Unlimited vacation policies — cracked or carefree?

It has always been a natural part of coming of age — the end to carefree childhood summers. After all, reaching adulthood means working year-round. Two weeks of vacation each year is standard — that is until you put in enough years with a company to eventually earn three weeks, or maybe more.
As millennials come of age, however, a new reality is emerging. Unlimited vacation policies, first introduced in Silicon Valley, are gaining traction among companies hoping to lure top talent.
Is it ludicrous?
For traditionalists, unlimited vacation time may sound ludicrous, but rest assured, it is more than the whim of a flip-flop wearing tech executive. Unlimited vacation has some sound theory behind it, so while some edgy companies you would expect, like Virgin Airlines, The Motley Fool and Netflix, offer the perk, traditional corporate giants like General Electric and the large accounting firm Grant Thornton are on board, too.
For companies competing for top talent, perks matter and unlimited vacation resonates loudly with the workforce they want to attract. In fact, a recent Monster.com survey identified vacation time as the most important benefit sought by job seekers behind health care.
Unlimited vacation, however, is about more than just passing along another perk. Proponents point out that it both frees employees from the pressure to plan and save days and frees employers from the administrative tedium of tracking time off and the financial obligation to pay for unused vacation.
More importantly, however, proponents say the policy sends a meaningful message to employees that their contributions matter more than the hours they clock. Additionally, it demonstrates respect for employees’ individual lifestyles and trust in their ability to manage their time responsibly.
Possible  abuse
Of course, an obvious concern is that employees would abuse the policy. A handful of employees attempting to reclaim their carefree childhood summers could certainly be problematic for a small company. Interestingly, though, companies that have implemented unlimited vacation policies report that their employees actually take off the same number or fewer days each year.
In fact, critics suggest the policy’s ambiguity is actually counter intuitive to ensuring workers take meaningful downtime because the lack of limits may encourage employees to work more, especially in competitive environments where they feel compelled to be present.
To combat abuse and counter under-use, companies can easily establish guidelines for scheduling time away and set required minimums for time off.
Effectively implementing an unlimited vacation policy, however, becomes trickier if business owners presume presenteeism positively correlates to productivity.
To be successful, a company must have a culture of mutual trust and respect, but more notably, leaders must be willing to embrace performance matrices other than hours worked to evaluate an employee’s contributions.

For some companies that requires a fundamental paradigm shift, but as millennials enter the workforce, cultivating a genuine regard for employees’ lives outside the office will be a win-win for everyone, whether the company institutes an unlimited vacation policy or not.

John W. Allen is president and COO of G&A Partners of Houston, an HR and administrative services company that manages human resources, benefits, payroll, accounting and risk management for growing businesses.