Most organisations treat vacations in the same reluctant way that parents dole out candy to their children. They dispense a certain number of days each year – but once we’ve reached our allotment, no more sweets for us. One US company, however, has quietly pioneered an alternative approach. Netflix Inc. is a streaming video and DVD-by-mail service that has amassed 15 million subscribers. At Netflix, the vacation policy is audaciously simple and simply audacious. Salaried employees can take as much time off as they’d like, whenever they want to take it. Nobody — not employees themselves, not managers — tracks vacation days. In other words, Netflix’s holiday policy is to have no policy at all.
Back in the old days – 2004 – Netflix treated holidays the old-fashioned way: it allotted everyone ‘n’ days a year. You either used them up or you tried to get paid for the time you didn’t consume. But eventually some employees recognised that this arrangement was at odds with how they really did their jobs. After all, they were responding to emails at weekends, they were solving problems online at home at night. And, every so often, they would take off an afternoon to ferry a child to the paediatrician or to check in on an ageing parent. Since Netflix weren’t tracking how many hours people were logging each work day, these employees wondered, why should it track how many holidays people were taking each work year? Fair point, said management. As the company explains in its Reference Guide on our Freedom & Responsibility Culture: ‘We should focus on what people get done, not how many hours or days are worked. Just as we don’t have a 9-to-5 day policy, we don’t need a vacation policy’. So the company scrapped the formal plan. Today, Netflix’s roughly 600 salaried employees can vacation any time they desire for as long as they want — provided that their managers know where they are and that their work is covered. This ultra-flexible, freedom-intensive approach to holiday time hasn’t exactly hurt the company. Launched in 1999, Netflix is now a highly successful and growing enterprise.
Perhaps more importantly, this non-policy yields broader lessons about the modern workplace. For instance, more companies are realising that autonomy isn’t the opposite of accountability – it’s the pathway to it. ‘Rules and policies, and regulations and stipulations are innovation killers. People do their best work when they’re unencumbered,’ says Steve Swasey, Netflix’s Vice President for corporate communication. ‘If you’re spending a lot of time accounting for the time you’re spending, that’s time you’re not innovating.’
‘The same goes for expenses. Employees typically don’t need to get approval to spend money on entertainment, travel or gifts. Instead, the guidance is simpler: act in Netflix’s best interest. It sounds delightfully adult. And it is – in every regard. People who don’t produce are shown the door. ‘Adequate performance,’ the company says, ‘gets a generous severance package.’
The idea is that freedom and responsibility, long considered incompatible, actually go together quite well. What’s more, Netflix’s holiday policy reveals the limits of relying on time in managing the modern workforce. In an era when people were turning screws on an assembly line or processing paper in an office, the connection between input and output was tight. The more time you spent on a task, the more you produced. But in much white-collar work today, where one good idea can mean orders of magnitude more valuable than a dozen mediocre ones, the link between the time you spend and the results you produce is murkier. Results are what matter. How you got here, or how long it took, is less relevant.
Finally, the Netflix technique demonstrates how the starting premises of workplace arrangements can shape behaviour. In his new book, Cognitive Surplus: Creativity and Generosity in a Connected Age, New York University scholar Clay Shirky argues that when we design systems that assume bad faith from the participants, and whose main purpose is to defend against that nasty behaviour, we often foster the very behaviour we’re trying to deter. People will push and push the limits of the formal rules, search for every available loophole and look for ways to game the system when the defenders aren’t watching. By contrast, a structure of rules chat assumes good faith can actually encourage that behaviour.