Unlimited Vacation Time: Newest Perk?

140924165427-couple-vacation-620xaOne of the hardest things for a HR professional to track is vacation time, especially when it comes to salaried employees.  There’s always the argument that because salaried employees aren’t require to track their working time that we can’t really track their vacation time…so why do we “award” them a specific block of vacation time from year to year.  When do we list a day as a “vacation day?”

The whole idea behind a person being labeled a “salary employee” (aside from the legal testing of the definition) is because these are individuals that a company needs to be able to depend on outside of the regular 9 to 5 grind.  We need them to be available for emergency phone call after hours or adjusting their schedule to be available to a client in a different time zone.  They don’t simply stop working because the physical office has closed for the day.  We know if we send them an email at 8pm regarding an issue that they will likely read it and respond right away rather than waiting until the next day during “normal business hours.”

A survey from 2008 showed that the average salaried employee works 54 hours a week.  In some industries, this may be a consistent number from week to week.  In others that are more seasonal, these hours may peak higher in certain months and drop considerably in the “slow season.”  Then there are the employees who travel to other cities as part of their job – leaving or returning on the weekend.  All these extra hours without extra time off as compensation.  A true fail in the “work/life” balance that many companies strive to provide for their employees.

Companies have traditionally compensated employees with higher salaries, but the state of the market since 2008 has caused most companies to lower starting salaries or skip annual raises to help keep the company afloat…while still requiring the same (if not more) amount of hours to be put in by salaried employees.  How do companies compensate salaried employees when additional monies aren’t an option?  How about unlimited vacation time?

We expect salaried employees to balance their work loads without the restraints of punching a clock.  While hourly employees are expected to put in their 40 hours a week, salaried employees actually have leeway and control over their schedules.  If I can complete a job in 30 hours that week, then I have managed my time and completed my job…no expectation that I have to complete 40 hours – just that I complete my task.  However, if it takes me 50 hours to complete my job that week, then the company views it as I am doing what I need to do to accomplish my job.  There is no “take an extra day off” to compensate.  The next week just starts all over again.

Unlimited vacation time seems to be a concept being explored by some companies as an option to the traditional compensation package and can be a benefit in the recruiting process.  If you are hired as a salaried employee, then we expect you to work the number of hours needed to complete your task.  That includes being able to take time off whenever you want without tracking how much time you take off.  You manage your time.  As long as your job is complete, you can leave early or take time off whenever you want.

So – positives and negatives…

Positives: Employees will enjoy this new “perk” – not being limited to a certain number of weeks off per year.  The additional time off they will be able to now take will also aid in reducing work-related stress from constant long hours and boost employee morale as they will now see themselves being treated as a valuable asset by their employer and no longer being taken for granted.  Employers will no longer have to have a discussion between HR and management as to which days count as a vacation day and which days are considered working “off-site” or available by phone/email.

Negatives: Without proper oversight by management, some employees may abuse this new option and take excessive amounts of days off – eventually leading to a decline in performance.  There is also the perception this new perk will have on the hourly employees – who won’t see that these individuals are working more than the standard 40 hours for the same amount of pay.  All they will see is these individuals getting more vacation time than them.

Unlimited vacation time may have been a perk reserved for only top executives, but I think we are going to see more and more companies exploring this idea as they look for creative ways to reward their employees and become more competitive as the market improves in the coming months.

Do I agree with it?  Honestly, I’m still on the fence about it.  I think companies will see a more positive attitude and improved performance come out of salaried employees as a result but I worry about the impact it will have on the day-to-day running of a company.  Even if “they are still available by phone or email,” too much time away will reclassify a position to more of a “telecommuting” job and can negatively impact a company on many levels: availability to the customer, subordinate employees and even management.

This new employment market has already caused many companies to review their recruiting and employee benefits packages.  As the market stabilizes and companies begin to hire more employees again, this will definitely be a benefit that can sway a candidate to join.

Question now is: As a company, do you set the new standard or follow the pack after the fact?

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