Blog post

Are you offering enough paid vacation to attract top talent?

Employers and employees alike are striving to achieve an optimal work-life balance that will maximize company productivity and minimize turnover—and HR professionals know that paid vacation time is a key component in that balance. But what is the benchmark for paid vacation time in the tech world? How can HR leaders know if their paid vacation package is enough to attract top talent? 

How many paid vacation days should your company offer?

Paid vacation around the world

Before looking at the numbers from the US, it’s a good idea to take a look at what’s going on in the rest of the world. The US is the only OECD country that doesn’t specify a statutory minimum annual leave entitlement at the federal level. Although approximately 77% of employers in the US do offer paid leave of some sort, there is no law requiring them to do so. 

Average number of vacation days by funding round

Since there are no national guidelines in the US, there is huge variation from company to company. Data from Compete show that the average number of vacation days provided by tech companies is 12 days a year. However, when our experts dove deep into the data they found that there was a big difference between earlier stage start-ups (Round A-C) who provided on average 9 days vacation, and more established tech companies (Round D upwards) who gave their employees on average 15 days vacation. It’s something that start-ups should keep in mind. Even if they can’t always compete with the big players in terms of salary, they can stay in the talent game by remaining competitive in terms of paid vacation. 

Are unlimited vacation days the answer?

One number that stood out in our statistics was that a whopping 29.5% of tech companies in our data offer unlimited vacation days. Unlimited paid vacation days sound like an employee’s dream come true. The idea is that as long as you get your work done, you can take as much time off as you need. 

An unlimited vacation day policy provides a much-needed balance to the demands of the tech world. As Netflix Co-CEO Reed Hastings explained in his 2020 book, “No Rules Rules: Netflix and the Culture of Reinvention,” an employee once said to him: “We are all working online some weekends, responding to emails at odd hours, taking off an afternoon for personal time. We don’t track hours worked per day or week. Why are we tracking days of vacation per year?” That’s when Netflix implemented the unlimited vacation policy. 

While some leading companies like Netflix and GitHub have been able to implement the policy successfully, in other companies, unlimited paid vacation can seem like a double-edged sword. Employees often take fewer vacation days when they are unlimited, as there is no set standard of what is acceptable. In fact, in some companies, it can create a culture in which it feels unacceptable to take any time off at all. Even when they do take time off, employees often complain that the time off doesn’t feel like “real vacation” and that they are expected to be online and responsive even when they’re off. There are also financial ramifications of unlimited vacation days – when an employee leaves a company, he or she can’t cash out the paid time that they have accrued, which can be quite significant. 

Keep track of the real-time stats 

There is no “one size fits all” solution for vacation policy, but it is important to stay on top of the trends in order to remain competitive. The market is dynamic—an unlimited paid vacation policy was unheard of five years ago, and today, it’s becoming more mainstream in the start-up world. And as more workers go remote, the competition for top tech talent is increasingly global.

As the Great Resignation accelerates and the battle for talent rages, it’s really an employees market, and employees care about their work-life balance. Offering a competitive paid vacation package can be a great way to offer that balance and attract the talent that is key to your company’s success. 

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