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.