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2015-06-16 06:03:21
David Burkus
June 15, 2015
When Netflix s founder Reed Hastings published the company s Reference Guide on our Freedom and Responsibility Culture on SlideShare it made an unexpectedly huge impact. The slide deck itself was viewed over 11 million times, and newspapers around the globe picked it up. Facebook COO Sheryl Sandberg called the deck the most important document ever to come out of Silicon Valley.
Out of the 128 slides in the document, the one most people remember was about unlimited vacation. Or more specifically, a no vacation policy policy. Netflix s leaders had decided to stop tracking how many vacation days its employees were taking. The rationale, according to the slide deck, was: We realized we should focus on what people get done, not on how many days they worked. Just as we don t have a 9am-5pm workday policy, we don t need a vacation policy. Instead, employees take as much or as few vacation days as they feel they need.
The reaction since has been mixed. Some companies, such as Richard Branson s Virgin, reacted by adopting similar policies. A few of these implementations failed spectacularly and publicly. Skeptics have argued that employees with unlimited vacation actually feel pressured to work more, work during their vacations, and take fewer days off altogether.
For the most part, whether or not these fears become reality is a matter of culture and whether or not your culture has one crucial element: trust.
Leaders who successfully implement unlimited vacation policies operate in companies that are already high in trust. But there s some evidence to suggest that showing trust in others actually helps them trust you more researchers who study game theory consistently find that when one person shows faith in another, the second person s faith in others also rises. They re also more likely to pay that trust forward, by trusting third parties who weren t involved in the additional transaction. So there s some theoretical evidence that implementing such a policy not only takes advantage of existing trust, but builds additional trust.
That s exactly what Netflix experienced. Shortly after the unlimited vacation experiment, Netflix leaders shortened the travel and expenses policy considerably. Instead of dictating when and how money should be spent and reimbursed, they wrote five simple words: Act in Netflix s best interest. Just as with the vacation policy, the response to this act of trust was responsible behavior by employees (and actually a cost savings since employees didn t need to go through a costly travel agency any more.)
Switching from a traditional vacation policy to unlimited vacation can be tricky. It s always difficult to be the one extending trust, hoping employees will believe your act to be sincere and reciprocate. In many cases, organizations that make the switch successfully also make sure that managers get excited when employees take their days off. In addition, many managers and senior leaders get very public about taking time off and taking it in long stretches. That way the message is clear that taking vacation won t hurt your performance review or career prospective. Some companies, at least initially, went so far as to bribe employees to take their vacation: for example, software company Evernote pays employees a $1,000 bonus if they take a week or more vacation. Marketing company HubSpot lets salespeople reduce their monthly quota twice a year to coincide with their vacation time.
On an individual level, the benefits of unlimited vacation can get even better if the culture of trust extends laterally as well. Windsor Regional Hospital, which switched to unlimited vacation a few years ago, found that in addition to coming back to work well-rested, employees began working better together too. Before the switch, a co-worker taking time off was seen purely negative, a hole that other employees were obliged to fill. Now, keeping the hospital running is seen as a team effort, and that teamwork has spilled over beyond just setting schedules. Employees know they can trust their coworkers to cover for them when they take time away. So, when they re back on the job, they know they can trust each other just as much.
These are just a few of the ways that show that unlimited vacation isn t about how much or how little time off your employees take. Instead, it s a means to gauge whether or not employees trust leadership, which starts with leaders trusting employees. If you re a senior executive trying to decide whether such a policy is right for your company, know that if your organization hasn t built a culture where leaders trust followers and followers trust leaders, then unlimited vacation probably won t work.
But, you probably have bigger issues to tackle first anyway.
David Burkus is the author of The Myths of Creativity: The Truth About How Innovative Companies and People Generate Great Ideas. He is also founder of LDRLB and assistant professor of management at Oral Roberts University.