Modern organizations have employed several policies to encourage productivity and motivate employees. Some organizations have a flexible time off policies, while others have unlimited vacation time policies. For instance, Netflix has unlimited vacation time policy where employees are free to take time off whenever they feel appropriate. The company has put in place guidelines to prevent abuse of the unlimited vacation policy. Companies come up with individual policies on time away from work to meet the needs of their employees and to motivate them.
Companies have several policies on time away from work. According to Fakih (2014) paid vacation leave was introduced as early as the 1940s by the government or private employers to improve working conditions. The time away from work policies have changed over the years as businesses no longer rely on the traditional approach of giving employees 30 days paid leave in a year. Companies have come up with policies to distinguish between paid time off (PTO) and unpaid time off. PTO include vacation, parental leave, sick leave, bereavement leave, leave of absence, military leave among others. Private sector employers do not offer all types of PTO; they only provide what the company can afford depending on the role of the employee within the organization. For example, paid vacation days are common among private sector employees, but entry-level employees start with one or two weeks off and their vacation days increase with time as they continue working for the organization. Senior executives are entitled to four-six weeks of paid vacation.
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Different companies also have different policies on parental leave. Companies such as Google, Netflix and Amazon are known to offer parent-friendly parental leave packages by paying new mothers and fathers to take time off. Maternity leave policies at technology companies are quite impressive. At Netflix, new parents are allowed to take 52 weeks (one year) of paid leave while Microsoft and Airbnb offer 22 weeks of paid parental leave. Technology companies have used parental leave to attract and retain talent, but most private sector employers in other industries are yet to modify their parental leave policy. Rau & Williams (2017) note that 86% of American employees do not have access to paid parental leave.
Private companies also combine PTO and unpaid time off to attract and retain employees. Microsoft offers four weeks of paid vacation (sick leave) and additional eight weeks unpaid time off. Previously Microsoft offered 12 weeks of unpaid leave to enable workers to take care of ailing parents or elderly family members, but now the company pays for the four weeks (Adema et al.,2016). Employees are entitled to unpaid leave when they have used up all their paid time off. Additionally, parental leave is not paid in most states in the US unless in California, New Jersey and Rhode Island (Amato, 2017).
The video about “unlimited vacation” jobs focuses on employers who allow employees to take time off whenever they feel like. The video is a commentary on employee vacation policies adopted by Netflix and Virgin Group where employees can go on vacation whenever they want for as long as they want. Netflix, Groupon and Virgin Group argue that if employees can get the job done, then they can take as much time off as they need. “Unlimited vacation” is a hit at Netflix because the company believes that people who take vacation are productive.
King Company is a manufacturing company that produces specialty computer components. The company has problems with the compensation system. Employees were not pleased when the company restructured its compensation systems from 14 salary grade levels to five levels as they claimed the company took away promotion opportunities. Two years down the line, employees are still complaining about salary compression. The merit bonus which was meant to improve morale is too expensive to maintain and yet employees complain that the bonus is never enough. Employees are also complaining about the benefits package, mainly paying premiums to add to the organization’s health cover. King provides paid time off regarding vacation and sick leave, employees receive ten days of paid vacation, and sick leave benefits accrue at a rate of 1.5 days per month. Vacation and sick days can be carried over to the next year. Employees have complained about the benefits system in place at King's, and HR is worried that other companies with favorable benefits package will poach valuable employees.
The company should change its PTO policies. Giving employees ten days paid time off and 1.5 days sick leave per month is not attractive enough for a technology company. The PTO policy should complement other benefits packages in place, and when it fails to complement the benefits package in place, it leads to increased cases of dissatisfaction, absenteeism, and sick-days’ vacation. Technology companies such as Twitter, Netflix, and Facebook have redefined PTO policies, with most of them adopting flexible policies. King has to create a better one “time off” policy to motivate employees. The company can increase vacation days to 21 and allow employees to take sick days whenever they need them. A permissive approach to PTO will make employees view their employers differently. Employees should not have to take unpaid time off to go to the hospital or take care of sick parents.
Unlimited vacation time policy is the latest practice for technology startups, but it will not work at King Company. King’s employees are already complaining about the benefits package in place, and they are more likely to take advantage of the unlimited vacation time. Unlimited vacation leaves employees guessing on how much vacation time is acceptable, and when the job security is low, employees will view unlimited vacation suspiciously. Employees at King Company are not used to unlimited vacation policy because they only have ten days paid time off; hence the employer should start with a single PTO program with increased flexibility. A flexible PTO should be accompanied by flexible rules; for example, employees should be free to take time off when necessary rather than asking employees when to take time off.
From the CBS video, unlimited vacation only works in an environment of trust. Employees can abuse the system and take too much vacation where there is no trust and proper coordination between HR and employees. Unlimited plans are adopted in the workplace with high levels of trust, mostly small startups with a few numbers of employees. Technology companies have also popularized unlimited plan because it fits their flexible work models. With the way things are at King Company, an unlimited plan will not work because employees do not trust management. Unlimited plan will give employees the autonomy and improve morale, but it will not work because employees and managers will not be on the same page.
In conclusion, time off (paid and unpaid) is a vital HR issue. Paid leave is a valuable recruiting and talent retaining tool, and if King Company does not adjust its leave policy, it will lose valuable employees. Companies should not rely on traditional and rigid approaches to time off; they should offer flexible plans that meet employee needs.
References
Adema, W., Clarke, C., & Frey, V. (2016). Paid parental leave and other supports for parents with young children: The United States in international comparison. International Social Security Review , 69 (2), 29-51.
Amato, N. (2017). The business reasons to take a vacation. Journal of Accountancy , 223 (6), 20.
CBS. (2015, Jun 20). Work vs. vacation: from unlimited time to no time off. [Video File]. Retrieved from: https://www.youtube.com/watch?v=RV4hPjmZVyA
Fakih, A. (2014). Vacation leave, work hours, and wages: New evidence from linked employer– employee data. Labour , 28 (4), 376-398.
Rau, H. & Williams, J. (2017). A Winning Parental Leave Policy Can Be Surprisingly Simple. Harvard Business Review. Retrieved from: https://hbr.org/2017/07/a-winning-parental- leave-policy-can-be-surprisingly-simple
