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Why this CEO gives his employees $2,000 a year to go on vacation

SteelHouse CEO Mark Douglas believes happy employees make productive and loyal employees — that's why he pays for their vacations.
/ Source: TODAY

The CEO of a marketing and advertising company is not only allowing his employees unlimited vacation, he's giving them $2,000 to spend on it.

Mark Douglas, the CEO of SteelHouse, does it for a simple reason. He has found that happy employees make productive and loyal employees.

"I actually want you to go somewhere and enjoy yourself,'' Douglas told Business Insider.

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"It's one thing to say, 'You have three weeks vacation,' like most companies do," he continued. "It's another thing to say, 'You have cash, and if you don't go on vacation and spend this money, the money literally goes to waste.' It's another level of saying this is real."

The California-based company gives employees $2,000 to travel, either reimbursing them immediately or allowing them to pay for airfares and hotels with a company credit card. Employees can use the money for one big trip or stretch it across multiple vacations.

In the last three years, only three out of 250 employees have left for work-related reasons, with another three leaving for non-work-related reasons, Douglas told Business Insider.

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Employees were allowed unlimited vacation when the business was created in 2010, but Douglas noticed they weren't using it for fear of consequences with peers and bosses. That's why he then added the incentive of $2,000 toward vacation.

"If you have a caged lion that was born in captivity, and then you open the cage, they back up more into the cage,'' he said. "They don't start running free."

SteelHouse is not alone in offering employees "paid paid vacation," as the company BambooHR has termed it. The Utah-based business also began offering employees $2,000 to pay for vacations last year.

"If you were to get just a regular bonus, those go to groceries and braces and things like that,'' BambooHR co-founder Ryan Sanders told TODAY last year. "But when you have a bonus that's available only when you have a vacation then you have to go and think, 'What can we do?'''

Follow writer Scott Stump on Twitter.