Employees at This Company Enjoy Unlimited Days Off

Kronos, a US company that creates workplace management software and services, has an unlimited vacation policy. Its CEO, Aron Ain recently described in Harvard Business Review how he successfully launched the unique policy.

Before the implementation of the policy, Kronos was losing the talent attraction/retention game and had to step up. Which is why Ain made the radical move to provide unlimited vacation for his employees.

Why Unlimited?

It’s not just a recruiting tool. The old standard of two weeks off for new hires, four weeks off after 10 years of work just doesn’t make sense anymore, especially since people are prone to job hopping. In a world where technology has made many jobs 24/7, who’s to say when someone is actually on vacation?

Kronos CEO, Aron Ain. Credit: Getty

According to Ain, “Kronos employees took 2.6 more days off on average than the prior year.  From a financial standpoint, it was our best year ever. I don't think that's a coincidence". He went on to cite improved employee engagement scores as well as improved number of positive anonymous employee feedback.

What does it need to make this policy work?

1. Employees must be trusted

It is obvious, but without trust this policy will not work. Without trust, managers question employees who take “too much” time off or employees don’t believe that they can actually take more time off.

2. Hire high-performers with the right work ethic

Recruit high-performers, and trust them to do their work. Monitoring won’t be necessary, for the most part.

3. Passionate concern for work/life balance must be a part of the culture.

It will make the policy believable, if done for the right reasons. It also gives conviction to managers to grant extra vacation day requests and for employees to ask for it.

What are the hidden disadvantages?

1. Risk of burnout

When the policy is implemented, some employees actually take less time off. It’s absolutely crucial that managers role-model taking advantage of the new policy to avoid this.

2. “Accruers” won’t be happy

Many organisations pay employees for unused vacation time. Some viewed as a part of their pay. Take that away and it can raise some dissent in the workplace. It’s important to help these employees understand that payment for accrued days off is not intended to be used as a financial bonus.

Some would think it’s a devious way for the company to save money. Ain said that is why it’s important to reinvest any accrual savings into other employee benefits such as better-paying maternity leave.

3. It does not work in all companies

It doesn’t work for people who really aren’t in 24/7 type jobs or in industries that require physical presence such as nursing and retail. Many countries even have restrictions on vacation time accounting. (Kronos only applies this policy in United States and Canada)

In Malaysia, based on Employment Act 1955 Section 60E (1) An employee shall be entitled to paid annual leave of:

1. eight days for every 12 months of continuous service with the same employer if he has been employed by that employer for a period of less than two years;

2. twelve days for 12 twelve months of continuous service with the same employer if he has been employed by that employer for a period of two years or more but less than five years;

3. sixteen days for every 12 months of continuous service with the same employer if he has been employed by that employer for a period of five years or more.

4. Some managers will feel it makes their job more difficult

Such managers fear the system abuse and an undue burden to police such abuses. Ensuring HR stands ready to help is important, as is the understanding that requests for vacation will still be tracked to ensure that people are taking enough time off.

5. Some will say it’s “unfair”.

Mainly those who have been working for 15 years to earn four weeks of vacation, now sees that the new hire gets the same amount. It’s crucial to remind them that nothing is being taken away from that and that what others get is irrelevant

Bottom line, unlimited vacation won’t work everywhere, but it’s a new option in the stormy talent war. Would you like to see it being implemented in your workplace?

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This article is based on Scott Mautz’s article titled This CEO Launched an Unlimited Vacation Policy. Here's How It Worked Out