Should Businesses Implement Flexible Vacation Policies With Incentives?

Should Businesses Implement Flexible Vacation Policies With Incentives?

This article was updated on Oct. 4, 2018.

According to Travel Weekly, the majority of American workers leave vacation time on the table. But it's important for employees to take time away from the office to reset and recharge. So more organizations are considering flexible vacation policies, such as unlimited time off, and offering incentives to ensure employees actually utilize available vacation time.

The Problem of Underutilized Paid Time Off

"The inability to take time off has become one of America's greatest work culture failings," states Project: Time Off. Employees who overwork put themselves at risk for burnout, which can negatively affect an organization. Tired employees are often less motivated, less productive and less engaged. And those with client-facing functions may sully your brand if their spark is lost and customer satisfaction is affected.

Why aren't employees using their vacation time? While the answer will vary, reasons could include organizational culture, the pressure to succeed and feeling too busy at work. When an organizational culture doesn't promote taking vacations, employees will follow suit.

With as many changes as organizations have made to accommodate the needs for flexibility in today's workforce, more organizations are changing and updating their paid time off (PTO) policies to reflect the change in today's work culture. Employers should be mindful of federal and state protected leave laws when seeking to revise their PTO policies.

Flexible Vacation Policies

Flexible vacation policies, like offering unlimited time off, aren't just for small, startup businesses. Many large organizations, including GE and Virgin, have unlimited or permissive time off policies for their employees.

It doesn't appear that flexible vacation policies increase absenteeism in the workplace. In fact, Forbes suggests that instead of employees taking too much time, businesses with a history of unlimited leave benefits found that employees often became more accountable for their flexibility, and because of that, took little to no time off, even with complete freedom.

Software firm Buffer decided to do something about the situation. "Since we weren't taking any, our team wasn't taking any either—or they were doing it in a very guilt-driven way, since they could see it wasn't the norm," Buffer reports. Management and organizational culture should reinforce the importance of personal time or else flexible vacation policies may not accomplish what they set out to do — encourage your employees to get away from their job so they come back refreshed and even more productive.

How Offering Incentives Can Help

One way to curb this issue is to offer incentives so employees are encouraged to actually take their time off. After recognizing the internal issues standing in the way of their policy, Buffer now allocates $1,000 for employees to spend on their vacation. Buffer says that after doing so they saw a huge increase in the number of employees who took vacations.

Another way to ensure your employees take advantage of a flexible vacation policy is to communicate with them. It should be made clear through all internal channels that employees can feel good about taking advantage of this benefit. This message should be consistent throughout the organization's management team.

HR leaders can create a more positive outlook on vacation among employees, and flexible vacation policies with incentives may be the answer.