To most employers, the prospect of offering unlimited vacation time to workers is more of a joke than something they would actually consider. After all, it couldn't possibly end well...could it?

A recent announcement from Kronos about the company doing just that has made many employers more seriously examine the benefits of unrolling such a flexible policy.

Here's a look at the possible pros and cons of unlimited vacation, based on what the research says.

Pro: It increases employee happiness.

One of the main reasons companies like Kronos and Netflix decide to implement such flexible benefits is to improve workplace culture and boost employee morale. After all, it's becoming more important for employees to achieve equilibrium in the different aspects of their lives.

The 2017 State of the American Workplace Report from Gallup showed that 53 percent of employees say it's "very important" to have a job that allows them greater work-life balance and personal well-being. Unlimited vacation time could help achieve both of these, by offering what is still a somewhat unique opportunity in the business landscape.

Con: You have to really trust your employees.

Depending on your staff, this might not be a substantial concern. In some workplaces, however, trust runs thin. Edelman Trust data showed that almost one in three employees don't trust company leaders - a divide that deserves attention when considering vacation policies.

Building trust between you and your staff should be a top priority. It can result in numerous benefits, from happier employees, better output, stronger company reputation, and reduced turnover rates.

Pro: You can attract and retain top talent.

In a business sphere that's growing more competitive by the minute, it can help companies to offer unique perks like unlimited vacation time to snare and retain the best talent. Research from Glassdoor shows that nearly 80 percent of workers prefer additional benefits over income increases. Ninety percent of millennials say they prefer benefits to pay raises.

Offering unlimited vacation time can attract top talent, even without extra costs of offering higher salaries. It could give your company the edge it needs to secure more of the best talent in your industry.

Con: Employees may abuse the policy, or suffer burnout.

One of the most obvious potential drawbacks to such a generous policy is the risk that employees will abuse it and take off weeks or even months without the risk of losing their jobs. No CEO wants to get caught in that type of financial pickle. While there's no guarantee your team won't take advantage, several experiments have shown this not to be the case.

A rundown of research compiled by Sage Business Researcher showed that companies offering unlimited vacation found that in many cases it actually encouraged employees to take less time off. Other research shows that it may even create competition to take fewer days off.

Pro: You can cut costs.

A traditional paid time off (PTO) policy typically results in accrued unused days off at the end of each year. At some point--if the employee quits, retires, or if you introduce a new policy--the company will have to pay out these unused vacation days.

An unlimited paid time off policy, on the other hand, will not have accrued time off. Employees also may feel less pressure to use the days or lose them as they do in a PTO structure. This lowers the odds of employees trying to use all their days each year or cash them out at the end of the period. Ask.com says it saves about 52 Human Resources working hours each year with its unlimited policy. (This sounds great, but again, beware of burnout.)

Con: You lose vacation time as a reward.

Senior employees may not find the idea of every worker receiving unlimited vacation days very rewarding--after all, they worked hard for their positions within the company, and may feel they deserve greater perks than new hires.

Using an unlimited policy for your entire staff may make it impossible to use extra vacation time as a reward or perk for senior-level staff or for those who perform exceptionally well. This can be confusing for employees, and lead to them feeling undervalued.

If you're on the fence about implementing an unlimited vacation policy at your organization, consider a hybrid policy, or "unlimited-ish" policy, that comes with some boundaries. This could mean only giving newer employees 20 days off per year, or giving people whatever time they need, within limits of your own choosing. Regardless, do your research and test the waters with these ideas before you dive in all the way.

Published on: Jan 30, 2018