You are here

Bosses bribe workers to take vacation in healing US job market

Employees work at their desks in offices inside the headquarters of Kaspersky Lab, a cyber-security firm, in Moscow, Russia, on Dec 9, 2014.

[WASHINGTON] A self-diagnosed workaholic, Jeanette Russell knows that a real vacation requires her to completely unplug by deleting mobile email applications and letting her work laptop battery die in a corner. It's also company policy.

"When we say 'work-life balance,' this is our proof that we mean it," said Ms Russell, director of finance and operations at Denver-based FullContact, a software company that helps businesses organise and sync contact information across devices.

Vacation is serious business at the four-year-old firm. Each employee is granted a yearly US$7,500 bonus to use for time off, with a mandate to stay completely out of touch while away. The extra pay is forfeited if that rule is broken. Co-workers pick up the slack for the vacationers and abide by detailed plans outlining who will fill holes during an absence.

While the start-up's policy seems like a worker's pipe dream, it hints at the kind of perks needed to attract and keep staff in a job market that's increasingly tilting in the employee's favour. It's also a win for companies because it may cost a little less than handing out raises, and the added flexibility helps attract sought-after employees.

Market voices on:

The fewest unemployed people for each US job opening since April 2001 would typically point to stronger wage growth as employers vie to lure and retain workers. Yet, year-over-year worker pay gains have struggled to break away from a 2 per cent average that's persisted since the start of this expansion, befuddling economists.

In Silicon Valley, where technology companies feel the strains of an especially tight job market, employers are enticing workers with buzz phrases like "unlimited vacation" and "paid-paid vacation." As the jobless rate drops further through the Federal Reserve's defined range of full employment, hiring managers across industries should feel the pressure to pony up.

Grant Thornton, the sixth-largest US accounting firm, said on Wednesday it will offer US employees unlimited time off.

With unlimited vacation, companies don't institute a set number of days per year for an employee to get away. Instead, time off is flexible, dependent on adjustments made by other workers to ensure the business doesn't skip a beat. So-called paid-paid vacation takes the policy one step further, offering a bonus earmarked solely for days off.

"It makes economic sense," said Drew Lawrence, FullContact's director of business development. As long as employees don't leave co-workers in a lurch, everyone returns from their time off as ready as ever to meet their targets, with minimal interruptions to clients, he said.

Matt Rizai, chief executive officer of data analytics company Workiva, sees additional rewards: "if they're happy, they're more productive, and if they're more productive, we do better business." Workiva, founded in 2008, started by offering a standard two-week vacation, and now allows up to twice as much. Last year, 85 per cent of the company's 953 full-time employees used their allotted paid time off, according to Kevin McCarthy, Workiva's senior public relations manager.

That beats the national average. Just 25 per cent of employees had used all of their paid time off in the prior 12 months, according to an April 2014 survey by online job-search network Glassdoor Inc. When employees did take vacation, 33 per cent reported working because "no one else at my company can do" the job and 28 per cent said they feared "getting behind." More time off may turn out to be cheaper in the end, said Harry Holzer, public policy professor at Georgetown University.

"When you give somebody a wage increase, the expectation is that's there forever, and the next year you have to build on that, whereas with paid vacation, it's not as obvious that it goes into the base," said the former Labor Department chief economist.

More leave also shows that companies are weighing these costs against what they might otherwise spend to keep their employees healthy, said Jennifer Schramm, manager of workforce trends and forecasting at the Society for Human Resource Management, which has more than 275,000 members in about 160 countries, according to its website.

"There's a lot more science coming out about the actual impacts of not taking time off," said Ms Schramm. Managers "are starting to look at these things more holistically." So far, there's little evidence that more creative vacation benefits are spreading beyond the technology industry.

While almost all US companies offer some form of paid time off or vacation, only about 2 per cent provide unlimited paid time off and fewer than 1 per cent have unlimited paid vacation plans, according to an annual benefits survey released in June by SHRM. Almost none said they planned to institute these types of "unlimited" policies in the next year.

Small-business owner Tom Corcoran found inspiration for a different kind of vacation perk close to home. He borrowed the idea of a 10th anniversary sabbatical not from a digital wizard, but from Oak Brook, Illinois-based McDonald's Corp, where a family member benefited from the policy in the 1980s.

"It's a real nice, good thing that gets people to stay," especially considering workers switch jobs more frequently these days, said Mr Corcoran. Each of 35 employees at his Corcoran Expositions Inc in Chicago is allowed to take three months of paid time off after working a decade for the business. Two of his employees will take such leave next year.

More businesses also are lumping together all types of paid time off - sick, personal and vacation days - in an effort to provide more flexibility, Ms Schramm said.

Broader benefits also may be a bid to attract millennials. Aged 18 to 34 this year, they represent the biggest share of the workforce and place a higher premium on flexibility than paychecks. Almost three-quarters said they'd be willing to trade 15 per cent of their salaries in exchange for a better balance between work and other activities, according to a May 2012 report by Rutgers University's Center for Workforce Development.

"The current generation has a slower transition to independence - they spend more time living in their parents' houses, they marry later, they have kids later," Prof Holzer said. "All of which enables them to be a little more easygoing about exactly what wage they get."