A trend emerging inside the workplace, but outside of current HR best practice, is unlimited annual leave. The Guardian recently reported that communications group STW is offering its consultants unlimited paid annual leave, stirring interest in the business community, although it’s not the first company to do so. Consulting firm CEB Global estimates that about 9% of companies around the world offer similar arrangements. Netflix does it and so does LinkedIn. And Virgin Management, the parent company of Virgin’s worldwide operations, has offered its top layer of management in the US and the UK extended paid leave since 2014. So how does an unlimited annual leave policy look in practice? This HR Blog explores exactly that.
The Inventium Case Study
Dr Amantha Imber introduced an unlimited annual leave policy at her Melbourne-based innovation consulting firm Inventium two years ago. During that time she said no-one had rorted the system, and sick leave, which is often used as a measure of the health of a company, had halved. 'It's very simple; you take however much leave you want to maintain a balance between work and life,' she told ABC Melbourne's Jon Faine. 'So on average, before we implemented this policy two years ago, people were taking four weeks annual leave. But two years on, now that we've implemented unlimited leave, that's now an average of five-and-a-half weeks.
Dr Imber said Inventium was still a profitable business despite the generous offer of unlimited paid annual leave and that the policy had been a positive change in her office, but agreed it certainly would not work in every workplace. You need a really strong, healthy culture,' she said. 'If employees aren't engaged and happy, then yeah [staff] probably would take advantage. I think there needs to be a high level of trust and respect between leaders in the business and fellow staff members. That's definitely present at Inventium and I think it's why it works so well. But if that's not present in a business, I think it could go pretty badly.'
Telstra's All Roles Flex Programme
Troy Roderick was general manager for diversity and inclusion at Telstra and helped develop the “All Roles Flex” programme. Any of Telstra’s 30,000 employees, from the CEO to linesmen in the regions, can take advantage of the policy, as long as it doesn’t hold up the organisation’s operations. It is practicable because every manager works with his or her own staff within the company’s broader guidelines. It also answers concerns about leadership role-modelling by promoting work flexibility internally as part of the company’s core values.
According to Roderick's communications about the programme before he left Telstra, it was all about whether the arrangement suits both the company and the individual employee. 'It’s all about whether outcomes can be achieved,' Roderick shared, 'not whether or not I agree with your particular need for flexibility, whether I think your sporting commitments are less important than your colleague’s parenting responsibilities. We’re trying to refocus it away from value judgements and onto, can we deliver the outcomes that we’re here to deliver as individuals on this team.'
The Research Perspective
Monash professor Anne Bardoel, who has researched balancing work and family life, said remuneration and job security were important factors in staff satisfaction, but genuine flexible working options were also highly sought after. The good news for small businesses, which often can't afford perks like gym memberships or on-site child care, is that flexible work options are relatively inexpensive. Bardoel says the key was to ask employees what flexibility looked like to them.' It is also critical for the employee needs to have some sense of autonomy and control.
Culture Amp, an employee feedback platform that began in Melbourne, has collected data to help it understand trends in people and culture and their impact on employee engagement. Lead people scientist Chloe Hamman said introducing unlimited annual leave had worked in some cases, but in many workplaces it was a failure and employees ended up taking less leave than before. 'Unlimited leave policy has appeared to work, or more so, not backfired, when the policy is supported by leaders and managers who role model the desired behaviours," she said. 'Such companies also tend to still carefully track the amount of leave people take and encourage employees to take leave when they haven't.'
Unlimited Leave May Not Work For Everyone
While Inventium’s staff have been respectful of this new leave strategy, Amantha Imber shared on Radio National's Life Matters that there are potential risks when introducing a policy such as unlimited leave. If your staff are already showing low engagement, there’s a chance they could abuse a system like this.
'This model isn’t for everyone,' she says. 'Research shows that actively disengaged staff are likely to abuse all sorts of policies. It works really well in organisations where there is a high level of trust between management and staff. If staff are highly engaged they want to do what’s best for their team, the organisation and for themselves,' she says.
There’s also a risk that by shining a light on your organisation’s leave policy you could potentially scare employees off from taking leave, they’ll be afraid as being seen as uncommitted to their job. If that happens, they may end up not taking off enough leave.
Imber says this has happened in the past, as people fall victim to ‘the guilt factor’. “When there’s ambiguity about something, people tend to opt for the more conservative side because they don’t want to be seen as breaking a rule or abusing a policy. They want to be seen as good staff members and if there’s a perception that taking less leave makes you a better employee then that becomes problematic.
'Think really carefully before you introduce something like this because it’s a relatively hard thing to take back,' is Imber's advice.
