US firms test ‘unlimited vacation’

WASHINGTON—Unlimited vacation policies, which have so far been adopted by only a handful of US businesses, have been embraced by both workers and their employers, who say the flexibility increases profitability.

At Ryan, a tax services firm of 1,600 employees, the majority of workers have not formally declared their hours since 2008, and no one keeps track of time off.

It’s an exception to the norm in the United States, where most people work 40 hours a week and paid leave is not regulated by law.

On average, Americans receive two weeks of paid vacation per year, according to a study from the nonprofit, nonpartisan Center for Economic and Policy Research.

Steve Thompson—a director at Ryan’s Washington office—says he often begins his summer weekends at mid-day on Fridays to avoid traffic on his way to the beach.

The 32-year-old and the two people on his team generally are physically in the office from 10 a.m. to 4 p.m.—so-called “core hours”—but are otherwise free to organize their work weeks.

Thompson—whose job entails helping businesses reduce their property taxes, earning Ryan a percentage of the savings—says he sometimes leaves at lunchtime to do errands or work out.

“If I’m feeling particularly stressed and I don’t have a meeting, I can go to the gym, work out some of the stress and then come back to work,” he told Agence France-Presse (AFP).

He estimated that in practice, his two team members still limited their “real” vacation to two consecutive weeks last year.

3-day weekends

But the real added value of the policy for employees is that they can easily take three-day weekends or the occasional day off, as long as they get their work done.

Telecommuting, made easier by new technologies, is encouraged.

Ryan’s flexibility marks a turnaround for the company, previously known for its nose-to-the-grindstone work atmosphere.

“It was a pressure-filled environment,” said Delta Emerson, executive vice president and chief of staff, who helped put in place the new policy, called myRyan. It replaced Excel spreadsheets of hours worked, which had been the way employees were formerly evaluated.

Since 2008, new standards based on individual performance have governed Ryan’s employee evaluations, with 40 percent of their assessment based on financial goals and another 40 percent based on client satisfaction scores.

The multiple benefits of unlimited vacations extend to employers as well, said Sheeva Ghassemi-Vanni, a lawyer who helps companies with similar transitions, especially in Silicon Valley.

For one, businesses no longer have to devote administrative resources to keeping track of leave. And when employees leave the company, it no longer has to pay out accrued vacation time.

Kelly Sakai of the nonprofit Families and Work Institute told AFP that more and more companies—especially in the financial and technological sectors—are adopting a system under which a physical presence is not required and an employee has a certain degree of autonomy.

But she cautioned that in some companies, “people don’t really feel that they can take any of these days off because … there’s no minimum of days that you need to be taking.”

Good faith

Cliff Palefsky, an employment lawyer in San Francisco, acknowledged that unlimited vacation is “not common.”

Where it does exist, it requires both “good faith on the part of the company and the employees,” he told AFP.

As it is relatively easy to fire employees in the United States, workers are acutely aware that they must produce or face the chopping block—making potential widescale abuses of the system unlikely.

Emerson admitted that at Ryan, “the first year was definitely rocky, where you had people looking around saying, ‘This is not going to last.’”

Thompson agreed, saying he thought “people felt guilty sometimes” when they were not in the office.

However, he said he believes that when managers like himself, with more than five years invested in the company, take four weeks off as he did last summer, “that probably helps kind of change the culture.”

And according to Emerson, Ryan’s voluntary turnover rate—the rate at which employees quit—has been cut nearly in half, to a level well below industry standards.

According to Ghassemi-Vanni, “unlimited vacation is so new, there really isn’t much regulation” or case law on the books.

“It’s a little bit of the Wild West,” she said.