Instituting Required Vacations

Okay, so today’s post isn’t really directly related to IT very much (more HR policy), but I do find it a very interesting subject that definitely applies to small businesses.  I stumbled across this article this morning about the downfall of people taking less vacations.  Again, it struck me as interesting since we have been recently reviewing our vacation policy as part of preparing for our SAS 70 audit.  As the article points out, peak performance requires down time.  In order to operate a peak performance, both our brains and our body require downtime.  If we don’t give them this downtime, our performance will suffer.  So if you want to get the most out of your employees and ensure their mental health, requiring them to take at least 5 consecutive days vacation once a year would be a great policy.  Looking into that, I stumbled across this article which shows some standard minimum required vacation by country.  Of course, the US is at the bottom with 0 weeks, even below Japan, the country that invented the concept of karoshi, being worked to death.

So we’ve determined requiring a week of vacation of employees is good for their mental health and performance, but it also has many other benefits.  Researchers are linking less vacation time to increase workplace tensions, anger, and conflicts.  All of these things can cost companies large amounts of money in lost productivity, employee turnover, and potentially lawsuits.

However, probably the most important reason for a small business to institute a “required vacation” policy is to prevent fraud.  As you can see from this article, small businesses are much more susceptible to fraud than large companies because individuals usually have much more responsibility with less checks and balances than at a large company.  Obviously, a little more due diligence during the hiring process can help reduce this risk a lot, but required vacations can play a large role in uncovering any fraud that may be going undetected.  When someone is committing fraud, they usually have to doctor records or do something to cover up their tracks.  Very often, this is a very regular task they would have to do daily, or at least every couple days.  If they are required to go on vacation, they will not be there to cover their tracks which greatly increases the likelihood that someone will notice that something isn’t right and uncover this fraudulent activity.  Of course, their other alternative is to begin working with another person so the other person can doctor the records while they are on vacation, but this complicates matters greatly for the fraudulent employee.

Finally, maybe just as important as the reason listed above, small companies should require employees to take at least 5 consecutive days of vacation a year to help ensure they are not too reliant on a single individual.  If your business can’t survive 5 days without one individual, what are you going to do if that individual has an accident or decides to look for a job somewhere else?  If it’s simply a problem of man-power, consider a temp agency to help fill the voids.  However, the thing you need to look out for more is “tribal knowledge”.  In other words, if you can’t survive an individual being gone because he or she is the only one that knows how to do a given task, then you need to have someone else trained to do the task, or document the process so anyone can do it.  Again, what are you going to do if this indispensable employee has a bad accident or decides to take his or her knowledge elsewhere?

So, as we see, not only are vacations vital for an individuals mental well being, they increase performance as well as provide countless other benefits to the organization.  I am curious if anyone out there actually has a policy like this currently?  Hopefully the value of this is starting to be known and we will see these policies becoming more and more common.

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