How Your Vacation Policy Could Give You a Competitive Advantage

Jul 26, 2017


Companies are always looking for a competitive advantage. With unemployment nearing record lows and businesses facing one of the tightest labor markets in recent memory, competition over the best employees could be the difference between becoming an industry leader and falling behind. Your company’s vacation policy could make a big difference to its future success.

Vacation and Recruitment

Employers are expected to offer paid vacation. It is a standard benefit. If you want to attract the best recruits, you are going to have to offer more than the standard. That means creating a vacation policy that is easier to use, more generous, or that can be cashed-in instead of used.

Many recruits, especially Millennials, want as much flexibility as possible with work. Creative policies that allow employees to bank large amounts of time, take time off immediately, or allows employees to use days in small increments may prove key to attracting the best employees.

Vacation and Productivity

Another way vacation time policies can give your company a competitive edge is in increased productivity. Employees that take vacations are more productive over the course of a year. Humans need rest. Vacation allows people to de-stress and reset.

While more than half of all employees don’t use all of their vacation time, companies are not benefiting from this devotion to duty. If you can structure a vacation policy that gets employees to leave the office more, their productivity and innovation will improve.

Long stretches of time away from the office, five or more workdays, also unlock creativity. Employees having new experiences and escaping from the usual day-to-day routine are more likely to come up with valuable new ideas. Rested employees are better problem solvers.

Reducing Absenteeism and Increasing Predictability

Related to productivity, generous vacation policies can also reduce absenteeism. People who are stressed and tired get sick more often, and sick days are more expensive for a company than vacation days because they are not planned. Employees that regularly use their vacation days have less absenteeism.

In order to thrive, your company needs predictability in the workforce. Properly crafted vacation policies increase predictability, making employees happier and healthier.

Encouraging employees to take vacation time also decreases the chances of sick employees turning up to work and infecting co-workers.

Vacation time can give you a healthier, happier workforce.

What’s Required

There are currently no federal or state requirements for offering vacation time. This means that you can be extremely creative with your vacation policies. You can craft a policy that makes your company stand out.

However, you also need to make sure that a policy is crafted that makes sense for your business. You don’t want to setup a situation where the office is a ghost town during critical times of the year. You also want to make sure your employees actually use their vacation time.

While there are no state or federal requirements for offering vacation time, many states do regulate how vacating time is issued or paid out once a company does decide to offer it. It is important to make sure your policies are fully compliant with all applicable laws and regulations.


Todd Miller

Written by Todd Miller

Director of Marketing, DHR

Todd leads DHR’s marketing department and is responsible for overall marketing strategy and execution. With nearly 15 years in the sourcing services and solutions space, Todd provides interesting insight on a variety of topics in this fast-paced and ever-changing industry.

Todd lives in Scottsdale with his two daughters and Collie/Shepard. One is a good boy.

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