Holiday policies are only as good as your company culture
What’s happening? Goldman Sachs will reportedly introduce unlimited paid holidays for senior bankers under a “flexible vacation” scheme, echoing policies implemented by employers in the tech sector. Taking effect from 1 May 2022, employees at all levels will be required to take at least 15 days’ leave each year. The firm seeks to ease the strain of long working hours following complaints from some staff. (The Times)
Why does this matter? While unlimited holidays may sound like a dream, in reality allowing employees to decide how much time they spend away from their desks – without support for high workloads or guidance about company expectations – can cause more stress than it cures. While burnout is a serious issue, solutions to improve employees work-life balance won’t come from a completely “hands-off” approach.
One key incentive? Alongside benefits to workers, reducing levels of burnout is also valuable from an economic perspective. In a study conducted by Stanford University researchers, it was shown that stress in the workplace costs the US economy roughly $190bn each year.
Some context – Goldman’s decision to adopt new holiday policies for workers comes after junior employees made headlines last year criticising long hours and poor support for their overall wellbeing during the pandemic. Following the media coverage, many other financial firms have entered into discussions about employee wellbeing, with HSBC announcing pay rises to improve retention, Barclays reforming internal work policies and FinnCap choosing to adopt unlimited holidays as well.
Introducing unlimited holiday policies was a tactic first embraced by the tech sector, with IBM, LinkedIn, Netflix and Glassdoor all adopting such policies from 2010 to 2016. These policies typically operate with an understanding that employees schedule their time effectively and take holidays as a means of looking after their health and maintaining a good work-life balance. The amount of work employees receive does not change, however, and staff are still expected to meet deadlines and keep their managers informed of their progress in relation to their holiday plans.
Can it work? Some companies, for example US-based Evernote, have gone beyond flexibility to incentivise employees to take holiday. Alongside flexible vacation, the company also issues a $1,000 budget to employees for holiday travel. The firm is scored highest on work-life balance and is highly rated on compensation on benefits through workplace ratings aggregator Glassdoor.
But, despite the success tech firms have reported with unlimited holiday policies, the financial sector may struggle to adjust company cultures to allow employees to derive value from their implementation.
Studies have found that, when unlimited holiday policies are implemented, staff actually end up taking less leave. The Chartered Institute of Personnel and Development has stated that, while such policies are good in theory, a company’s culture has to be such that employees feel safe taking the leave on offer. In many cases, policies can lead to expectations that employees work extremely long hours to compensate for time away.
For example – Tech company CharlieHR adopted an unlimited holiday policy in 2015 but scrapped it in 2018, stating it resulted in staff taking less leave than normal. Employees were not being incentivised by an allowance to use up; differences in holiday use often left staff that took less holiday having to cover more work for those that took more holiday; and workers were anxious about taking too much holiday and being perceived as not working hard enough.
Rather than “unlimited” holidays where workers are left alone to navigate the concerns highlighted above, some companies are implementing pop-up wellness days that force all employees to take a paid break. There is also increasing attention on companies successfully adopting four-day working weeks.