27 September 2023

Extended vacation: Why unlimited holidays boost productivity

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Travis Bradberry* says set vacations date from an assembly-line mentality that has no place in the technology-dominated 21st century.


Since 2004, Netflix employees have taken as many vacation days as they’ve wanted.

They have the freedom to decide when to show up for work, when to take time off, and how much time it will take them to get the job done.

Just because there’s flexibility at Netflix doesn’t mean it lacks accountability.

Employees have to keep their managers in the loop, and they’re expected to perform at a very high level.

High performance is so ingrained into Netflix culture that they reward adequate performance with a severance package.

Netflix employees have unlimited vacation because no one is tracking their time.

Instead of micromanaging how people get their jobs done, the leadership focuses only on what matters — results.

Without the distraction of stifling rules, employees are more focused and productive.

When Netflix still had the typical vacation policy, employees asked an important question.

“We don’t track the time we spend working outside of the office — like e-mails we answer from home and the work we do at night and on weekends — so why do we track the time we spend when we are off the job on vacation?”

Management couldn’t deny the simple logic behind the question.

Back in the industrial age, when people stood on the assembly line from 9am to 5pm, paying for time made sense.

With advances in technology that’s no longer the case.

People work when work needs to be done, from wherever they are.

There’s really no such thing as ‘after hours’ anymore.

We’re now operating in a participation economy, where people are measured and paid for what they produce.

Yet, when it comes to time off, we’re still clinging to the vestiges of the industrial economy, where people were paid for the time they spent on the job.

This is a huge demotivator. Netflix realised this, and it changed its policy to reflect the way that work actually gets done.

While Netflix was one of the first notable American companies to take on an unlimited vacation policy, the idea didn’t start there.

Brazilian company, Semco has been quietly offering unlimited vacation for more than 30 years.

After a health scare when he was 21, Ricardo Semler, the son of the company’s founder, realised that the schedule he was keeping was slowly killing him.

If it could kill him, then it could kill his employees too.

So, he made the radical decision to do away with schedules, sick days, and vacation time.

Contrary to the prevailing worry that productivity would plummet, Mr Semler found that employees actually became more productive and fiercely loyal.

When he first instituted this policy in 1981, Semco was just a $4 million company. It’s now worth more than $1 billion.

As successful as unlimited vacation policies have been, less than one per cent of companies world-wide have adopted them.

Companies defend their strict vacation policies with the belief that employees will take advantage of anything else.

However, companies that have actually tried unlimited vacations have found the opposite to be true.

Freedom gives people such a strong sense of ownership and accountability many end up taking no vacation at all.

Employers that have instituted unlimited vacation policies have also had to make policies that encourage people to actually take time off.

Software developer Evernote, for example, gives employees $1,000 to spend on vacation, and technology company FullContact gives employees a whopping $7,500.

Since employees are hesitant to take time off, they have to submit receipts showing that the funds were spent on a vacation in order to be reimbursed.

While workaholic employees might sound good on paper, that’s not what smart companies want.

Smart companies know that when employees take time off to recharge — especially when they have the freedom to take time when they need it — they come back even more creative and productive.

Subsidising that time off is money well spent.

It’s sad that we’re still compensated according to an assembly-line mentality.

These days we work from whenever and wherever necessary to get results, so it only makes sense that our compensation and benefits reflect that shift.

*Travis Bradberry is the award-winning co-author of the bestselling book, Emotional Intelligence 2.0, and the co-founder of TalentSmart. He can be contacted at TalentSmart.com.

This article first appeared on the TalentSmart website.

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