Page 17 - Harvard Business Review (November-December, 2017)

IDEA WATCH HOW I DID IT

are recognizing that even when longer-tenured ones—may have money it formerly paid departing employees goes to
people record vacation time, accrued a large amount of unused the bottom line.
they’re often working. Another vacation time. Many companies From the beginning we decided not to try to profit
factor is that under a traditional pay employees for that time, from abandoning an accrual system. We felt it made
policy, companies accrue unused usually in cash—either as a more sense to reinvest those savings in other em-
vacation as a liability. As that lump sum when they leave the ployee benefits. So in addition to offering an open va-
liability increases, they become company or over several years. cation policy, we increased maternity leave, parental
interested in a different way of These are significant issues. We leave, and adoption leave; we increased the 401(k)
handling paid time off, or PTO. see many companies exploring match; we created a scholarship program for employ-
the shift, but relatively few ees’ children; we launched a child care assistance pro-
Your data shows that more actually go ahead with it. gram; and we began contributing up to $500 a year
companies offer unlimited PTO toward employees’ student loans. In the end those
to executives only. Does that If those are the expected new benefits exceeded the savings from changing our
cause morale problems for challenges, what unexpected vacation policy, but I believe they were worth it.
other workers? ones do you observe?
In those situations only a few I’ve read about some employers—
executives are getting unlimited not our clients—that go from THE LEADING COMPLAINTS
vacation days—the same group a traditional plan to unlimited While I was educating myself about open vacation
that might be getting access to PTO and then revert to some policies, our HR people were doing more-systematic
the corporate jet or other perks. form of more-defined limits, research. They hired a consultant who had helped
It’s a small number of people, so such as “Take up to four weeks other companies make the shift. He gave a presenta-
oftentimes the broader workforce of vacation.” Putting a number tion on the pros and cons, saying that at most compa-
doesn’t know about the policy. out there helps people feel nies, 95% of employees prefer unlimited vacation, but
It can get a little noisier as the safe if they take time off. Too 5% typically object—for reasons I’ll discuss shortly.
circle expands—when it’s not just often these systems can result The consultant also said that the biggest problem with
the C-suite but also senior vice in gamesmanship—one person the change is that some employees actually take less
presidents and directors, and goes thinks he shouldn’t take time off time under the new policy than they did under the
from 10 people to 100. At a certain until the person he sits next to old one, because they’re afraid of asking for too much
point it becomes impossible to does—and if that person takes time off. We wanted to be sure that didn’t happen at
keep quiet, and you may face two days, he’ll take only one. So Kronos, because it would defeat the purpose.
communications issues. companies that opt for unlimited We made one important decision early on:
PTO sometimes make an effort Although we would no longer set formal limits on time
When companies consider this to counter that behavior. off, we would continue to track every employee’s re-
shift, what challenges do you quests and time taken, because we wanted to be able
warn them about? How far do you think unlimited to analyze how well the new policy was working and
That depends on the company PTO could extend? to be sure that managers were implementing it fairly.
and its culture. The company is We are seeing it expand among We announced the new policy on December 18,
likely to have pockets in which executives and extend to the 2015. “Thank you for creating an environment where
people might be prone to abuse executive team. We do think there we trust each other so much that we can take a step
an unlimited-PTO policy. The are limits, however. When you like this,” I said in a companywide video. The new
fix for that is to not offer it for extend it too far, you include policy would take effect on January 1. Just as the
that function. Managers face people who aren’t really in 24/7 consultant had predicted, most people reacted favor-
uncertainty about how much roles. And in some industries ably—but a minority did not. They spoke up quickly
vacation time people will actually I see unlimited time off as totally and loudly.
take—and we know from our untenable. Retailers. Nursing. Their complaints generally fell into three cate-
surveys that when companies Call centers. Those are places gories. The first came from a handful of managers
make the shift, many people where you need to have a who thought the lack of a formal policy would make
actually take less time off. That certain number of bodies their jobs more difficult. They worried that employ-
creates a risk for burnout. In predictably in their seats. It ees might request excessive time, or that supervisors
that case, the company needs seems to me unrealistic for would spend too much energy adjudicating requests
to foster a culture in which the majority of employers to on a case-by-case basis. They were uncomfortable
people see that it’s OK to take do this, so I think you’ll see a with the ambiguity of the new system and preferred
time off. The other challenge is gradual expansion as opposed a black-and-white policy that would automate their
that some workers—especially to mass adoption. decision making.

40 HARVARD BUSINESS REVIEW NOVEMBER–DECEMBER 2017