Harvard Business Review: Employer Vacation Policies Are “Broken”

According to a recent article in the Harvard Business Review, employer vacation policies are “broken” and “don’t work.”

Analysis of Typical Employer Vacation Policies

The typical employer policy allows an employee who has accrued paid time off to submit a request for vacation.  That employee then has to “cram extra work into the week(s) before they leave” in order to extract themselves from the office, say the study’s authors.  If the employee manages to get that work done and leave, the employee leaves knowing that an even bigger pile of work awaits her upon her return.

This reality ultimately leads to absenteeism in the workplace, concludes the study’s authors, because employees never get a chance to recharge.  The end result is “payrolls dotted with sick leaves, disability leaves, and stress leaves.”

Many employers agree with these observations and attempt to resolve the problem by offering more vacation.  But is that the answer?  Probably not, concludes the Harvard Business Review study, because more than 40% of Americans have no intention of using all of their vacation time as it is.  Other employers — especially progressive companies like Adobe, Netflix, and Twitter — go even further and give their employees unlimited vacation time.  Is that the answer?  No, says the study’s authors, because the “warrior mentality” affects these workplaces.  There’s too much “social pressure” and internal competition.  So even fewer employees take vacation, and it becomes a “race to the bottom instead of a race toward as well rested and happy team.”

The Solution?  Mandatory Vacations on Set Schedules

So what is the answer, according to these researchers?  They argue that employers should establish vacation policies that required mandatory scheduled vacations.  The researchers found one company who requires employees to take 1 week off for every 7 weeks worked.  Employees don’t get a say in when they go — they just go.  And there is no paperwork, no approvals, and no guilt.  After this system was in place for 12 weeks, the employer asked employees to rate their job satisfaction and found some startling results:

Creativity increased by 33%
Happiness rose by 25%
Productivity increased by 13%

What Should California Employers Do?

This is admittedly very early research, with results that are clearly not statistically significant, but this article raises some interesting issues.  However, I see both strategic and legal problems lurking for employers who adopt a mandatory vacation policy.

On the strategic HR side, 1 week out of 7 is probably too much.  I don’t see how most employers can survive if their employees are gone — and being paid — 15% of the time.  Plus, I don’t think employees will like a system that tells them when they are going on vacation.  It may feel progressive and fun at first to have so much time off, but I can’t imagine employees and their families being happy long-term when they are forced to “vacation” without much notice.

On the legal HR side, an employer who adopts a mandatory adoption policy is likely violating California law with respect to exempt employees.  Remember that exempt employees in California are required to be paid for the entire week if they (a) work one day in a workweek, and (b) they are ready, willing, and able to work.  For these employees, if the employer then forces them out on vacation, the employer would have to pay those employees anyway.  To then require those employees to use their accrued vacation time to get that pay would almost certainly be illegal under California law.

If you want to read the full Harvard Business Review article, you can find it here.

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