03/18/2010 05:12 am ET | Updated May 25, 2011

A Vacation Policy for the New Decade

It's well known that US employees don't get as much vacation as employees in Europe do, and they typically don't take all the vacation they are given -- and yet we also know that vacation is really important to long term health and employee satisfaction. So how do we fix this disconnect?

I am CEO of a software company in Silicon Valley called FirstRain. On January 1st I changed our vacation policy dramatically to be "Take as much as you need."

This is not a new idea, it was pioneered by Netflix. But it is still rare, and yet it makes so much sense to me I want to encourage the conversation and get other business leaders to consider it for their businesses.

At FirstRain, we have a very intense culture. People work hard, long hours inside and outside "normal business hours," from home, from airplanes -- and we don't clock or watch their hours. So if we don't clock the hours they are here, why should we clock the hours they are not? Why should we be tracking paperwork and forms when an employee takes the day off, but not when they work over a weekend?

It is much more trusting and respectful to simply say:

  • Work the hours you need to to get the job done,

  • Take the time off you need to take care of yourself and your family, and
  • Talk to your manager about the time you need and how to fit it in with your work.
  • After all -- if we entrust an employee with critical algorithm design, or with talking to customers -- why wouldn't we trust them to manage their own time? And one of our five values is, "Take ownership for the company's success" so people managing their own time is really consistent with that -- I trust them to do what's right.

    If you value your employees, and you trust them, why wouldn't you let them make their own decisions about when and where to work, and for how long? Trust is the key.

    Here's our Letterman-style "Top Ten" list of the reasons to move to an unlimited vacation policy -- it's ALL about building a great culture:

    1. Each employee gets to make their own decision about when it makes sense to take time off
    2. Each employee gets to decide how much time off they need
    3. It rewards folks for working smarter, not longer
    4. It places trust in our employees -- trust gains trust back
    5. It differentiates us from our competition -- especially when hiring
    6. Vacation is good for physical and mental health -- so this supports good health
    7. It reduces administrative paperwork -- always a good thing!
    8. It's one less policy we have to document and explain
    9. No more accrued vacation liability on our balance sheet
    10. It's just very cool to say, "at FirstRain we take as much time as we need, as long as our work is done."