At my former company (before retirement), employees could take as much vacation as they want. It’s virtually limitless, within reason. Vacation time isn’t “accrued”. You take it when you need it, as much as you want.
At first blush, this seems pretty damn sweet. As much vacation as you want? Score!
Here is the rub: My company also tracked your utilization time, which is time spent directly in support of a billable contract to a client. The greater your utilization, the larger your quarterly bonus.
Bonuses at my company easily amount to 20% or more of your salary in a given year.
Aaaaand, boom! Instantly, the company with that “generous” vacation package has instantly forced a huge decision for you to make: Either work your tail off and almost never take a vacation, or take as much as you want and potentially earn much, much less.
The company also provided additional bonuses for those with an especially high utilization rate, effectively requiring no vacation time during the quarter – or working unpaid overtime to make up for hours spent away from the office…enjoying life.
Not only that, but each employee was given the opportunity to do even more work on internal company projects, known as “Management By Objectives”, or MBOs. These hours further expand the lucrative bonus potential.
The opportunity to make crazy money is seeded deep within each of us, and this company cleverly knew that and exploited it very well. It consumes our work and influences our decisions whether we realize it or not.
“Yo dude, did you get your high utilization bonus this quarter?“
“Yeah, and I probably need to take the wife out to dinner to make up for ignoring her over the past couple months.“
“Sweet, I got mine, too. Damn, money at this place is off the hook!“
To the untrained eye, this is a pretty sweet deal. Unlimited vacation and huge bonuses. What’s not to like?
When vacation is unlimited, we take less of it!
There is plenty not to like about the way my former company runs their vacation policy – for example, the way our human nature is exploited to maximize billable hours.
When vacation hours are limited and tracked – like they are at other companies – employees are encouraged to take time off to avoid losing that vacation time. “Use ’em or lose ’em”.
But when they’re not and money is on the line, we feel compelled to work.
Work a lot.
At another employer where vacations were limited, I remember working with a guy who had a couple weeks of unused vacation left during the holiday season and, refusing to let those hours go to waste, decided to take a two-week “staycation”, using that time to catch up on much-needed sleep and spend more time with his family.
It was time well spent. And, it didn’t affect his salary a bit.
Further, some companies allow a certain number of unused vacation hours from the previous year to transfer over to the next. In addition, if an employee leaves the company, any remaining vacation hours are paid out to the now ex-employee. A bonus for moving on!
In the end, what seems like a more stringent vacation policy works out in the employee’s favor. When vacation hours are virtually unlimited, we take less of them. When vacations are limited, we naturally want to get the most out of those hours and avoid letting them go to waste.
It’s a clever ploy, and it works.
The incentive to keep working
When companies like mine provide “unlimited” vacation hours, incentives keep the staff working. At the company I worked for, that incentive was money – and lots of it.
Just piles of cash.
A 20% yearly bonus spread out quarterly demands attention. It kept many of my co-workers slaving away at the office for many hours, focused entirely on sacrificing freedom for the sake of the almighty greenback.
We work instead of
Most of us can work from anywhere. Company-issued laptops are the norm, and the expectation that we work from our homes is always there. In fact, my company “encouraged” staff to check their email periodically while on vacation, “just in case”.
Perhaps my company didn’t understand what “vacation” actually is. They do, however, keenly understand the psychology of humans.
And based on our vacation policy, they successfully encouraged their staff to ignore the need for rest and relaxation in exchange for money…money that can be used to buy stuff like big cars, large homes, televisions and cell phones, requiring us to keep that source of income in place, endlessly working in a wicked cycle of freedom-killing decay.
“How important is your vacation to you?” they would implicitly ask with a policy like this. “You can take as much time off as you want, but if you work until you literally can’t move, there’s money in it for you.“
Toward the end, I took vacations
Over the first 12 years working in corporate America, I rarely took a vacation. Instead, I worked. At companies that would buy back unused PTO every year, I’d pocket the monetary equivalent of those hours.
An additional half paycheck!
That taste of freedom changed that for me. My former employer had one of the most relaxed vacation policies that I’ve ever seen, but I took more vacay than ever. I didn’t get my high utilization bonus the last year I worked a full-time job with them, but I honestly didn’t care.
I’ve come to realize that the money just isn’t worth it. My health and happiness come before bonuses, high salaries
Check out this infographic from TeamViewer about how the vacation / work life balance has been skewed. It’s relatively old data, but things definitely haven’t gotten any better.
How generous is your company with PTO time? Are your vacay hours limited?
This post was originally published August 2016 but has been updated and revised using the Revise and Republish strategy.
Steve is a 38-year-old early retiree who writes about the intersection of happiness and financial independence. Steve is a regular contributor to MarketWatch, CNBC, and The Ladders. He lives full-time in his 30′ Airstream Classic and travels the country with his wife Courtney and two rescued dogs.