The Work Behind Vacation

Mercer Select Intelligence Vacation Policies 2017

What does vacation mean to you? A week at the beach? A long weekend in the mountains? Visiting family? Well, for better or worse, vacation means a headache for most HR professionals. That’s because vacation leave, like any other time away from the office, must be meticulously recorded and tracked for each individual employee. Or does it?

Employers around the world are increasingly aware of the toll that maintaining a traditional vacation leave program takes on their HR department, and some are making efforts to alleviate this strain. For instance, many employers have embraced the paid time-off pool concept. This policy does away with distinct types of leave – think vacation versus sick leave – and simply grants employees a block of days that they may use for whatever they wish. The result is a simpler employee leave tracking system for HR departments and a greater degree of flexibility for employees.

However, some employers opt to take things one step further by adopting unlimited vacation. These policies allow employees to take as much time away from the office as they need, no strings attached. Although this may sound like a recipe for failure, by removing a number from an employee’s allotment of vacation days, employers discourage employees from trying to meet that quota. In practice, its simple economics: employers flood the supply of vacation days, thereby decreasing demand.

Here at Mercer, we’ve been monitoring this trend, and what we’ve seen may surprise you. Despite the appeal of these low-maintenance employee leave systems, they’re both relatively rare in the working world. For starters, almost no employers outside of North America have adopted a paid time-off pool, suggesting that these solutions are far from the mainstream. Moreover, only 4% of employers around the world have adopted an unlimited vacation policy.

Companies around the world may have different reasons for choosing not to adopt paid time-off pools or unlimited vacation policies. For one, pro-employer labor markets may not necessitate innovative or disruptive HR solutions, dampening the appeal of transitioning from a traditional leave program to a newer one. Furthermore, many countries around the world may have strictly regulated leave requirements that limit employers’ ability to lump leave days into one unit. In such cases, employers may be (understandably) disinclined to deviate from the statutory requirement.

Nevertheless, it is evident that new marketplace conditions will continue to bring new solutions to HR departments around the world. While some employers may be slow to adopt these departures from the norm, no HR professional should be caught unaware of the new trends emerging at the policy frontier. Follow Mercer and Mercer Select Intelligence for more information.

Interested in learning more about vacation programs? Don’t miss one of Mercer’s newest publications, Vacation and Other Leave Policies Around the World. This global report draws on the survey responses from 47 countries to provide a real-time snapshot of how the world’s leading companies offer their employees time away from the office.

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