I launched unlimited vacation at my company, and it’s still working

Two years ago, at an all-staff meeting at Inventium, the innovation consultancy I run, I announced that we’d be introducing unlimited paid vacation. To my knowledge, we were the first company in Australia to introduce the policy, so I’d spent the months prior researching what other organizations around the world had learned from going down the path I was about to embark on.

What I found wasn’t uniformly encouraging. Unlimited vacation policies have attracted a lot of negative press. Back in 2014, Tribune Publishing abolished its unlimited vacation policy a bit over a week after announcing it, after negative reactions from staff; Kickstarter did much the same the following year, instead moving to cap leave at five weeks per year. And some companies have found that their teams actually take less time off after embracing unlimited policies. But two years after experimenting with that ourselves, I can confidently say it’s been a success. The amount of leave taken by staff has gone from 19 days per year to an average of 27 days per year. At the same time, sick leave has almost halved, now sitting at around 1.4 days per employee. And while our overall headcount has remained stable at roughly 15 team members over the past two years, retention has significantly improved.

There are several lessons I learned from making unlimited vacation work, but these are the top three.

It has to feel safe to take off

From what I could tell by reading other companies’ accounts of how unlimited vacation had played out, employees simply didn’t know how much time would be acceptable to take off. In most cases, leave was unlimited but also untracked, so people felt in the dark about what was “normal” and what might be seen as abusing the policy. To play it safe, people often ended up taking less time off overall.

Looking back, a crucial decision I made was to keep our standard annual allotment of 20 days (or four weeks) in place, then add “unlimited leave” on top of that minimum. This helped make it feel safe for staff to keep taking those four weeks off at the very least. Indeed, other organizations have set mandatory minimums, requiring team members to take a certain amount of paid time off (PTO) each year. At Inventium, though, I wanted to set a floor while also removing the ceiling.

Taking more than the minimum amount of vacation time needs to be modeled from the top. Had I, as the organization’s leader, taken only the bare minimum vacation time, others may have hesitated to take more themselves. So in the policy’s early days, when someone took an additional few days off after a few hectic weeks, I’d talk about that publicly in all-staff meetings and reinforce what a great thing it was that this person was maintaining a good work-life balance.

But it wasn’t just about me modeling it and talking about it. I noticed that other team members began to look out for each other. I started to hear stories about colleagues who’d encouraged others to take additional vacation days because they looked like they were having a stressful few weeks. And if it wasn’t for these nudges, some people told me they probably wouldn’t have taken it. The power of peers should never be underestimated in making a policy like this successful.

Create new norms

Many companies I read about didn’t track vacation time, the argument being that if working hours are untracked, why should PTO? The problem is that this can make it hard to set new norms, which I found was crucial in shifting employees’ behavior. So at Inventium, we track how much vacation time people take, and I report on this to staff.

In the last financial year, our team members took an average of 27 days of leave altogether (excluding sick leave, parental leave, public holidays, and other types of specific leave). By sharing this knowledge regularly, my goal is to establish a new habit, which then normalizes taking a greater amount of vacation time, instead of leaving employees to worry that they might be overdoing it.

Give it a name

When I launched unlimited vacation, I thought carefully about whether we needed a few rules to govern how it was to be used. But laying out a set of instructions seemed like a patronizing thing to do, especially since one of the goals behind the policy was to treat people like adults and empower them to make decisions for themselves.

So instead of instructions, I launched it with a clear intent, which was to use the additional PTO to achieve more work-life balance. We called it, accordingly, “rebalance leave.” I made it clear that the policy wasn’t to replace other kinds of leave like parental leave, sick leave, caregiving leave, and so on.

Unlimited vacation policies have been around for a while, and many companies have found the practice doesn’t work for them. But in my experience, there are definitely a few ways to make it more likely to succeed, and I’m glad we’ve found them.

Amantha Imber, PhD, is the founder of Inventium, an Australia-based innovation consultancy.