5 Reasons CEOs Should Offer Unlimited Vacation in 2015

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As a CEO, do the words “unlimited vacation” cause cold sweats and an overwhelming urge to hide all your employees’ passports? If so, you aren’t alone–most CEOs have some discomfort around the concept of unlimited vacation, which explains why only 1 percent of U.S. companies offer this program.

Among these 1-percenters is Netflix, an unlimited-vacation pioneer and the company that inspired Richard Branson to recently announce a similar policy for Virgin. As Reed Hastings explains in the 2009 Netflix “Freedom and Responsibility” practices, his company exercises a “trust policy” when it comes to scheduling their vacation days. It’s a policy that puts control in employees’ hands.

Unbridled PTO power is what makes some CEOs worry that their staff will shirk work responsibilities and opt for a four-day work week every week. As it turns out, employees do just the opposite. This vacation policy is not about giving employees the go-ahead to be lazy or unreliable. It’s about trust. It empowers them to best meet organizational and individual goals in the hours that make sense for both parties–and it works. Let’s face it, 9 a.m.–5 p.m. hours are not the hours of the digital age.

At SmartRecruiters, we’ve seen fantastic results from offering unlimited vacation and flex hours. It has driven employees to take greater ownership of their roles, collaborate better with their teams and work smarter while in the office. Success is measured not by how much time everyone spends in the office, but rather by “have I achieved my goals?”

Growing an organization-wide sense of trust has been the biggest benefit of an unlimited vacation culture at our company. Here are five more benefits you could see at yours:

1. It creates better connected teams and an agile workforce.

According to a 2014 Glassdoor survey, three out of five employees admit to doing work while on vacation. According to the survey, the main reason is that they are afraid of getting behind. This speaks volumes about the existence of unsupported team members. An open vacation culture encourages your employees to pitch in and cover one another’s work load, which then builds stronger, more versatile teams.

2. It shows you think of employees as adults which, in turn, makes them more responsible and valuable.

Empowering employees to define their schedule shows that they are valued and trusted peers. Say an impassioned employee works 40 hours in a week, yet they want to keep plugging away on a project. Without the ability to “get back the hours” at a later date, that employee will either have to push their work to the following week or forever lose their personal time to meet goals. This can lead to resentment and reduced eagerness to go the extra mile in future projects.

3. It boosts employee morale, happiness and productivity.

Studies have shown that employees perform better when they take time off to rejuvenate and have less stress in their daily lives. Unlimited vacation gives them the flex hours they need to harmonize work with other aspects of their lives. Besides, committed employees are always “on,” even during their time-off. They might come up with the next great idea for your company while relaxing on the beach or driving to their kid’s Little League game.

4. It can save your company money.

An unlimited vacation policy saves the cost of tracking and managing your organization’s PTO schedule. It also eliminates the liability and unexpected expense of paying out accrued and unused vacation days when employees leave (if you’re among the companies that follow this practice).

5. It will help recruit and retain the best candidates.

An open vacation culture can be a strong competitive differentiator for recruitment. Candidates, especially millennial job seekers, look favorably on unlimited days vs. the 16 days most U.S. companies provide. The impact can last long after recruitment. Netflix, for instance, saw an increase in employee engagement and retention after introducing its unlimited vacation policy.

Let me be clear, I don’t think there is a magic number of vacation days that businesses should all adopt. What I am advocating for is more freedom for employees to integrate their careers with the other pillars of their lives, such as getting to know their kids, discovering new perspectives through travel, and fueling creative thinking through passion projects –all things that lead to happier, more innovative and more committed employees.

In 2015, I hope unlimited vacation policies catch fire and more CEOs think of it not as merely a benefit or perk, but as part of crafting a high performance company culture built on trust and respect. The question to ask yourself isn’t “how many days off do my employees deserve?” but “how do I empower smarter, more responsible employees in 2015?”

Go ahead, take some time off to think about it.