Vacations are not just a benefit for the employee, they are a benefit for the company as well.

While it may seem throughout this series that some of my advice is cold or heartless, please remember that I am focusing on issues that negatively affect the company, which means all the positive things that affect both employees and the company in positive ways are not part of this series. Much as a series on getting out of debt would have little good to say about using credit, it is the same with this series. Of course, having and using credit is vital to growing your business quickly, and similarly, having happy employees is vital too.

So the topic of vacations most often comes to us from employees who either use all of it up and feel they don’t have enough, or employees who seem to never use any of it up and who have a huge balance of unused hours which is sitting on the company’s books as a liability. So what is ideal, and how do you get there?

There have been many articles referencing many studies showing that vacations are good for employee productivity and morale. I would add that from my personal experience both taking vacations and observing employees after vacations, I agree with the sentiment. Think of a vacation as a mini-restart of the employee’s attitude, happiness, and speed of work. If you recall, when an employee first starts working for a company, they have a certain happy, positive, enthusiastic attitude about them. In most companies, somewhere between 30 days and 6 months, that happy honeymoon period ends. Employees settle into a slower, less enthusiastic pattern of behavior where they see work as repetitive and boring. Their productivity may be up from when they first started, but it is due to the repetition and memorization of routines rather than a desire to work faster or learn a new skill.

So how do you rekindle that enthusiastic flame? Well, if you watch an employee that just had a 4-day weekend or a week off, you can generally see a speedier, more enthusiastic employee.

People are almost always faster at executing their jobs after a vacation. Consider the following:

  • They have not done job tasks for a bit, so tasks are not boring now
  • They had a chance to relax and shop, so there those two desires are not looming in the back of their minds as they were before the vacation
  • Their work was most likely not done while they were out, so they are working faster to get current and old work done, and they are succeeding
  • They often get overwhelmed with spending 24 hours a day with their families on the trip, so work becomes an escape from having to be so close

These are just a few of the reasons that employees who have just come back from vacation are re-energized, enthusiastic, and ready to work. Now conversely, think of the employees who have not had a vacation in many months or even years. They display the opposite of all the qualities of a recently vacationing employee. Yet these people are often proud of the fact that they don’t take vacations or sick days and see it as a dedication to the company. As someone who very much fell into that category, let me say it is delusional. Not going on vacation may be the result of not having money for travel, family problems that prevent travel, lack of desire to come back to unfinished tasks, fear of someone else doing their job better while they are gone, or whatever real reason may exist. But people do not skip vacations because they love the company, love their job, or love to work.

Based on my experience working with companies, although I do think there is some research on this topic, so feel free to google if you like, a company should give a minimum of 2 weeks vacation per year to each employee. High-stress employees, like management or employees whose work requires creativity, should be given 3 weeks, and senior management/owners should plan on 4 weeks minimum. I say this not because management is more entitled but rather that we see the greatest benefit to the operations of a company when management takes vacations. It re-energizes the entire department rather than just a single person.

There is a drastic difference between a CEO who has not had a vacation for 9 months and one who just returned from a vacation. The creativity, revitalized energy level, and new ideas are all huge benefits to the organization.

So if we assume those levels of vacation per year are set, then some parameters about vacations need to be established. First, I recommend my clients disallow the indefinite buildup of vacation hours. The point of yearly vacations is exactly that – to take them yearly. So a 2X policy or even a 1.5X for maximum days accrued is a fair one. If an employee has 2 weeks of vacation every year, then the most they can carry is 3 or 4 weeks. Once they have maximum vacation accrued, they will no longer accrue any more. Some employees may complain, but generally, they are the ones that need to be forced to take vacations the most. Using the information above, you can explain to employees that vacations are beneficial to them as well as the company and that the company will cap maximum earned vacation time as a way to encourage everyone to take vacations every year. Of course, this has the added benefit of carrying less financial liability on the books. It is very important to set a good example for employees by taking vacations as an owner or as management to demonstrate that everyone is expected to take vacation time.

Of course, there are always some employees that burn through their vacation one day at a time, never take a long vacation, and always seem to be right on the edge of using all their earned days off. Unfortunately, these folks are never going to benefit from a real vacation because they have a hard enough time with a 5-day work week to get by. I know it may be hard to believe for entrepreneurs willing to work 80-hour weeks for little pay when starting a business – but there are people, and quite a few, who will work for you once your company grows, that have a hard time committing to 40 hours a week. Vacation for these folks is not something to be used to recharge and relax but rather something that allows them to have an extra weekend day or mid-week day of not dealing with work. While they are certainly just as entitled to take their vacation as everyone else, this pattern of using vacation days can be a red flag. If you start examining the work quality of these people, along with workload, their ability to work with others, and other productivity factions, more often than not, you see that you as a company are getting the bare minimum possible from their person, while someone else earning the same pay and with the same vacation benefits will be more productive. If you need to reduce headcount or want to get some new blood into the workforce, you have a head start on your list of terminations.

Excerpted From The Original

Business Growth Roadblocks: How to use uncommon sense to surpass $5 mil

It’s not always the sales side that is the problem, quite often it is the operations that are keeping a company from growing, but majority of books only address the sales side. This book looks at the most common problems in company operations and how to fix them. The book is written primarily to address companies of $3-5mil with 8-20 employees who seem to have slowed down the growth, and it illustrates how others have grown past that size by changing back end operation.


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