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Brilliant or crazy to offer unlimited annual leave?

Category: Blog & News

One of the struggles many businesses have is how much freedom to give their employees. 

In a perfect world people should just turn up, do a great job for a fair amount of pay and get on with things. They should be responsible, committed and able to work unsupervised.

But that’s not always the case.

The reaction in many businesses is to clamp down and create ever more constraining policies. Policies for annual leave, sick leave, IT, hours of work, dress code, social media…the list is endless. The theory goes that if people know the rules they can be held to them.

The problem with this approach is that it turns an adult-to-adult relationship into something more like adult-to-child.

Instead of an employee being responsible for themselves, you take over this role and suffocate any chance of autonomy.

That’s why I was so pleased to see a business owner trying something different. In the spirit of Netflix and Richard Branson, Triggertrap’s CEO took a deep breath and launched an unlimited annual leave policy, having “decided that the act of actually tracking holidays was more hassle than it was worth ”.

But then it backfired.

In the UK employees are entitled to 28 days leave which expire if they are not taken in the year. With the new policy, staff could take far more days than this, exposing the business to a labour shortage.

But that’s not what happened.

Rather than people taking too much leave they didn’t take enough.

Not one employee took their entitled 28 days, leaving the team fatigued at the end of a very busy year (Avg 1.25 days/month).

Why people didn’t take leave

According to Triggertrap two problems seemed to underpin people’s reluctance to take leave;

  • Their entitlement was no longer on their pay slip so they weren’t reminded of it and
  • People felt guilty taking days off because it no longer felt like it was theirs to use

It’s counter intuitive, isn’t it? You imagine that once given a ‘blank cheque’, staff will take as much as they can get away with. And occasionally this might occur.

But that’s not how we are wired.

We are wired to;

  • largely conform with those around us. If no one in my team is taking leave then I won’t either. (Social Norms)
  • mentally account for things like annual leave. When no limit is set there is no credit in the account to draw upon. (Mental Accounting)
  • pay attention to things that are top of mind. If annual leave is not brought to our attention we will get caught up with other things. (Availability Bias)
  • prioritise now over later. Work can always seem busy in the moment so it is very hard to imagine taking time off. (Short term bias)
  • be paralysed by choice. Having to decide how many days to take from an unlimited number can perversely make it harder because it’s difficult to know how much leave is ‘right’. (Paradox of Choice)

As Triggertrap’s policy experiment has shown, people’s behaviour can surprise us. Where we might jump to the economic conclusion that employees will always seek to maximise their outcomes, the truth is that all behaviour is a function of a broader psychological context, and one that Behavioural Economics seeks to define for us.

How have Triggertrap resolved their policy?
The easy thing would have been to revert to the old adult-child system of tracking and capping leave. Instead Triggertrap have refined their approach, by;

  • paying a small cash bonus for taking at least 14 days within 6 months,
  • tracking days taken publicly so people are acknowledged for taking time off and it becomes the norm
  • encouraging team members to suggest team mates take time off because it’s a good and healthy thing,
  • asking people to gain the consent of their team before they take leave, reducing people’s sense of guilt about leaving team mates in the lurch.

The result? Since tweaking their policy every staff member has taken at least 10 days in 6 months (Avg 1.8 days per month), which is heading in the right direction.

Above all else what I love most about Triggertrap is how they are willing to think differently about their relationship with employees, treating them as adults in the hope that it will ultimately lead to better outcomes for all.

More on Triggertrap and how they see their policy. 

To discuss how behaviour can be changed without it backfiring, get in touch.

This article also appeared in Smartcompany.