MBA2240 Q&A Wednesday: Should I offer an unlimited paid leave policy for my team?

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Hey O. Welcome to the Hundred Dollar RB show. The place to be to build the business you want every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started with my co founder back in 2014 and today's episode is Q and A Wednesday. On Q and A Wednesdays we answer a question from one of you, one of our listeners. If you got a question you want to ask, go ahead and email me over at Omar MBA Net. Today's question is from Dan and Dan asks, hey Omar, I run a small software company but we are growing. Right now we only have about five employees but we're looking to hire many more in 2023. I want to attract great talent and one of the ways I want to do that is by giving generous leave. I've heard of companies offering unlimited leave. Is this a good idea? Is there something that I might be missing or might regret? Should I have an unlimited leave policy for my team? Thank you so much for all the great content and helping me out with this question. Thanks Dan for the great question. It's a really good question because I like where his head is at. He wants to compete. He wants to attract great talent. And one of the levers he can pull is his leave policy is offering unlimited leave. And you're in luck, Dan, because my co founder Nicole and I, we did massive amount of research on this topic. When we were putting together our leave policy a couple years ago, we upgraded our leave policy and updated it to help our team have a better work environment. And we looked into this idea of doing unlimited leave. And I'm going to share with you what we've learned about the positives and negatives and ultimately why I don't recommend it. So let's get into it. Let's get down to business. Creating an attractive benefits package for your team members, your current ones and new ones, is a great strategy to keeping great talent and attracting some new people that are going to add some great value to your company. And in my experience, salary is just one factor. Yep, money talks, but so does a lot of other things like the job itself, autonomy, the place of work, and job satisfaction, benefits. And of course, leave. People love their time off. Most people want to work so they can enjoy their life periodically throughout the year. So, on its head, having an unlimited leave policy sounds amazing and incredibly attractive. Now, most people worry about the wrong thing. They think, well, if I have an unlimited leave policy, my team members are going to abuse it. They're going to take off weeks, maybe even months out of the year. And how we're going to get anything done if everybody does that on the team. This is what most people fear with an unlimited leave policy, but the research shows the opposite. Actually, companies that instill an unlimited leave policy typically have team members taking less time off to a fault, meaning they're not even taking the leave days that they need to recharge their batteries and work efficiently. Now, if you're wondering how does this work if they have unlimited leave, why they're not taking leave? Well, let me give you a case study that we studied when we were researching this topic. And that case study comes from Basecamp, which is a remote team, and they have around 50 or so employees, and they instilled an unlimited leave policy. They wanted to be generous. They wanted to make sure their team had enough time to recharge their batteries and do great work. But they found what other companies have found is that this policy actually backfires when there is no rule. People still make a rule. What happened? Well, when the leaf policy is unlimited, nobody wanted to take leave because they don't want to be the person that is taking the most leave out of the company. So the new Unwritten leave policy, even though it says unlimited was less than the person that's taking the most leave. So what happens is, let's say it's six months into the year, and the person that took the most leave out of the company might have taken two days. So no one wants to exceed that because it looks like they're the person taking the most leave. So they'll just take one day instead of the amount of days they actually need, and taking from a reserve of days that they are given, which is the more traditional model that is not unlimited. This is interesting because it gives you a window into human psychology. Because we're tribal by nature. We work in tribes. We work in groups. We are looking at what other people are doing, and we are going to measure ourselves against what other people have done. So what people are fearing where people are going to be taking too much time off. Actually, the opposite happened, where people are not taking enough time off, and people would get burnt out, and they would feel guilty if they took too much time. Like they took three days in a row for their holiday or something like that. So at the end of the year that they experimented with this over at basecamp, they realized, wow, people were taking a fraction of the time off they used to when we used to give them an allotted amount of days that they can have off, instead of unlimited. So my advice is, instead of saying we have unlimited leave, which doesn't really work in practice, but looks kind of nice and it's good marketing, is to have a generous leave policy that's just as good. Now, remember, they don't have to take the days off that they're given. So even if you're a little bit generous with your policy, it leaves room for them to be able to take a lot of time off, but at the same time, feel like they're not doing anything wrong if they take time off or any time off, regardless of what other people are taking, basically they're