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Latest work perk: unlimited vacations

July 19, 2012 at 7:35 AM ET

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More companies are experimenting with unlimited vacation policies. But is it really all a day at the beach?

Sanket Naik took a six-week trip last year to Thailand and India to see his family, but he didn’t worry about using up all his alloted vacation time.

Naik, senior director of cloud operations at Coupa, a tech startup, doesn’t have to accrue days off, and he didn’t negotiate a plum deal with his employer. The company just gives him and its staff of 100 all the vacation days they want.

“There’s the flexibility to travel or fulfill personal commitments without violating HR policies. We don’t have to count anymore,” he said about Coupa’s vacation policy, which was implemented in January.

Welcome to the world of unlimited vacation days. Coupa is one of a handful of companies, including TheLadders and Netflix, that have decided to offer the perk to employees. 

“This is an unusual benefit and not in the mainstream yet, but more companies seem to be looking at this as an option,” said Steven Miranda, managing director for the Center for Advanced Human Resource Studies at Cornell University ILR School.

"It's not a gimmick," said workplace change management consultant Matthew Stegmeier.

“Organizations that have had success with unlimited vacation, such as Netflix and Red Frog Events, rely strongly on accountability,” he said. “Employees must make sure all their responsibilities are covered prior to leaving, which often means counting on a colleague to pick up the slack. As such, excessive vacation usage will be frowned upon as it grates on colleagues.”

Indeed, unlimited vacation doesn’t mean you can spend your life at the beach. Most employers who offer the option still require workers to get permission for the time off from their managers. And many workers who are offered the benefit end up working during those so-called vacation stints.

During his long vacation in Asia, Naik estimates he worked remotely for Coupa for about two to three weeks, using online tools such as Skype and mobile broadband to get his work done.

When asked whether the mixing of work and leisure time takes away from the goal of a vacation, which is to recharge, Naik said, “That’s the reality. Even if you did not have unlimited vacation, you still have to deal with managing your personal time with work time -- a challenge anyone that works in a modern work environment  needs to deal with.”

For Mark Verbeck, Coupa’s chief finance officer, the unlimited vacation policy was about freedom. “We want to empower our people to make the right decisions and be responsible without bogging us down with many pages of policies and rules.”

As for the potential to abuse the system, he said, “If you’re making sure people are getting the job done, then this policy can’t be abused.”

However, Cornell's Miranda said some employees may not take the time off they deserve.

Because there are no specified vacation days, some employees may not take time off, especially if they are worried about their job performance. "If the company has a culture where it's working people to the bone they’ve not eliminated an aspect of forcing people to take time off," he said.

TheLadders, with 200 employees, has had the unlimited vacation-time benefit for three years. The longest period of time anyone has taken off consecutively since it's been offered is about five weeks, said Angela Romano Kuo, vice president of human resources for the company.

“Our salaried employees aren’t given a bank of vacation days; they take what they need,” she said. “If there’s a long weekend or a longer vacation that they want to take, they simply need to get their manager’s approval for the specific time off. Managers will ask the requesting employee for a plan of what will happen to his or her work during the absence, and if they’re confident that the workload will be covered, the request is approved, which it almost always is.”

In the end, she said, “Our employees are responsible for the quality of their work, responsible for the hours they work, so they should also be responsible for the amount of vacation time they use.” 

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