Report: $272 Billion Tied Up In Accumulated Vacation Time
The uncertain vacation culture created by America’s managers has led to $272 billion in accumulated vacation time sitting on the balance sheets of U.S. businesses this year, according to a new Project: Time Off report, The High Price of Silence: Analyzing the Business Implications of an Under-Vacationed Workforce. Private sector vacation liability has surged 21 percent in the last year.
The report, based on survey research by GfK and a review of 10-K financial statements by Oxford Economics, analyzes management’s unique time off viewpoints, pressures, and privileges to uncover contradictions that contributed to 658 million unused vacation days in 2015.
“This is a $272 billion wake-up call for America’s business leaders that they cannot afford to ignore vacation,” said Project: Time Off Senior Director and report author Katie Denis. “Beyond the red mark on balance sheets, not taking time off hurts employee engagement and productivity, affects talent retention, and expedites burnout—all of which hurt a company’s bottom line.”
Despite an overwhelming belief (93%) among managers in the importance of time off, six-in-ten managers (59%) report leaving time on the table, compared to slightly more than half of employees (53%). Senior management is considerably worse, with fully two-thirds (67%) of executive and senior leaders who left vacation unused last year.
The report reveals a troubling narrative about the stresses faced by senior leaders, caught between the C-Suite and the rest of the organization. The challenges senior leaders experience in planning and using their vacation may have a negative influence on company culture, as they interact most closely with non-manager employees. The fear of returning to a mountain of work was cited by 55 percent of senior leaders on why they didn’t use their vacation time, compared to just 26 percent of executives.
As companies look for competitive advantages in the benefits arms race, increased consideration needs to be paid to the under-utilization of vacation and its impacts on the bottom line and beyond. The report highlights best practices from companies that understand and have harnessed the power of vacation, including:
Increased Energy and Avoiding Burnout. Managers say the most compelling reason for time off is to cut down on burnout. Brian Scudamore, CEO of O2E Brands, which includes 1-800-GOTJUNK, changed his vacation habits once he realized the business suffers when he’s burnt out and that trickles down.
Boosting Creativity. The majority (84%) of managers agree that when employees take time off, they return to work with improved focus and creativity. Instagram, Dropbox, the musical Hamilton, and Starbucks, as it is today, were all inspired by vacation thinking.
Talent Development. When managers forego vacation, it robs employees of the opportunity for increased responsibility and companies of the chance to see if their talent strategy is working. Deloitte Consulting CEO, Jim Moffat, believes that if leaders are unable to take vacation without checking in, it is symptomatic of larger issues in the company.
Talent Retention and Attraction. Positive vacation cultures are key to attracting and retaining talent. FullContact, popular for its $7,500 vacation incentive, reports nearly eliminating turnover since implementing the popular program.
“From the C-suite down, managers need to embrace the potential time off holds for themselves and their employees. Choosing to ignore vacation is choosing to fall behind companies that appreciate its power,” Denis concluded.