Talent Daily Debates: Is Vacation Still a Reward if It’s Mandatory?

Talent Daily Debates: Is Vacation Still a Reward if It’s Mandatory?

Concerns about employee wellness, the financial liabilities of unused time off, and a desire to keep up with the competition have leaders rethinking how they approach paid time off (PTO). Mandatory time off is one radical policy change executives are considering in response.

Take the case of Bart Lorang, CEO of software company FullContact. Fortune has profiled how Lorang requires staff to take 15 or more days off every year. As a warning against working on vacation, he’s put up a photo of himself on a camel in Egypt looking at his smartphone instead of the pyramids.

That story sparked a debate here at Talent Daily on the merits of mandatory PTO, and we wanted to share that debate with you…

Matt Dudek
Research Director at CEB, advocate of mandatory PTO

Recent rewards research from our colleagues shows you have to listen to your employees, not the market, to build the right rewards package. Listen to your top performers who are working all the time and they’ll likely say how very few of them ever take most or even some of their paid time off. Requiring employees to take paid time off is a logical response and one of the few tools leaders have to ensure their best talent can rest, recharge, and be more productive. No other option can do that.

For example, offering unlimited vacation may make employees more exhausted. In economics, moving to an infinite supply of a good or service drives down its price. So under an unlimited PTO policy, top talent may never take vacation since days off are so “cheap.” They’ll say “I can always take tomorrow off,” and then tomorrow never comes…

Solutions focused on increasing supply of PTO alone won’t work. We have to change the demand side and get employees consuming PTO. Putting a minimum “floor” on PTO consumption is a smart place to start. Enforcement is easier, more practical, and beneficial than other “no workaholics” policies like no email after 5:00pm. It may have an unintended upside too. Imagine if your boss’s year-end performance review were influenced by whether her direct reports took all of their vacation (and if she lost points if they didn’t). She’d have to reconfigure projects to make time off possible.

Adam Brinegar
Research Leader at CEB, skeptical of anything “mandatory”

Sorry, Matt, but mandating employees take vacation is simply a desperate way to cover up for a poorly managed workforce and can actually make things worse.

This is a “Hail Mary” for when organizations have a bunch of managers who are incapable of properly managing work and inexcusably do not encourage and plan for employees taking vacation. Yes, smartphones encourage workaholic behavior, but managers should be able to role model sensible limits on overwork without resorting to mandates. If your managers are simply unable to fulfill their part of the employment contract (letting their employees take time off, stress free, if they want it) and hit their goals, your problem is bad management. I prefer to go to the root of the problem, not create “band-aid” mandates.

I suspect most companies that try something like this are hoping for an easy PR victory – especially tech companies, which are notorious for their brutal work hours. It sends out a signal to the market, saying “Hey, we are serious about vacation time.” But you can send these signals in a lot of other ways: For example, Facebook CEO Mark Zuckerberg’s decision to take two months’ paternity leave signaled to his workforce that this was acceptable, a point the company hammered home a week later by expanding its paternity leave policy worldwide. (By comparison, Yahoo! CEO Marissa Mayer was criticized for sending the opposite message when she cut short her maternity leave after giving birth to twins).

By the way, I’m not sure about this whole camel picture. Is there really anything wrong with looking at a smartphone when you are on a camel? Camels are slow and boring. Maybe you are just Wikipedia-ing “camel” or “desert.” I take my smartphone on vacation. It enhances the experience. I don’t want my organization telling me not to.

Matt:

Oh, Adam… I do like your “bad bosses” angle on this, but that’s a key point in favor of mandatory time off! Not only does your boss have to let you take time off, mandated PTO could be a trigger mechanism to force managers to change their management behaviors, full stop. You yourself found from our research on enterprise leadership that changing mindsets is key to sustaining behavioral change and doing this is most effective through “self-discovery” exercises. Mandated PTO could be one such exercise. In adjusting to mandatory PTO for their team, managers would realize on their own that they have to do more forward planning and be more thoughtful when assigning work to get everything done while accounting for everyone’s PTO. That benefits everyone and is a “stickier” strategy than a mandatory training course on project management.

I do see your point on not being forced to do anything by your organization. Let’s take this one step further. Our research has found that only 26 percent of employees say their rewards package is personally relevant to them. Why then are companies trying to find a one-size-fits-all policy for PTO? We pay people differently for different jobs; why not have different PTO policies for different jobs? I can see mandated PTO as an important tool to attract and manage salaried workers in demanding jobs.

Adam:

That’s closer to my wavelength, but I think it gets too complicated. Ultimately, there is a work-leisure tradeoff that employees have to make, and some people are going to choose differently. Some of this is job related (some jobs in a field pay better but require less time off), but it can also vary on an individual basis. I would never want to tell a salesperson who is nearing her goal two days before close that she has to take time off because it’s mandated as part of her employment package. That person should just be able to choose not to take all of her PTO that year given the monetary or career benefits that arise. I think having a sensible number of PTO days at the company, and then having managers who are able to work with employees so that they ultimately get what they want is the best option. The key is enhancing manager judgment.

CEB members: check out our research on inside-out rewards here, and on enterprise leadership here.