Unlimited vacation policy and HR implications

As tech start-ups across the country continue to compete for the best and the brightest, South Carolina companies in Charleston Digital Corridor are offering unlimited vacation to attract tech talent.

PeopleMatter, a Charleston-based software company, offers its employees countless perks including unlimited vacation. Like a number of tech-based South Carolina companies, PeopleMatter has experienced challenges in finding talent. One method that the company has used to address the issue is providing benefits packages comparable to those at some of Silicon Valley firms, many of which include unlimited vacation.

Unlimited vacation offers employees the flexibility and freedom to take as much vacation as they would like just as long as their work is completed. Part of the trend is influenced by a human resources management strategy known as Results Only Work Environment (ROWE), where employees are compensated for their output or results rather than the number of hours they work. Many adopters of ROWE believe that offering schedule flexibility improves overall productivity of employees.

The unlimited vacation policy is not new to the world of HR as major companies like Netflix and Zynga implemented this policy several years ago and claim its success. Nonetheless, only 3 percent of employers offer unlimited vacation according to a recent study by the Society for Human Resource Management (SHRM). Another SHRM report explains, “One benefit to employers is that since employees are not able to accrue paid time off, employers are not forced to pay a lump payout for unused paid time off if an employee leaves the organization.”

Implementing an unlimited vacation policy may not be right for every employer. A Forbes article, “Could Unlimited Vacation Time Work For Your Company” examines the HR implications of this policy and the questions HR professionals should consider before moving forward:

  1. Have you hired the right kind of people?
  2. What is your company’s culture?
  3. Is it even something your employees want?

Weighing the pros and cons of implementing an unlimited vacation policy may be something to consider for students pursuing a bachelor’s degree in human resource management. As South Carolina regions strive to attract tech talent, offering unlimited vacation may have a serious bearing on recruitment success. To help students prepare for these and similar challenges, Limestone College offers HR 303  – Compensation and Benefits, a course that examines total compensation methodology of today’s organizations utilizing both tangible and intangible forms of compensation.