All about deceptively generous vacation policies

Published August 8, 2016   Posted in Having some fun

At my company, employees can take as much vacation as they want. It’s virtually limitless, within reason. Vacation time isn’t “accrued”. You take it when you need it, as much as you want.

At first blush, this seems pretty damn sweet. As much vacation as you want? Score!

Vacation at the beach!

Here is the rub: My company also tracks your utilization time, which is time spent directly in support of a billable contract to a client. The greater your utilization, the larger your quarterly bonus.

Bonuses at my company easily amount to 20% or more of your salary in a given year.

Pinterest: Vacation policies are deceptively generousThe company also provides additional bonuses for those with an especially high utilization rate, effectively requiring no vacation time during the quarter – or working unpaid overtime to make up for hours spent away from the office…enjoying life.

Not only that, but each employee is given the opportunity to do even more work on internal company projects, known as “Management By Objectives”, or MBOs. These hours further expand the lucrative bonus potential. The opportunity to make crazy money is seeded deep within each of us. It consumes our work and influences our decisions whether we realize it or not.

Yo dude, did you get your high utilization bonus this quarter?

Yeah, and I probably need to take the wife out to dinner to make up for ignoring her over the past couple months.

Sweet, I got mine, too. Damn, money at this place is off the hook!

To the untrained eye, this is a pretty sweet deal. Unlimited vacation and huge bonuses. What’s not to like?

When vacation is unlimited, we take less of it!

There is plenty not to like about the way my company runs their vacation policy – for example, the way our human nature is exploited to maximize billable hours.

When vacation hours are limited and tracked – like they are at other companies – employees are encouraged to take time off to avoid losing that vacation time. “Use ’em or lose ’em”. But when they’re not and money is on the line, we feel compelled to work. Work a lot.

With another employer where vacations were limited, I remember working with a guy who had a couple weeks of unused vacation left during the holiday season and, refusing to let those hours go to waste, decided to take a two-week “staycation”, using that time to catch up on much-needed sleep and spend more time with his family. It was time well spent.

Further, some companies allow a certain number of unused vacation hours from the previous year to transfer over to the next. Also, if an employee leaves the company, any remaining vacation hours are paid out to the now ex-employee. A bonus for moving on!

In the end, what seems like a more stringent vacation policy works out in the employee’s favor. When vacation hours are virtually unlimited, we take less of them. When vacations are limited, we naturally want to get the most out of those hours and avoid letting them go to waste.

It’s a clever ploy, and it works.

The incentive to keep working

When companies like mine provide “unlimited” vacation hours, incentives keep the staff working. At my company, that incentive is money – and lots of it. Just piles of cash.

A 20% yearly bonus spread out quarterly demands attention. It keeps many of my co-workers slaving away at the office for many hours, focused entirely on sacrificing freedom for the sake of the almighty greenback. We work instead of relax. Rather than spend time with our families, we travel for business.

Most of us can work from anywhere. Company-issued laptops are the norm, and the expectation that we work from our homes is always there. In fact, my company “encourages” staff to check their email periodically while on vacation, “just in case”.

Perhaps my company doesn’t understand what “vacation” actually is. They do, however, keenly understand the psychology of man.

And based on our vacation policy, they successfully encourage their staff to ignore the need for rest and relaxation in exchange for money…money that can be used to buy stuff like big cars, large homes, televisions and cell phones, requiring us to keep that source of income in place, endlessly working in a wicked cycle of freedom-killing decay.

How important is your vacation to you?” they implicitly ask with a policy like this. “You can take as much time off as you want, but if you work until you literally can’t move, there’s money in it for you.

Finally, I am taking vacations

Over the past 12 years working in corporate America, I rarely took a vacation. Instead, I worked. At companies that would buy back unused PTO every year, I’d pocket the monetary equivalent of those hours. An additional half paycheck!

A taste of freedom has changed that for me. My current employer has one of the most relaxed vacation policies that I’ve ever seen, but I’m taking more vacay than ever. I won’t get my high utilization bonus for the remainder of the year, but I honestly don’t care.

