The Unlimited Vacation Policy – Should We Try It?

Netflix has let their employees take off as many vacation days as they’ve wanted for the past decade. That means that they have the freedom to decide when to show up for work, when to take off and how much time it will take them to get the job done. Since instituting this policy, Netflix has grown its market cap to over $51 billion.

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Employees do have to keep their managers in the loop and are expected to perform at a very high level. Instead of micromanaging how people get their jobs done, the leadership focuses on what really matters, the results. They found that when they give people greater autonomy, they create a more responsible culture that results in more focused and productive employees.

Let’s take a look back at history. When people used to stand on the assembly line from 9 to 5, paying for their time made sense. However, with advances in technology, people work when work needs to be done – wherever they are. “After hours” doesn’t really exist anymore.

Today, we operate in a participation economy where people are measured by what they produce. For some reason, we are still clinging to the vestiges of the industrial economy when it comes to time off. This is a huge demotivator and Netflix wasn’t actually the first company to realize this – it happened in Brazil.

Semco has been offering unlimited vacation days for more than thirty years. It happened after a health scare to Ricardo Semler when he was just 21 and the son of the company’s founder. He realized that his current schedule was slowly killing him and that it could do the same to his employees. He got rid of schedules, sick days and vacation days. What happened? His employees thrived – becoming more productive and fiercely loyal. The company thrived too, climbing from a $4 million company to over $1 billion.

Even these unlimited vacation policies have been successful, less than 1 percent of U.S. companies have implemented them. Besides the workaholic culture, American companies aren’t legally required to give any paid time off at all, even though it is mandated in many other countries with up to 28 paid days off per year.

Employers may be afraid that their employees will take advantage. However, time after time the opposite seems to be true – some people end up taking no vacation at all because they develop such a strong sense of ownership and accountability.

What kind of vacation policy does your company have? What would you prefer?