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June 02, 2015

Will unlimited paid vacation policies take flight?

Proponents say the policies offer workers more flexibility and autonomy

Vacations Policy
Vacation Contributed Art /

It's vacation time

Ever dream of bolting from the office for a month to drive across the country? Or flying to Europe for a few weeks? Maybe even boarding a long cruise to the Caribbean?

Try working for a company like the Brownstein Group, a Center City branding agency, and that dream could become a reality.

Brownstein offers its 70-plus employees unlimited paid time off, a policy it adopted three years ago. As long as employees are on top of their workloads, they’re free to take off whenever they please.

“The philosophy is being really high-trusting and super-trusting to the team, with the expectation that we hire adults. We hope people enjoy and respect how generous we are and give back to the company.” – Emily Allen, Seer Interactive

“People want to feel valued,” said Julia Missaggia, director of human resources for the firm. “They don’t want to just feel valued as a resource that gets stuff done. They want to feel valued as a person. The unlimited PTO reflects that we see them as people.”

Unlimited vacation policies are far from widespread. About one percent of U.S. companies offer them, according to the Society for Human Resource Management. But such practices could gain traction as progressive companies shift toward human resource policies that value production over hourly input.

Some praise unlimited vacation as a workplace perk providing more autonomy and flexibility. Critics question whether it actually stifles vacations, suggesting guilt could prevent employees from taking time off.

It is unclear exactly how many Philadelphia-based companies offer unlimited vacation time. But Brownstein and Seer Interactive, a digital marketing firm, are among the few.

Both firms utilize HR policies that stress the need for maintaining a busy workload, but enable flexibility in meeting it. The businesses heavily rely upon trusting relationships, expecting employees to handle their responsibilities appropriately.

“We ask that everyone use their best judgment,” Missaggia said. “That works based off of trust. We expect people to act like adults and then we’ll treat them like adults. You know what you have on your plate. Let’s try to schedule it accordingly.”

Practically, Missaggia said, most employees take about the same amount of vacation days as they did before Brownstein adopted its unlimited PTO policy at the start of 2013. The benefit, she said, is that unlimited PTO provides more flexibility and autonomy.

Employees no longer have to budget a set amount of time off. So, they can take an extended weekend at the shore in August without worrying whether they’ll come down with the flu in December.

And if an employee has been trying to plan an extended trip to Africa, that now can be arranged without exhausting paid time off.

“We just ask them to be adults,” said Emily Allen, Seer Interactive's director of employee development. “If you know you have a trip coming up and you’re going to be out of the office for two weeks in August, let your team know. Let your manager know.”

Julia Missaggia

Julia Missaggia, human resources director at the Brownstein Group, says the company's unlimited vacation policy provides employees with greater autonomy and flexibility. (Thom Carroll / PhillyVoice)

As companies shift toward results-based systems, business experts suggest unlimited vacation policies could become more prevalent.

Virgin and Netflix are among the most prominent companies that have adopted them, joining a host of smaller tech-oriented companies.

Debbi Casey, an assistant professor of Human Resource Management at Temple University's Fox School of Business, said unlimited vacation policies thrive in performance-based workplaces that bundle flexible compensation and work/life balance policies.

"It's really worked well for places that can let go of that hierarchal, bureaucratic, 'we need to watch you and make sure you're doing your job mentality,'" Casey said. "But what you can't do is mix them. You can't give people unlimited vacation and then have other mandatory practices."

But the policies have not been well-received everywhere. The Tribune Publishing Company rescinded a discretionary time off policy after the Los Angeles Times, and other Tribune-owned newspapers, fought it. The company reverted to fixed amounts of vacation and sick days.

Stew Friedman, director of the Wharton Work/Life Integration Project, called unlimited vacations a good policy that gives lower-level employees greater responsibility in determining when and where they complete their work. But he acknowledged it has some drawbacks.

Some workplaces may end up promoting an environment where it is not the custom to take vacation time, Friedman said, making workers hesitant to take time off.

It is imperative for upper-level managers to stress that vacations are permissible by taking their own vacations, Friedman said. He credited Wharton alum Brett Hurt for instilling such a culture at the Texas-based Bazzarvoice, which does not track vacation time. Hurt, the co-founder, takes six weeks off each year.

"If you have a policy that says you can take as much time as you want, but I'm not going to as the senior executive, then it's probably not going to be used to its full advantage," Friedman said. "In this case, I think you really do need to be a role model, if you're going to have that kind of policy where there's ambiguity."

Some companies with unlimited vacation polices, like Evernote, require employees to take at least one full week off. Otherwise, they forfeit a bonus.

Brownstein considered implementing a similar policy, Missaggia said, but found that employees are taking at least one week off. If employees aren’t taking time off, she said, the firm reminds them they can.

“It’s a rare circumstance,” Missaggia said. “I think that’s just because that the messaging that you get from the top down here is, ‘Hey, you should take care of yourself mentally, and use that recharge time.’”

Nor has Seer Interactive had to encourage employees to take time off or rein their vacation requests, Allen said. She credited a high-trusting culture instilled throughout the company.

“We’re looking for someone that is a team player,” Allen said. “We’re looking for someone that has good judgment. Assuming someone has good judgment, these policies are going to be fine.”

So, if an employee is gearing up to spend a few weeks hiking the Swiss Alps, Seer says go for it.

“The philosophy is being really high-trusting and super-trusting to the team, with the expectation that we hire adults,” Allen said. “We hope people enjoy and respect how generous we are and give back to the company.”