I’ve come to realize that the money just isn’t worth it. My health and happiness come before bonuses, high salaries and cleverly deceptive PTO policies at work.

How generous is your company with PTO time? Are your vacay hours limited?

We track our net worth using Personal Capital



Comments

34 responses to “All about deceptively generous vacation policies”

  1. I’ve worked under both models, and my anecdotal evidence is unquestionably that people took far more days off when they had a limited pool. At my most recent company, our whole leadership group had theoretically “unlimited” PTO — yet I worked with folks who hadn’t taken a day away from the office in well over a year.

    From the employer’s perspective, “unlimited” vacation is brilliant: You offer it mostly to your professional workaholic types, who tend to always be on the clock and checking e-mails anyway. You incur zero financial liability for PTO that might have to be paid out when someone quits. People take far fewer days off. AND you get to advertise the whole thing as a great benefit to your employees. What devious genius came up with this idea?

    When I worked under the limited PTO model, I didn’t end up taking all my vacation days, but I did at least cash out several thousand dollars of extra money when I quit — a nice delayed reward for fewer days on the beach.

    • Steve says:

      You’re dead on, Matt – it’s a brilliant strategy. I’ve heard of some communities around the U.S. that are no longer putting stop signs at intersections because the *LACK* of a stop sign actually makes people pay more attention, sending the number of accidents down. It just goes to show that conventional wisdom doesn’t always make sense. Unlimited vacation probably sounds good to everyone, but if you look at the psychology behind it, it’s a clever ploy designed to get people to work longer.

  2. I can understand the rationale of your company’s policy, it makes sense. But it obviously ignores the burnout factor by incentivizing folks to work as much as they are willing and able to. So I’d ultimately be opposed to it.

    My company’s policy isn’t too extraordinary. We are given a certain amount of PTO which goes up when you reach years of service milestones. I just hit my 10th year anniversary and so got an extra five days! But I still have a heavy workload and responsibilities that nobody else but me are beholden to. So while I have a lot of PTO, it is hard to use it all. And that is the way most folks feel in the office / company. While the company strongly encourages everyone to use their PTO, the workload put on us makes it very hard to…

    • Steve says:

      That sounds very much like the vacation policy that I’m used to, especially at larger corporations. The smaller ones (like the company I work for now) tend to employ these “generous” vacation policies. But like you said, even with a limited amount of vacation, the opportunity to actually take those hours seems fleeting!

  3. Really interesting post Steve and the psychology behind it is more interesting! Being an salaried educator, calendars and pay are basically “fixed” but some work summer school and tutor (or take on other jobs throughout the summer and school year) – mainly to pay bills and buy more stuff (not save up for financial freedom in most cases). I’m glad you have made a change and take more vacay time now. I wonder how many marriages (and kids) suffer from policies like you have at work?

    • Steve says:

      Home life probably does suffer, Vicki – and that’s sad because “work” should never completely consume us. It was easy to work a lot back when I was single, but if you have a wife and kids, it can’t be easy, emotionally, to put in the same hours that you may once had when you were unattached!

  4. We’ve never worked with a company that had monetary incentives for not taking vacation. But I don’t think we would limit it for that reason anyway. We have a spreadsheet to allocate our vacation time throughout the year and really try to make the most of it by doing several trips with our kids each year. We want them to make memories, and we need a break from the norm as well.

    Very interesting about how people will take less if they have more time, and keep working longer if they have a good vacation package. These corporations know what they’re doing.

    • Steve says:

      Thanks Kalie. Yup, they know. It’s no secret I don’t think what happens when you don’t officially track PTO, but also incentivize work over vacation with money. Some people might take advantage of that policy (like I am doing!), but MOST won’t. They’ll keep working longer hours for the sake of the almighty green back! Ugh…

  5. iFreebies says:

    Excellent post and one that hit home for me. I am recovering workaholic:). In my last job we had a set number of vacation days and I had plenty of tenure working my way up to senior level management so in theory lots of PTO. While I had those set days we could not take vacation ever. It was literally a career limiting move to take a day or two off. The result.. you got paid out some vacation at the end of the year over your bank and lost a lot. When said company let me go I had many weeks of vacation paid out to me. It was terrible. For that check I felt that I lost so much of my life. I vowed never again to fall into this trap.

