Vacation Leave: Separating the Apples from the Oranges

Mercer insights vacation other leave industry scorecard blog 2018

Few employee benefits are as tangible as vacation time. Aside from compensation, vacation time is often top of employees’ minds when considering job prospects or approximating your employment value proposition. That said, not all vacation policies are built alike, and in fact, they’re often as difficult to compare as apples and oranges.

Consider, for instance, the vacation package offered by two different organizations in separate industries; we’ll call them Alpha and Beta. A mid-career role for Alpha and Beta in the same country allows for the following vacation leave:

  • Alpha: 3 weeks’ paid vacation, plus holidays
  • Beta: 5 weeks’ paid vacation

Which employer’s vacation allowance is more generous? A first glance Beta’s vacation leave package seems to outpace Alpha’s by a wide margin – two weeks, to be exact. But Beta’s vacation does not account for holidays. Not a problem, you might think, as employees of Beta can simply use vacation time for holiday leave, and outsiders can compare the vacation packages of both companies by taking the total number of federal holidays out of the Beta’s vacation allowance.

Unfortunately, things are rarely that easy. In this example, Alpha is a professional services firm and Beta is a retail company. The complicating factor is that employees in the retail sector often can’t take leave on holidays because that’s their busy season. (Think of US retail employees on Thanksgiving or Memorial and Labor Days.) Considering that Beta employees are unable to use any of their five weeks’ paid vacation for major holiday leave, the allowance becomes compressed over the rest of the calendar year. Practically speaking, Beta employees must distribute their vacation time over periods of the year where friends and family are generally engaged with school or work. Given this outlook, is Beta’s extended vacation allowance truly preferable? More importantly, is there anything to learn by comparing Alpha (an apple) and Beta (an orange)?

This underscores the value in accounting for industry when comparing vacation leave policies. As important as it may be to know the standard vacation leave policy for employers in Turkey, working HR professionals often need a more functional approximation of what employees in their talent pool expect. When evaluating talent markets, the ties that bind the talent pools for manufacturing firms in Turkey and Brazil may be tighter than those for two Turkish firms in different industries. An HR professional working for a London-based banking institution may be more interested in what employees of a Hong Kong brokerage firm expect than those working for a commercial fishing outfit in Wales.

Indeed, for employers and employees, industry standards are often key to understanding and benchmarking vacation leave. In the new global economy where talent is becoming increasingly specialized and mobile, employers would be wise to evaluate the behavior of their international competitors, rather than their immediate neighbors. After all, if you’re a healthcare firm, it’s possible that you’ll lose top performers to another healthcare firm abroad rather than to the bank across the street.

Interested in learning more about vacation leave? Don’t miss Mercer’s Vacation and Other Leave Industry Scorecard publication, a valuable tool for measuring your own organization’s vacation leave against competitors within and outside of your industry.

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