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There’s been buzz lately about companies switching to unlimited vacation policies.  That’s right, an actual corporate policy that gives employees, from their first day on the job, an unlimited amount of vacation time. No more earning two weeks of paid time off and then carefully managing your accrued hours and then trying to build your hours back up after that epic Hawaiian vacation.

Wipe the slate clean, you now have unlimited vacation from your first day on the job. Are you ready for that?  Is your business?

Of course, this isn’t intended to turn work into a free-for-all. Unlimited vacation policies carefully planned, spelled out in great detail for employees and require managerial approval for any time off.  In other words, unlimited vacation does not mean you can just up and go on a whim.

Not Right for Every Type of Work

Cornerstone OnDemand has put this policy in place internally and we’ve seen it come into favor in a range of other types of businesses. It’s not a random policy decision: an unlimited vacation model has benefits for the company and, more critically, we view it as another tool for smart management in the new world of work.  More on that below.

In recent media coverage, we’ve seen some pushback against unlimited vacation policies, sometimes rancorous. With any major change in the way we are all accustomed to working and managing there will be resistance.

Let’s be clear: an unlimited vacation policy is not right for every business or every industry. In work that is process-oriented or work that relies on shift labor or in retail or manufacturing businesses that schedule very strictly, an unlimited vacation model might not be appropriate.

On the other hand, in many places, including here in the U.S., a lot of work has shifted over the last few decades to being focused on knowledge work. That’s true in technology companies like Cornerstone, as well as in consulting, research, legal, engineering, most scientific fields, banking, and more.  When work is project-based, collaborative and organized around the exchange of information, an unlimited vacation policy is not only appropriate, but it’s also a tool for smart management in the new world of work.

For the Employee, Favoring Results over Input      

Under an unlimited vacation policy, performance expectations shift for both the employee and the manager.

Employees are essentially told: “we want you to get your work done efficiently, we want you to focus on positive work outcomes and we want to you take time off to recharge your batteries.”  It’s refreshing to treat adults like adults. An unlimited vacation policy explicitly favors results over inputs.

Another company that’s been vocal about its switch to unlimited vacation is HubSpot, whose CEO puts it simply: “We favor innovative results over inflexible rules, and we believe doing so gives the employees the autonomy to be awesome.”

Drive Development

The impact on employees usually gets all the attention in the unlimited vacation discussion.  However, I would argue that there are equally important impacts for managers and this is something we have focused on in Cornerstone’s development of its policy.

When you move to an unlimited vacation model, not only are you asking employees to focus on results, you are also shifting the onus for managers in terms of how they manage their staff. If your employee is constantly requesting vacation days, with limited notice, and the work is not getting done, well that’s a management moment for you.

Unlimited vacation does not mean “take personal time off whenever you feel like it” – it means that managers and employees need to be working collaboratively to ensure that (a) work is getting done and (b) vacation time is appropriate when requested.

In other words, under unlimited vacation, managers can stop nickel-and-diming the accrued hours spreadsheet and instead work with employees to set and manage expectations around productivity and results.

The Time is Right

If an unlimited vacation model works for your business and for your particular industry, the time might be right.  With the shifts in the new world of work – more collaboration, more technology, more anytime/anywhere work, and more Millennials – a change  in the way your organization views its vacation policy can have meaningful impacts around employee and manager performance, productivity and loyalty.

As it stands, the lines between working and not working have shifted for a lot of us.  We work from home, we work on our smartphones, and, yes, we even work on vacation sometimes (or at least check in). An unlimited vacation policy should not be designed to blur that line further.  When you take vacation, you should take vacation: disconnect, relax, and restore.

Some questions to consider for your organization:

· Does an unlimited vacation policy make sense for your business? 

· Do you think that if you hire right, your employees will rise to the challenge of putting results first (and take timely and restorative vacation time when it’s appropriate)?

· Does an unlimited vacation policy address Millennial worker preferences around work-life balance?

· Do you think that employees will actually end up working more and taking less vacation time under this model?

Let us hear your feedback in the comments.