The Case Against Vacation Policy

IT consulting firm Bluewolf lets employees take as much vacation as they want, whenever they want—as long as they meet their goals

by John Tozzi

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Michael Kirven, 38, and Eric Berridge, 39, didn't worry about a vacation policy when they started Bluewolf, their New York IT consulting firm, in 2000. As the startup added employees, the founders let staff take paid time off for holidays, travel, and rest when they wanted, without asking permission—just letting managers know as a courtesy. About 18 months later, with 10 employees, they made their ad hoc policy official. "If you want to take a vacation, take it," Kirven says. As long as workers met their goals, they could take as much time as they wanted, when they wanted. In other words, no formal vacation policy.

Kirven doubted the startup could sustain the approach as the company expanded. "I didn't think it would scale when we were at 20, then 50, then 100, then 150 [employees]," he says. Now, with a staff of 200, satellite offices in San Francisco and North Carolina, and $18 million in revenue in 2007 (disclosure: BusinessWeek's advertising department was a Bluewolf client in 2004), he doesn't consider the loose vacation rules a risk that employees will shirk their duties.

Instead, Kirven sees it as a competitive advantage. He makes it clear no vacation policy doesn't mean unlimited vacation. He estimates most people take three to four weeks each year; six or more would usually make it hard to meet objectives, he says. But there's no pressure to put in a certain number of days or hours as long as the work is getting done.

Holdover from the Industrial Era

Bluewolf is part of a small but growing group of companies of all sizes that let employees manage their own time. The most visible example is Best Buy (BBY), where an employee-led movement toward results-only metrics transformed the company's culture (BusinessWeek.com, 12/11/06). Outdoor gearmaker Patagonia lets workers at its Ventura (Calif.) headquarters surf during the day and offers up to two months of paid leave (BusinessWeek.com, 8/21/06) for employees to work with environmental groups. But giving workers complete control over their schedules is rare enough that Kirven says human resources people tell him he's crazy.

Counting days and hours is a holdover from the industrial era that makes no sense for information workers who can do their jobs without being at their desks at set hours, proponents of such changes say. "The reason companies have a vacation policy or time-off policy is because of the way work is structured: 8 to 5, Monday through Friday," says Jody Thompson, one of the Best Buy HR managers who upended the company's attitude toward time. Thompson and Cali Ressler just published Why Work Sucks and How to Fix It, a manifesto for what they call the Results-Only Work Environment, or ROWE. "Work is something you do, not someplace you go," Thompson says. The pair now run a St. Paul (Minn.) consulting firm, CultureRx, to help companies switch to the model they pioneered at Best Buy.

The benefits for staff are clear. Workers at Bluewolf's Manhattan headquarters in a converted 15th-floor loft enthuse about the flexibility the company offers, and the bottom-up culture that supports everything from volunteer work to green initiatives to team trips to the gym. And when the vacation time isn't enough, Bluewolf accommodates workers who want to take unpaid leaves, including one who took a year off when each of her three children was born.

But what's the business case for tossing the vacation policy? For companies rooted in the information economy, like Bluewolf, which is adding staff quickly, the freedom helps attract and retain motivated workers, especially Gen Yers who resist punching clocks.