Would an ‘unlimited vacation’ policy tax HR departments?

An "unlimited vacation time" policy could be a good fit for some companies, depending on culture.

An "unlimited vacation time" policy could be a good fit for some companies, depending on culture.

Recent studies have made no secret of American business' unused vacation time problem. Not only does this country not require businesses to make vacation time available, it appears that many workers don't use the time they are given.

Information from Oxford Economics, in a study commissioned by the U.S. Travel Association, showed that the amount of unused hours for paid time off equals more than $52 billion every year. On average, employees have been taking fewer days off since 2000, but this could be affected by the specific policy that a company has towards vacation hours, and how many an individual is allowed to accrue.

While some workplaces feature a set number of hours per year, Susan Milligan recently wrote about a policy in SHRM that endorses the opposite: an unlimited amount of vacation time. Under this sort of plan, employees don't have a set roster of hours to keep track of but can take however much time off they need when they need it, as long as it doesn't affect overall productivity. Though she cites major companies like Netflix that have made this policy work, Milligan writes that unlimited vacation works best for offices with a trusting culture.

There are certainly some possible operational benefits to this kind of plan, since it eliminates the hassle of having to manage vacation days and sick time. On the other hand, Milligan writes that employees need to approach this policy in the right way for it to be effective, which could be more difficult for those workers already used to the standard system.

"Instead of looking at it as part of the compensation package—a perk that grows with time invested at the company—taking vacation becomes less of a 'benefit' than a necessity for remaining energized and productive," she writes.

To adopt a new system for managing important HR processes like vacation, companies may need new HRIS software systems that are suited to these functions. HR consultants can bring their knowledge to each project and address the goals a company hopes to reach with its implementation.