Tuesday, January 5, 2010

Changing to a new (really cool) vacation policy

We've made a terrific change this year to our vacation policy - which is basically not to have one. As of January 1 our employees can take as much vacation as they need provided they are getting their work done. The idea of doing this for all employees was pioneered by Netflix and we've decided to follow their excellent lead for our US team.

This change is one more thing we're doing to build a great culture. We have a very intense culture today. People work hard, they work long hours inside and outside "normal business hours", from home, from airplanes, and we don't clock or watch the hours they work. So if we don't clock the hours they are here, why should we clock the hours they are not? Why should we be tracking paperwork and forms when an employee takes the day off but we don't do the same for when they work over a weekend.

It is much more trusting and respectful to simply say:

Work the hours you need to to get the job done,

Take the time off you need to take care of yourself and your family and

Talk to your manager about the time you need and how to fit it in with your work.

After all - if we entrust an employee with critical algorithm design, or with talking to customers - why wouldn't we trust them to manage their own time? And one of our five values is "Take ownership for the company's success" so people managing their own time is really consistent with that - I trust them to do what's right.

This is a very popular move as you can imagine and one I am really pleased to be able to do. I asked Ana to give me a Letterman list - the Top Ten reasons this is a great move for our team - here is her list:

1. Each employee gets to make their own decision about when it makes sense to take time off
2. Each employee gets to decide how much time off they need
3. It rewards folks for working smarter, not longer
4. It places trust in our employees - trust gains trust back
5. It differentiates us from our competition - especially when hiring
6. Vacation is good for physical and mental health - so this supports good health
7. It reduces administrative paperwork - always a good thing!
8. It's one less policy we have to document and explain
9. No more accrued vacation liability on our balance sheet
10. It's just very cool to say, “at FirstRain we take as much time as we need, as long as your work is done”

p.s. This last Christmas we shut down between Christmas and New Year to encourage people to take vacation and take a break. It was so popular - both restorative and productive - we're doing it again at the end of 2010 even within this new policy to encourage the break.

p.p.s. The basic idea of not clocking vacation has been around for "executives" for years but for financial reasons - if you store up vacation then the company has to accrue the financial obligation of paying for that vacation on the balance sheet and so, since executives typically cost more, companies often did not accrue or track vacation for VPs and above so they could reduce the accrued liability.


Barbara Ruth Saunders said...

Something interesting - and ironic - about this. While conventional wisdom might say that people "goof off" because they are lazy, companies that allow this kind of time freedom may actually have an advantage in attracting people who are just the opposite: busy, efficient, high-achieving, "smart-not-hard" workers who don't mind being judged on their performance.

dining room table said...

This is just a great post and it is really interesting. I am going to share this post to all my friends and I am sure they will love it.

Christoffer said...

Hi Penny. Very interesting article. Just a heads up: The Netflix link is dead.

cfiguy said...

Sigh. Wonderful that there are companies that "get it." Amazingly bizarre that this concept is seemingly so radical. I've been talking about this since 1991. I'm sure others have been talking about it for far longer. You can find the idea in Ricardo Semler's book "The Seven Day Weekend." Business, however, is too often full of conventional, paranoid, play-it-by-the-book people who freak out at the idea of giving people this much choice and freedom.

Some day, we'll *all* evolve. Can't wait.

Anonymous said...

A friend of mine told me that her company founded with this policy. If you want to attract and retain, this is it.

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