Vacations Are Good For Employees—and the Company’s Bottom Line

Earlier this week, I was speaking with a friend in HR. She said an employee at her company just gave two weeks notice. The employee had 200 hours of unused vacation that the company now had to pay out. That’s one heck of a parting gift.

This massive vacation rollover means the employee didn’t use all of her vacation time in 2019 and hadn’t taken any in 2020 either. She found a new job—probably because she’s stressed out and feels burned out—and now the old company has to not only pay out five weeks of vacation time, but also rack up recruiting expenses to find her replacement.

How could the company have retained this employee while saving hiring costs and time? By encouraging her to use her vacation time.

Between the massive public health concern surrounding COVID-19 and the nationwide economic impact of shutdowns or stay-in-place orders, people are burnt out and need vacation time. And, beyond that, companies have to worry about vacation liability at a time when budgets are already tight. Not every company pays out unused vacation when people leave, but plenty do. And some states, like California, require it. It’s generally a good policy, but when employees who haven’t taken a vacation in a while quit during this period, it’ll cost a fortune.

When your employees (and you!) take a vacation, there are actual health benefits: reduced stress, reduced depression and decreased heart disease. And regular employee vacations can result in increased productivity to power your business. If you want employees to be engaged and effective, they need to have time to do something other than work.

However, with many locations still impacted by the pandemic, there’s virtually nowhere to go. And it may not even be safe to take the kids to see grandma. It’s no wonder your employees may want to save their vacation for the day the world reopens. But that mentality is neither healthy for them, nor sustainable for your vacation payout budget. Consider incorporating these options to help get PTO on the books in the name of employee wellness and keep vacation payouts from skyrocketing in the name of company financial wellness.

Suggest that people take a Monday or a Friday off here and there. It extends the weekend and provides more time to unwind—without making people feel like they’re away from work for too long at a busy time.

This has already been a crazy year, so I’m not suggesting a use it or lose it vacation policy, but I am supporting a limited rollover to 2021. Think about what is reasonable for your financial situation if that rollover payout day comes. Institutionalize encouraging your employees to use their vacation time before the end of the year.

If people don’t want to take time off, enable them to donate their vacation time to a coworker who was affected by COVID-19 or another stressful situation this year. It doesn’t reduce your employee’s stress, but it is a nice thing to do.

Yes, you can mandate that people use their vacation time. Employees don’t necessarily like this, but sometimes you have to do what you have to do. Give them specific parameters, such as "you need to use 50 percent of your vacation by Halloween." Make it a point to explain how taking some time away can help them be more productive.

Often, employees don’t want to take a vacation because they know they won’t truly get to unplug and relax. Hold managers accountable for getting their employees to take needed time away. Don’t shy away from making sure they know that off means off—no emails, no last minute projects and no surprises for vacationing employees.

Put your out-of-office reply on, set your Slack status to away and disappear for a day or two. Then come back refreshed and ready to work—setting an excellent example for everyone in the process.

Learn more about how vacation time can make your employees more productive, and why a three day weekend could be the best thing for your business — explore Cornerstone’s vacation survey here.