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Should You Give Your Employees Unlimited Vacation Time?

Unlimited vacation isn't as radical as it sounds. Here are four ways to make the policy work for you.
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While many workers get two weeks per year to cram in all of their vacation time, an increasing number of companies, including Foursquare and Tumblr, have introduced a popular perk: Unlimited vacation time. If allowing your employees that kind of freedom makes you fear that no one will ever show up to work, you might want to take a closer look at the policy, says human resources consultant Andrea Herran. She is the founder of Focus HR, a human resource consultancy in Barrington, Ill., and a self-described "huge fan of the policy.”

An unlimited vacation policy isn't a free-for-all. It simply means that employees are not limited to predetermined amounts of vacation time as long as their work is performed to acceptable standards and they follow the policy guidelines. In her work with companies of all sizes, Herran has found that many see little increase in vacation time used once the policy is put in place.

She says adopting unlimited vacation can work for a surprising number of companies, provided there are clear guidelines. Companies benefit from a popular new perk, while relieving themselves of the drudgery of tracking vacation time used and enforcing vacation time policies. Herran offers these steps to setting your own policy.

1. Involve employees.
The first step in setting a strong policy is to get the input of employees. Talk to them about how this policy will affect them and what rules and guidelines they'd like to see in place.

"When you leave it up to your team to set rules, they'll often be stricter than you might be because when other people are out, it affects them directly," says Herran. "No one is going to want a policy that lets someone be out for weeks at a time or who can call in at the last minute and take vacation."

Related: Your Last-Minute Summer Vacation Survival Guide

2. Distribute the work.
Work with employees to develop flexible coverage plans for each employee. For example, if the receptionist is out, how is that work covered now? Is that a sustainable solution over longer periods? If not, how can the work disbursement be adjusted to be more effective and efficient? It's a good management practice to have plans for every employee's absence anyway, Herran says.

3. Set the rules.
The first and most important rule is to be clear about the criteria that need to be met in order to take vacation time. First, employees need to be clear about their job requirements and be confident that their work performance and status is sufficient. Employees need to understand that this doesn't mean they can now take off in the middle of a big project if that will leave everyone in the lurch, Herran says. It's important to make clear the protocol for taking the time off.

Require sufficient advance notice, such as several weeks or months, depending on your firm's needs. You may also limit the number of consecutive days or weeks employees may take as vacation. She also suggests that teams work together to determine when each member can take time off to ensure that two key employees are not out at the same time.

4. Encourage time off.
Clearly, employees still have to navigate guidelines and approval processes to take advantage of unlimited vacation time. However, if you find that you have employees who are simply not taking vacation at all or who are taking only a few days each year, that's an issue that needs to be addressed, as well, Herran says. Is there some sort of dysfunction there? Is there a problem with the team? The employee could be overwhelmed or even staying put to cover up wrongdoing.

"Employees need to get away and recharge. If they're not doing so, something could be seriously wrong and it could be hurting your company," she says.

Related: Most Americans Work While on Vacation, Report Finds

What's your take on the popular new perk of unlimited vacation time?