Unlimited vacation policies are--at least in theory--extremely popular and a very hot topic among employers and employees... but how does a small business actually go about implementing a policy where employees can take as much time off as they like?

As Hamlet would say, "Aye, there's the rub."

To answer that question, I asked people who have done it. I talked to Slade Sundar, the COO of Forte Interactive, a software company that provides web solutions for non-profit and endurance event customers, about how they created and implemented their unlimited vacation policy.

Here's Slade:

At Forte Interactive we have a strong results-driven culture, and our vacation policy reflects that. Still, that policy requires a great deal of trust, responsibility, accountability and communication. In fact the success of our policy was dependent upon the ability of our employees to strongly own our company's values of partnership and empowerment.

Here's the thinking behind our Unlimited Time Off policy:

  • The ultimate goal of everything we do is to provide a win/win situation for employees and Forte Interactive, one that will result in the growth of our company. Our success is based on our ability to innovate quicker and produce better results in less time.
  • We want our employees have more control and autonomy over their time off, and we don't want them to wait until they are burned out to "use up" their vacation if only because it will soon expire.
  • One of the best ways to achieve those goals is unlimited time off. In this environment, our employees are motivated and rewarded to find ways that they can take more time off (i.e. get more done in less time at work) by streamlining and automating processes and cross-training others in their role.

Of course we did need to set up a few ground rules, because of course at first people thought "unlimited" meant "wild." So we clarified the philosophy of unlimited time off as follows:

Unlimited doesn't mean undisciplined. Our policy doesn't allow for employees to ignore responsibilities or company goals. When we say that we have an unlimited PTO policy, we mean that we aren't going to limit the number of PTO hours in total that an employee can take when they are meeting or exceeding goals.

Unlimited doesn't mean unplanned. This policy doesn't allow employees to simply "not show up" without first contacting their manager and team. Managers will still have to approve time off and the process for requesting time off is unchanged. The success of this policy comes from the communication that takes place between employees, team members and their managers.

This approach directly conflicts with the popular book Why Work Sucks and How to Fix It that says all meetings are optional; that doesn't work for us, but we found a way to have meetings and still have time off. Imagine that!

Unlimited doesn't mean untracked. We still track when employees take or do not take time off. For us, there are two kinds of offenders to this policy: those who take too much time so that it affects their work (measured only by a decrease in work output) and those who don't take enough time off (measured by the number of days per year and cross-referenced by work output and stress level).

We want to make sure that all employees are taking the time needed to renew and recharge for the road ahead.

A key part of the process was to ensure our employees understood the philosophy of partnership for both our clients and our coworkers. So:

We instructed our employees to plan ahead for projects or goals that may be impacted by taking time off: keep your coworkers and managers informed, let your colleagues know at least two weeks ahead of time when you'll be on vacation, and report in on days you need to be out unexpectedly.

The philosophy is to never leave your coworkers or our clients hanging. The old way of vacations, because it was seen as the "amount of days off that I have to use before they expire" was taken with an overwhelming sentiment of entitlement, and many things fell through the cracks when a team member went off on vacation for a week.

We told everyone to make every possible effort to be available when needed. Customer calls, staff meetings and other time sensitive responsibilities must be covered regardless of your personal work schedule. If an employee plans time off, he or she needs to coordinate with coworkers for coverage of any responsibilities during that time off.

And lastly, we expect our employees to be productive, innovative and respectful. We consider them the best at what they do. We always expect top-tier performance, and this policy is in place to ensure our company operates at peak effectiveness.

The biggest challenge came with re-training the managers to think a little differently about their people. People have a finite amount of energy, which means our "resources" can burn out. So manages had to stay aware of the state of their staff and "force" people to take time off if they weren't taking care of themselves.

This was the hardest thing to do--we actually had to force people to go home because they were workaholics!

When I rolled out this policy I somewhat expected people to abuse the system, but it turned out the opposite was true. People didn't want to take time off... and we had to force them to take time off.

In the first year I actually had to set goals for our customer service team to exceed 3 weeks of vacation since they were the group that was so entrenched in the 9-to-5 culture of the past.

The interesting thing is that due to that goal, and their yearly goals for customer service, they ended up improving our customer service processes and our new employee on-boarding and cross-training went from a 3-month process to being successful in 1 month.