Taking a vacation may be good for employees and their employers. When workers get away from work for a bit, it can raise morale, boost productivity, reduce costs and possibly even protect against theft. But sometimes it's not enough to offer paid vacation. Many employers find that to reap the benefits of vacation, they have to encourage employees to take time off through their vacation policy.
San Francisco-based visitor registration system Envoy recently began requiring employees to take four weeks vacation each year as part of their vacation policy; the company's founder and CEO Larry Gadea felt employees should disconnect from time to time. "In a startup environment, it can be pretty busy," Gadea says. "You need to take some time off and relax. It's important."
Vacations had to become mandatory at Envoy because employees don't always want to take them, Gadea explains. "Especially engineers," he says. "They'll just be excited about doing their work and want to keep on moving to the next thing."
And it's not just engineers. A 2014 study by Oxford Economics says U.S. employees failed to use 429 million days of paid time off in 2013. Unused days came to 16 percent of available paid time off, or 2.4 days per employee.
Business Benefits of Vacation
Gadea says when employees take time off, it encourages others to not be overly dependent on any one person to get the company's work done. "It also encourages people to spread their knowledge with coworkers," he says.
While boosting organizational resilience, vacations may also improve the performance of individual employees who take them, says Jay Starkman, CEO of Engage, a Hollywood, Florida human resources firm. "Vacations allow people to recharge their batteries and come back as better workers," Starkman says. "It's amazing how people come back from vacation and say, 'I've got some new ideas.'" After taking paid vacations, employees may also be more loyal, which can reduce turnover and hiring costs, he adds.
Vacation may also have an effect on worker productivity. Research suggests that as the average workweek goes past 40 hours, employees become less productive, says Dave Weisbeck, chief strategy officer for Vancouver workforce analytics platform Visier. "There is a benefit to taking that vacation time," Weisbeck says. "At some point we get tired and need rest."
The corporate balance sheet contains an additional argument for encouraging employees to use vacation owed to them. "When employees have accrued vacation time and don't take it, that starts to show up on your books as a liability," says Weisbeck. So persuading employees to use that time can strengthen the company's financial position.
Security and risk management may also provide reasons for employers to encourage vacation. Embezzlers and other workplace criminals are more readily unmasked when someone takes over their work while they are on vacation. A 2016 study by the Association of Certified Fraud Examiners found mandatory vacation and job rotation policies reduced average losses to companies victimized by fraud by 48 percent, from $170,000 to $89,000.
Despite the good that vacations can do, employees can sometimes be reluctant to take them. Weisbeck says that after shrinking for decades after World War II, average workweeks in America have been growing again as employees take less time off.
One reason employees may want to avoid taking vacations is because of a desire to appear more valuable to their employers. That motivation can become prominent in tight labor markets when employees don't want to seem replaceable.
In any market, when company culture values long hours at work, advancement-seeking workers may try to meet that standard. "If somebody's working to get the big promotion, then sometimes there's a desire not to take that vacation," Starkman says.
Another reason for not taking vacation is that not all employers offer them. The United States is the only major advanced economy with no national requirement for paid vacation. By comparison, European Union employers must offer at least four weeks a year, and in Portugal and Austria that number, including vacations and holidays, can come to five weeks. German employees get only slightly less—34 days of paid time off annually.
Using Your Vacation Policy to Encourage Breaks
Employers who offer paid vacations often have "use it or lose it" policies to encourage employees to use the benefit. "You generally can get 70 to 90 percent of vacation time being used when you put in use it or lose it policies," Weisbeck says. However some states may restrict these policies, so employees may want to check local laws.
One easy and potentially effective way to get employees to take vacation is to just tell them it's okay. "It's a cultural issue," Starkman says. "if you have a culture that espouses the virtue of taking vacations, in my experience it's not hard to get people to not work for a couple of weeks."
Employers might also want to consider that not all vacations are created equal. Weisbeck says some evidence suggests that traveling on vacation can be so stressful that employees come back in worse shape than when they left.
Gadea, in addition to specifying that employees must take time off, also tells them they can't check in while they're gone. "When you're on vacation, be off the grid," he tells his employees. "Don't be thinking about work. Don't answer emails. Don't write code on the plane. Focus on not working."
For more tips to help you achieve a better work-life balance, watch the exclusive video series, made in partnership with MSNBC: Work-Life Balance: Tips from the Trenches.
Read more articles on company culture.