"Unlimited leave": how do I ensure staff holidays don't get out of control?

16 June 2015 -

It’s a bold approach to management and leadership that is gradually becoming more common – but unlimited leave poses some thorny HR issues

Jermaine Haughton

Unlimited leave has become a hallmark of progressive management styles. Initially taken up by a clutch of dynamic tech startups, such as Evernote, Zynga and Hubspot, holiday time that it not restricted to a set number of days per year is gradually filtering into the mainstream, corporate world, with Richard Branson’s Virgin Group joining the fray late last year. Branson himself was influenced by a scheme active at Netflix to introduce a “non-policy” for paid leave at Virgin, with the mainstream media raising its eyebrows at such an innovative approach to HR issues.

Allowing workers to take off as much time as they want – as long as they complete their projects and achieve their goals – is a gesture that is beginning to pick up support around the world. However, if you are an employer who is seriously thinking of applying the policy to your organisation, there are pros and cons that need to be addressed.

On the plus side, Hubspot CMO Mike Volpe has said that the company ditched the traditional permission-slip system in favour of unlimited leave because it allowed staff to focus on building their work around their life – not the other way around. Volpe argued that unlimited leave relieves pressure on employees, enabling them to devote their time to driving results for the company and boosting their careers. Also, he said, “Companies with unlimited vacation policies make it easier for employees to get home for the holidays because they don’t have to think twice about leaving a day or two earlier when fares are cheaper and the crowds are less hectic.”

However, Lotte Bailyn – professor of management emerita at the MIT Sloan School of Management – is far more sceptical, arguing that the policy could prove to be something of a mind scrambler. “Unlimited vacation time may sound wonderful in theory,” she said, “but in reality, less is more. Too much choice is restrictive and confusing. Sheena Iyengar, a professor at Columbia Business School, calls this phenomenon “choice overload”. Some of her past research shows that when employees are deluged with too many mutual-fund choices it overwhelms them to the point of paralysis. They become risk-averse or unable to make a decision.”

Codel Software director Adrian Lewis also has concerns over the basic HR issues – particularly with ensuring that the policy doesn’t become draconian, or even an anarchic free-for-all. He told Insights: “Suddenly allowing unlimited leave could run the risk of senior employees being ‘afraid’ to be seen as ‘uncommitted’ by taking leave – or the opposite, whereby those employees with less responsibility could choose to be frequently absent, with no checks and balances in place, making it difficult for a business to plan and budget for the cost of that absence.”

With that in mind, Insights spoke to two business leaders to find out why they introduced unlimited leave – and how they manage the process…

Trenton Moss, CEO, Webcredible

Moss’ firm works in the user-experience sector, developing visitor journeys for web-based products.

Why did you introduce unlimited leave?

“The Netflix ethos is that one superstar is better than two average people, and you pay people what you think they’re worth. We very much follow their lead. We have no formal pay reviews – instead, we have more regular, goal-oriented chats every three months. There is currently a huge demand for good user-experience practitioners, so holding on to staff is a big challenge – members of our team are always being tapped up on LinkedIn, and many professionals in our business are Millennials who are fleet of foot and like to keep moving.”

How do you ensure staff holidays don't get out of control?

“Unlimited holiday is easy to implement – you just have to create an environment of trust, and ours is built through three company rules: i) always act in the best interests of the company; ii) never do anything that makes it harder for others to achieve their goals; iii) do whatever you can to achieve your own goals. Other than that, when it comes to setting holiday time, staff can do whatever they want. For example, a consultant may need to do a certain amount of billable days per quarter – aside from any flexible home working. That employee might decide to do many more than the agreed amount in one quarter, and then take the equivalent off in the next. It’s important to say, you still need to ask permission – the only difference is that there’s no cap.”

Tom Craig, co-founder, Impression Digital

Craig’s business is a digital marketing agency with a focus on SEO and creative content.

Why did you introduce unlimited leave?

“For two reasons: i) to reiterate the environment we're trying to create at Impression – ie, work shouldn't be enforced, people should want to do it, and should enjoy learning and feel rewarded from achieving good results; and ii) to attract the best members of staff, those who work hard and achieve good results but also seek a good work life balance. Typically, we find those are the happiest staff and can bring more from their life experiences to their roles – not just being stuck in the work environment, but bringing learnings, experiences and knowledge from out-of-work activities.”

How do you ensure staff holidays don't get out of control?

“There’s a real focus on the client account performance of each employee. Performance is shared between the group, and everyone works together to ensure our clients are positive. So if someone was to take excessive holiday or leave, and their clients began to perform badly, it would reflect negatively on them within regular team meetings. Also, we do regular in-house training sessions and social activities, so sometimes there may be a feeling of ‘missing out’ if they're off too much. We still use cloud-based HR tracking for employees to request leave, so levels of leave across the team can still be recorded and monitored. We feel the policy has bedded in well – people take time as they need it, but ultimately we have a near-100% client retention policy, and no complaints from employees.”

Find out more about flexible working and work-life balance in this special CMI Checklist guide.