Inside Richard Branson’s Decision To Give Virgin Employees Unlimited Vacation

Richard branson balloon 1
Branson steps away from his desk and sometimes the Earth. Reuters

Virgin founder Richard Branson recently declared that the company’s employees can take as many vacation days as they want, provided that “their absence will not in any way damage the business — or, for that matter, their careers!”

Branson said that he got the idea from Netflix.

His daughter Holly forwarded him an article on how the video-streaming giant lets employees take as many days off as they need.

She suggested that it would be “a very Virgin thing” to do the same.

With Branson’s blessing, Virgin will now join an estimated 1% of American companies that offer unlimited vacation, a number that’s stayed stable for a few years.

Netflix, his inspiration, has had unlimited vacation policy since 2002. Company leaders realised that there was no California law requiring them to have a formal system, so founder Reed Hastings decided to “skip the accounting rigmarole” and handle vacation informally.

Soon after, salaried employees were told to take off as much time as they felt appropriate, sorting out the details with their bosses.

The “unlimited” vacation policy has radiated out to other performance-oriented tech companies, like HubSpot, Quirky, Evernote — and, in the effort of full disclosure, Business Insider.

But, while not having to deal with rigmarole sounds nice, unlimited vacay has its detractors. Critics say the policy may cause some employees to take less, not more, vacation time.

Arguments include:

• MIT Sloan professor Lotte Bailyn says people could suffer from “choice overload” when faced with unlimited vacation — the same thing that keeps you from choosing which toothpaste to buy when you’re stranded in the dental care aisle. Without knowing a number to follow, they will be overwhelmed by choice.

• Tech blogger Jacob Kaplan-Moss
says that there’s a “keep up with the Joneses” thing afoot, alleging that unlimited vacation can lead employees to feeling guilty if they take more time off than their peers, and thus “end up over-working because they don’t know what’s normal.”

• Slate writer Matthew Yglesias says that the only companies that would dare “offer unlimited vacation do so because they’re confident their employees won’t choose to take much time off.” These are tech companies, Yglesias says, where employees’ job security is closely tied to performance. “If I started taking half the year off,” he says, “my traffic would plummet and I’d have a problem with the bosses.”

The biggest problem might be that while Branson’s declaration is full of enthusiasm, it lacks in precise prescriptions.

“This sounds not well thought-out,” MIT professor Bailyn said in an interview. “People take less time off because they feel they’re not sure if this is really a commitment to them or that this is more a PR thing.”

The professor says employees may not know what to do with all that ambiguity.

“Typically, without any guidelines or structures, people don’t quite know what to make of this [policy],” she says. “They tend to fall back on expectations they have formed in previous terms.”

The most progressive vacation policies, then, are those that get people to actually take vacation.

Quirky, the consumer goods manufacturer, builds blocks of mandatory vacation into its yearly calendar. The whole company shuts down for the first week of May, August, and January — all slow points of the year.

“Our thesis is centered around the fact that this will lead to better work, more beautiful products, and an emotionally balanced team,” says Quirky founder Ben Kaufman.

The beloved save-anything-app Evernote puts money where its vacationary mouth is. The Washington Post reports that the Silicon Valley company not only has the unlimited vacation policy, it gives employees a $US1,000 stipend for taking the entire week off, thus putting some oomph into the feel-good policy.

Maybe that would be a “very Virgin” thing to do, too.