The question is popping up all over – Should my company be moving to an unlimited vacation policy?

Netflix has famously “not” had a vacation policy for years. In an April 2012 article in Bloomberg Businessweek, Netflix CEO Reed Hastings claimed, “We focus on what people get done, not on how many days they worked.”

A few months prior, Inc. magazine was talking about it too. Joe Reynolds, head of Red Frog, a $45 million event production business, lauded the approach: “We’ve seen our unlimited vacation day policy have tremendous results for our employees’ personal development and for productivity.”

Same goes for the New York Times this spring which quoted Phil Libin, chief executive of Evernote on his company’s unlimited vacation policy: “If you want to take time off, talk to your team, but we’re still measuring you on the same thing, which is, did you accomplish something great?”

Even traditional companies like IBM have “sent their vacation policies packing.” But employees shouldn’t get too excited just yet.  According to a World at Work study, approximately one percent of employers offered unlimited paid vacation in 2010. But now that combined PTO policies are commonplace, many in the HR field believe this is the next logical step.

Surprisingly, perhaps, the idea has resistors on both sides of the time clock. For some overworked employees who already struggle to take the allotted vacation time they have, the fear is that “unlimited” vacation turns into “no” vacation.

For the policy to be successful, employers may need to set expectations about the minimum use of vacation as well as the max. Here are the top pros and cons of an unlimited vacation program:

Pros

• Employees are more likely to take time off when they are sick versus coming to work ill.
• Employers don’t accrue any leave on the books.
• Employers save on admin and accounting costs associated with administering vacation time.
• Positive effects on morale.
• Increased productivity.

Cons

• Term is a misnomer because employees aren’t able to take as much time off as they would like (usually due to workload issues).
• Employees say they feel the pressure to always be “on,” even while on vacation (blurred boundaries).
• Huge financial hit to make the switch and hard to change back if it doesn’t work.
• Potential perceptions of inequity by coworkers.

In reality, many organization simply haven’t done enough work around building a culture of trust for this kind of program to work

Weigh In
Does unlimited vacation have a chance of catching on? And what do you think about minimum vacation expectations?