    My current company employs the unlimited style you mention above. Brilliant for all the reasons you state and they don’t have to pay out a dime when you leave. I however am making sure to take vacation. I don’t care the potential repercussions. Life is too short and I learned my lesson. Never again. We took the first real out of state family vacation this year and it was great. The only down side is it made me realize what I was missing out on in the past and we’ll never get those years of memories back. Money is important but only to a point and I am trying to learn the lesson of “enough”.

    • Steve says:

      Wow! Career limiting to take vacation…that sounds absolutely awful. But good on you for taking more time away from the office, now. It’s true, money is important, but it shouldn’t be our primary motivator!

  6. I’ve worked at companies like this too. Personally, I hated it. They act like they’re being generous with such a vacation policy, but in fact most people ended up taking less vacation.

    At the end of the year you know management is going to be comparing which employees took the most vacation….comparing the “best performers”.

    Ultimately, if the cash from your bonus’ is considerable, the long term value of a few extra days may mean a few *extra years* of freedom…assuming you can stop yourself from buying an expensive car or a big house.

    • Steve says:

      Yup, Mr. Tako – I’m very certain there are quotas and the managers with the best time-sold get the bigger bonuses. I guess that’s only natural in business…the maximization of revenue. But you’ve hit on the crux of the matter. How much do these bonuses help our plans for early retirement? Is it still worth the extra effort to work longer so we can pad the ol’ bank account? Tough questions sometimes.

  7. Mr. PIE says:

    With nearly 25 years of integrated service, I have a European style PTO quota. Six weeks. Unfortunately, despite being European by birth, I don’t bring my Euro game to taking time out of work nearly as much as I am allowed or should. Still, I am able to take a winter break, a summer break and holiday season break with family. I use a bunch of other days by taking a Friday afternoon now and then. Ironically, I compensate by getting into work ridiculously early at 6.00am – 6.30am on those Friday’s. Mmm….not good really.

    Yeah, the usual work pressure, snipey comments about time off – it is a horrible culture thing here that I know is very different in many countries in Europe. That is one thing that is very, very different between the US and Europe.

    Our future 52 week vacation quota will be fully embraced however. That, I have no doubt about.

    • Steve says:

      Six weeks is pretty impressive! Like you, I also tend to start work very early – I’m usually in my chair by 5:30am, but that’s only because I work from home. When I commuted into an office, that was more like 6:15 or so. Still early.

      Looking forward to that 52-week / year vacation!

  8. Apathy Ends says:

    We have a decent PTO plan at 6 years you get 5 weeks and can roll over a full years worth of PTO, after that it is use it or lose it. So if you sacrifice PTO for 1 year, you have to take vacation the next year or you lose it!

    Currently getting 4 weeks (9 more months to 5 weeks)

    I do know some people have lost PTO, but the vast majority use it.

  9. Kate says:

    The last section of your post says it all. Time is a far greater benefit than money.

    I’ve worked for my employer for 5 years now and there have been a few changes to our work environment and the vacation/PTO benefit during that time. The largest change was when they took away the extremely flexible work environment, which was built around the idea that, as long as your work is completed and meets expectations, you can work whenever from wherever (this was on top of accrued vacation time).

    I told my manager that I’d happily forgo merit increases to get that benefit back. To me, it was priceless because it gave me so much extra time in the end.

    As long as they have people who need/want the extra money, there’s no incentive for employers to change the benefits structure.

    • Steve says:

      Thanks for the comment, Kate. It’s very true, so long as money is the primary motivator for people, they will design their policies around just that…motivation! And anyone who values something other than money will need to work the best they can within “the system”.

      Retirement will make that last point much, much easier. 🙂

  10. Mr. SSC says:

    I work in a limited PTO environment, and people here use it. Even the workaholics that don’t want to take time off, just take the friday off they’d normally work anyway, which becomes 4 day work weeks all year long. I take time off and enjoy the time I have off.

