IMHRO: Why Unlimited Vacation Isn't a Fools Errand

Namely’s series, In My HR Opinion, brings you honest takes on the hottest HR topics and trends, straight from industry leaders.

To learn about the pros and cons of an unlimited vacation policy, we spoke with Lisa Shapiro, Payroll Manager at The Motley Fool. Lisa shares how unlimited vacation increase both employee morale and productivity, and she offers tips for creating a culture that enables this policy to be effective. Here’s what Lisa had to say:

Unlimited paid time off, while often controversial, is one of the fastest growing workplace perks. Being able to offer that level of flexibility can be a great tool for attracting, retaining, and developing top talent. But how do you know if it will work in your office?

In just over 25 years, The Motley Fool has grown from a company of three founders to over 300 employees, and since our earliest days, we have never tracked time off. We like to say that we have a “No-Policy Vacation Policy,” encouraging employees to take all the time they need as long as their work is getting done.

It probably sounds risky to offer employees this type of unchecked freedom, but the results of our recent engagement survey actually proves just the opposite. Over 95 percent of our employees said that The Motley Fool demonstrates a commitment to their well-being, 87 percent said they usually have enough energy to overcome challenges at work, and 90 percent said they would recommend The Motley Fool as a great place to work. Not only does unlimited vacation contribute to employee happiness, it also keeps our employees refreshed and ready to execute on important projects. As a result, our unwanted turnover rate is roughly 5 percent.

So all you have to do is institute unlimited PTO and watch as engagement scores skyrocket? If only it were that easy…  

In the same way you can’t just buy a foosball table and suddenly improve office relationships, unlimited vacation doesn't make a great place to work. You have to have the right company culture in place first. Ask yourself these three questions to understand whether or not unlimited vacation could work in your office:

1. Do You Trust Your Employees?

If an employee gets the side eye for coming in after 10 am or an exasperated sigh from their manager if they want to cut out early for a baseball game, then unlimited PTO likely won’t work for your office culture. However, if your employees have the ability to work any time from anywhere, a culture of trust could support an unlimited vacation policy. That same employee who came in late may have worked all day Sunday to meet a deadline, or answered emails after they put their kids to bed. When you offer unlimited PTO (and even if you don’t), time spent in the office is not an accurate measure of employee performance.

2. Is Leadership Setting the Example?

If your CEO hasn’t taken a real vacation in years, then neither will his or her direct reports, or their direct reports, all the way down the to the most entry level position at the company. According to a recent study by TSheets, US workers get an average of 11 days of PTO per year, but typically leave at least five days unused. If no one uses your unlimited vacation policy, then you may as well not offer it in the first place. New hires, for example, drawn in by the promise of a flexible work schedule, will be disappointed to see that the policy isn’t put into practice.

3. Do You Really Appreciate the Need for Employee Time Off?

The head of our People Team, Lee Burbage, deliberately kicks off conversations with other Fools in the office by asking, “So, you have any fun vacations coming up?” If they don’t, he’ll encourage them to plan some time off.  He is actively on the front lines telling people to take a break because he wants them to know that time off is important to their health and the health of the company.

Lee’s watercooler conversations aside, The Motley Fool takes it one step further: To remind our employees of the importance of taking time off, we created the Fool’s Errand. Once a month, one employee is chosen at random and is then required to take a two-week vacation within the next month. The winner also receives $1,000 from the company to spend on their errand. As a result, people have gone on amazing trips, ranging from Iceland and Australia, to all over Europe.

In addition to the clear morale boost, unlimited vacation also helps ensure we don’t have single points of failure. In other words, that we have enough cross training in place for individuals to easily find coverage while they’re out. Not to mention, the monthly Fool’s Errand gives us an opportunity to remind everyone that you don’t need to win to take two weeks off! You always can, because we trust you.

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