measuring themselves against their allowance and not other people. So when we put together our leave policy and we reworked it and we improved it, we wanted to have a healthy number of holidays, like vacation days for them, as well as local holidays. We give five local holidays, which means, you know, everybody has different local holidays, national day, all that kind of stuff, depending on where they are in the world. We have a remote team that's global, so we want to make sure we accommodate for that. So they have five local holidays that they can use, and they can be personal days, too, as well. We also have sick leave allocations as well, maternity leave, all that kind of stuff. But the point here is, is that we have a healthy number of days they're allowed to take off, so they feel like they are not doing anything wrong by taking some days off to relax and recharge. Now, this is what I've learned over the years that's very interesting. You're gonna have a spectrum of people in your team. There are gonna be people that need more time off. Like, they just, by nature, for some reason, run out of gas and need more time to recharge their batteries. And there's other people that take very little days off and are willing to work hard, and they're ambitious, and they will keep going, and maybe they'll even do overtime voluntarily. And that's great. But you need to kind of protect both people. Meaning, for example, people that don't take that much time off, they might think that they don't need the time off, but they actually do, right? They probably are not giving themselves permission to relax and take some time to recover from all the hard work they do. So one thing that we've implemented that has worked really well is combining two different rules. The first rule is that leave days do not roll over, meaning that you can't just save your leave days. Year after year, they reset at the start of the year. So it's basically use it or lose it. And it's okay to lose it, it's fine. But it also allows them to remind themselves, hey, I should keep in mind when I take time off, even if it's two days here, one day here, extended break, that's fine. Now, I set a combination of two rules. This rule, meaning no rollover and number two is you can't take it all at once, right? You want to spread it out. You want to pace yourself so that you get the rest when you need it, not when you just take, you know, a whole bunch of days off and then you're done for the year and you can't take any more leave. We've had team members that did that, and I got to tell you, it didn't work out. They got burnt out, and they regretted it. They kind of didn't have the foresight. So we built in the rule where you just can't take all the leave at once. We have a max amount of days in a row that they can take off, and this allows them to kind of space themselves because it's a healthy policy. Even if they go with that maximum number, it's still a good amount of time for them to recharge. Of course, we have our own holidays as well, like we take Christmas off and New Year's and Easter and all that kind of stuff, so that allows some break too. The point here is that you can craft your own policy to work for your own needs, making sure your team members feel like they're being treated well, have enough days off to take so that they can feel recharged, but at the same time not have some sort of unwritten rule about how many days to take off when it's unlimited. This Valentine's Day, schedule your flower delivery in advance to show how much you love someone. It's so easy with Urban Sims. 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To wrap up today's Q and A Wednesday's question Should I have an unlimited leave policy for my team? I don't recommend it. It doesn't work. Instead, have a generous leave policy that works for your team. And here's a tip. If you're trying to recruit great talent and you have great talent already, you said you had five team members. Dan, ask your team members to talk a little bit about what it's like to work at your company. What they love about it, what they enjoy. We've done this with our team. We've built videos, we've grab testimonials and quotes, we have pictures, all kinds of stuff. And we use that as a recruitment tool to attract people just like the people we have like minded people, people that appreciate the same things. So most team members that are happy are more than happy to help you out with this exercise. Thanks so much for listening to the $100 MBA show. If you love what you hear, if you want to hear more of it and you want to hear over 2,200 episodes in our back catalog, make sure you follow us. Just tap the triple dots in the top right hand corner of your screen on Apple Podcasts or Spotify and click follow. Want to give us some extra love? Share the podcast on social media. Let people know that hey, I listen to the hundred dollar MBA show. Love it because it helps me every day get better at business. Before I go, I want to leave you with this. One of my favorite books that I read when I was developing myself as an entrepreneur in the early days of was Derek Sivers book Anything youg Want. And in that book he talks about the beauty of being an entrepreneur is that you get to build your own utopia which is your business. You get to make a rule so you can choose whatever you want. You can create the environment you want to work in. It's a good reminder that this is one of the perks of being an entrepreneur is that we get to choose the place we want to work at and who do we want to work with? Who do you want to attract to come and work with us? Pretty cool. That's it for me today guys. I'll check you in tomorrow's episode. I'll see you then take care. Of.

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