    I worked with people in the past that got angry that the company was forcing them to take vacation. It was a use it or lose it, but then they changed the rules for not buying it back either. So you literally lost it for nothing if you didn’t take it.

    I’ve never worked anywhere that incentivized not using vacation. That said, I’ve also never had the problem of having too much vacation to figure out how to use it. Life’s too short to not relax and enjoy it.

  11. We get paid by the shift. If we don’t work, there’s no pay. No vacation time, no holidays, no lunch breaks, nothing. And I typically stay for an extra two hours (unpaid) to finish charting. Even if we’re sick, we don’t get paid if we don’t show up. And sometimes we can’t find anyone to cover our shifts anyway. I don’t even get benefits.

    So, I go on all the vacations I want and work enough to pay for it.

  12. I’m with you. I don’t like the “unlimited PTO” policy – I feel guilty using anything over a week or two. My current employer gives me 25 PTO days annually + 11 company paid holidays. We also have a “use it or lose it” policy and can roll over only 80 hours per year; there isn’t a buyback.

    This will be the first year out of the last five where I won’t lose days. Screw that. One of my resolutions this year was to take more time off – it’s the one resolution I’ve kept! 🙂

    Even though I’ve already used more PTO this year that I did all of last year, my mid-yearly review just came in at “exceeds expectations” and I got a 4% raise. I’m on track to come in at about 120% of my year end bonus as well. So I’m taking more time off, doing better at work, and making more money. Nice!

    But also like you, the money is secondary these days. Hugely important, yes, but not the end goal, which is my happiness. And the more time I spend away from work, the more I realize how much I enjoy being away from work. FIRE can’t come soon enough!

    • Steve says:

      Sounds like you’ve figured out the right pattern to completely maximize your work life, Ty! Congrats on that. Funny how spending more time away from the office can boost productivity.

      FIRE can’t come soon enough…100% with you! 🙂

  13. John says:

    Since I was a freelancer for many years, I only took one full week of vacation in 16 years! Dumb. I did take a lot of time off here-and-there (long weekends, days off during the week sometimes, etc.), but it would have been nice to have some more full weeks to unwind.

    Great post!

  14. Ha ha ha. My mom always sends me articles about all these companies with “unlimited vacation” that we should go work for. Since I know the research, I say, “no thanks, we’ll take Mr. T’s 6 weeks with no strings attached!’ Thankyouverymuch!

    • Steve says:

      Ha! That’s my attitude as well, Maggie. Unlimited vacation may have swayed me back when I first joined the workforce out of college, but definitely not now. Unlimited vacation for very limited pay…what a deal! 🙂

  15. Liz says:

    I get 5 weeks with no rollover and no pay out that I know of. I get holidays on. Top of that. To be sure, I’ve plotted out every blessed day so I don’t lose any of it. We cover for each other when we are off but work on either side of time off is crazy trying to fit people in. I work in healthcare and although I may be on vacation my patients are still there waiting for me to come back. That said, I generally love what I do so I dont mind a little extra work to make sure my people are taken care of. But I am trying to be better balanced because some of the facilities I go to don’t know boundaries and will call on your day off or after hours. I changed my voicemail to remind them to call the on call service. Everyone NEEDS a break!

    • Steve says:

      Amen to that, Liz – everyone needs a break. Regardless of the type of work that you’re in, time away is critical. Work flat out suffers when we work too many hours. And time off should be just that…OFF!

  16. […] by the way, my wife and I will be taking a vacation (yes, PTO!) to the upper altitudes of Colorado this week and spilling into next. I have articles lined up, so […]

  17. […] continue to ignore it. Some, like mine, keenly understand the psychology of man and design clever vacation policies to keep people working even longer, settled nicely within perpetual billable working slots as […]

  18. […] continue to ignore it. Some, like mine, keenly understand the psychology of man and design clever vacation policies to keep people working even longer, settled nicely within perpetual billable working slots as […]

Leave a Reply