Actionstep's Vice President of engineering Stevie Mayhew describes offering all employees unlimited annual leave as a 'high–trust model'. Video / NZ Herald
Microsoft introduced a new unlimited-leave policy for salaried staff this week, following others in the tech sector including Netflix, Salesforce and Microsoft-owned LinkedIn.
The policy doesn’t extend to the colonies, but New Zealand does have other tech companies who’ve embraced the trend (keep reading).
The policy seems radical. But forsome it’s proved a trap.
“On first blush, people do think ‘That workplace is crazy! People will take indefinite leave’,” says AUT Professor of Human Resource Management Jarrod Haar.
“But the reality is that they almost never do. Most take no more leave than usual – and the highest-engaged staff actually take less leave.”
Various US studies bear out Haar’s comments. Staff who were comfortable taking a set number of days felt sheepish or guilty about taking time off when the open-ended decision about leave fell on their shoulders. One US publication even went as far as calling it a “hell trap disguised as a perk”.
There’s also the meat-and-potatoes drawback that leave days doesn’t accrue, so there’s no outstanding holiday payout when an employee leaves (Microsoft US staff will get a one-time payout in April for any unused vacation balance).
AUT Professor of Human Resource Management Jarrod Haar. Photo / File
New Zealand-founded tech company Actionstep introduced unlimited leave after pandemic lockdowns up-ended its thinking about work-life balance.
The maker of practice management software for mid-sized law firms - mainly across NZ, Australia, the UK and the US - billed it as a “high-trust” model in April last year.
How’s it going today?
Actionstep’s Auckland-based global president David Hepburn says it’s been a roaring success. Staff are more productive, and feel more empowered.
He told the Herald that the “guilt” factor that’s undermined unlimited leave policies as several big firms in the US - and even seen several abandon the policy - was front-and-centre of the company’s thinking when it introduced its own policy.
Its solution was to include a minimum leave provision of four weeks (which also helped smooth things over from a legal standpoint).
And over Christmas and New Year, all staff - bar a skeleton crew - took an enforced two-week break.
AUT’s Haar - while overall encouraging of such policies - added, “For very large firms, there might be those 1 to 3 per cent who are slackers and see this as a super chance to skive.”
He notes it could go off the rails in a situation where a staffer is in a hunt-for-another-job mode, or otherwise mentally checked out, opening the door to a super-charged form of so-called “quiet quitting”.
How does Hepburn get around that one? Actionstep managers periodically review the amount of time off taken by staff (removing the pure discretionary element).
“If someone’s taking no time off, or taking the piss, then there can be a mature conversation,” he says. Previously, with the default system, there was no medium for that discussion.
Hepburn says nearly all Actionstep’s local staff have taken nearly exactly the same amount of days off under the Unlimited leave setup. But the key difference is that they’re a lot more collaborative about it. With a feeling of more flexibility, they coordinate time off more with their immediate colleagues, which makes time off less stressful and more true time off in an age of always-on connectivity.
US staff - who only have two weeks of statutory annual leave - had come up to the same speed as Kiwi employees. A key reason for introducing unlimited leave was to put Actionstep’s NZ, Australia, UK and American staff on the same footing, Hepburn says.
Haar’s take: “Workers might be encouraged to work extremely hard and power through work, and then take time off to recover - say, two months full-power and then one week off. If it suits people’s work and life and wellbeing, then it’s much better than powering on for 11 months and then trying to recover during the Christmas break.”
He adds that an unlimited leave policy “tells employees they are trusted and valued and that is likely to affect engagement, performance, and retention. I’d call it a bold move but a brilliant one if its about professional services and high-quality employees.”
Smart cow collar firm Halter introduced unlimited leave in 2021 and has enjoyed a period of rapid growth since, including a $32m raise and boosting staff numbers from 60 to 115 at a time of an extreme tech talent squeeze.
Timely founder Ryan Baker: "It’s the quality of the work that matters, not the quantity. A calm, rested, focused and motivated mind does the best work."
And New Zealand is also the home of one of the open-ended hours pioneers: Dunedin-based Timely, a maker of appointment-booking software founded by Ryan Baker in 2011.
In 2019, Baker explained why he did not believe in timesheets: avoiding what he called “unwork”.
“Unwork happens when you’re not in a good head space to produce your best work. You produce poor quality work that takes more time later to tidy up.”
The firm’s 90 or so staff were measured by their contribution, not how many days they spent in their office (always a home office; Baker was also a remote work pioneer.)
“It’s the quality of the work that matters, not the quantity. A calm, rested, focused and motivated mind does the best work”
The approach certainly created a lot of value. The startup that Baker bootstrapped from his Dunedin home a decade ago was bought by Silver Lake-backed American firm EverCommerce in 2021 in a $100m-plus deal.
