What’s the Right Vacation Policy for Growing Startups?

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Once your startup has stabilized and you realize you are going to make it…the question always arises  — “What is our vacation policy?” Employees are bordering exhaustion, they have been going 12+ hours a day for months at a time. The fruits of their labor are starting to pay off. They see new employees coming on board that are significantly better rested than they are.

What does the leadership team usually do in this case? Oftentimes, they draw upon their past big company experience…or worse yet, leaves it to the newly hired HR person to come up with the answer. Too often, the maturing startup sets policies that bound and limit vacation time.

So what’s the right vacation policy? Don’t focus on your vacation policy. Focus on your management structure instead. Create a great organization filled with strong leaders that are empowered to make decisions. Don’t let the bean counters in to accrue vacation time and put policies that determine vacation time by tenure, rank, or title. Instead, let employees create contracts with their managers that let employees take the appropriate amount of time off for their personal situation, as each situation is different. As long as the company and the work product are not affected, employees can take all the time they need (or as little as they need).

I put this policy into practice with my company several years ago. It was an outstanding experiment. From a cost perspective, I had nothing to track on the books — no accrual, no hours owed, no negative vacation balances. From a morale perspective, employees and managers both felt extremely empowered. Best yet, employees actually tended to take less vacation and oftentimes had to be encouraged to leave their work behind for a few days. As it turns out, even the big companies have been catching on. IBM rolled out a similar un-vacation policy several years ago too.