Work Zone: A bottomless well of vacation time

Employee autonomy at Netflix means leaving the office for as long as you want, as often as you want, if the work gets done

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Paul Sakuma, Associated Press
Netflix Chief Executive Officer Reed Hastings says vacation limits and face-time requirements are "a relic of the industrial age."
By Ryan Blitstein, The San Jose Mercury News

SAN JOSE, Calif. -- When it comes to vacation, Netflix has a simple policy: Take as much as you'd like. Just make sure your work is done.

Employees at the online movie retailer often leave for three, four, even five weeks at a time and never clock in or out.

Vacation limits and face-time requirements, says Netflix Chief Executive Reed Hastings, are "a relic of the industrial age."

"The worst thing is for a manager to come in and tell me: 'Let's give Susie a huge raise because she's always in the office.' What do I care? I want managers to come to me and say: 'Let's give a really big raise to Sally because she's getting a lot done' -- not because she's chained to her desk."

Across America, executives are searching for ways to keep experienced baby boomers at their companies and attract younger workers, many of whom are used to controlling which songs they listen to and where they get their news.

Netflix's time-off rules -- or lack thereof -- are part of a broad culture of employee autonomy instilled in the company when Mr. Hastings founded it a decade ago. The executives trust staffers to make their own decisions on everything -- from whether to bring the dog to the office to how much salary they want in cash and how much in stock options. Workers are treated, as Chief Talent Officer Patty McCord likes to say, as adults.

"We want our employees to have great freedom -- freedom to be brilliant or freedom to make mistakes," Mr. Hastings said.

That might sound like executive blather, but to hear employees tell it, on the way to almost $1 billion in sales last year, Netflix has made good on its promises to workers.

"There's an inverse relationship between how often a company talks about its values and how much those values are actually reflected in the workplace," said Heather McIlhany, a Netflix online marketing manager who took a three-week vacation to South Africa in November, just nine months after joining the company. "At Netflix ... the freedom is inherent in how we work," Ms. McIlhany said.

Though cultural change is hard to measure, some of America's largest businesses are experimenting with unconventional time-off rules and benefits. New Brunswick, N.J., health-care giant Johnson & Johnson has an ever-expanding stable of work-life balance programs, including an extra week's paid vacation for new moms and dads, and for parents adopting.

"Companies are trying to give people more responsibility, more freedom and more flexibility," said Carol Sladek, a principal at Lincolnshire, Ill., human resources consulting firm Hewitt Associates. "If you have more control, your life feels better."

To be sure, Netflix's time off policy is rare, and applies to only its 300-plus salaried workers, not the much larger hourly work force. Experts said it was hard to imagine a bigger Fortune 500 company adopting the idea. As one Yahoo spokeswoman scoffed: "We're a grown-up company, with over 12,000 employees, and you have to have some semblance of process and procedure."

But even in perk-heavy Silicon Valley, what's happening inside Netflix's Tuscan villa-style Los Gatos, Calif., headquarters may be unprecedented.

American workers get a median of 10 vacation days after one year on the job and 15 days after five years of work, according to Hewitt. One in three Americans doesn't use all his vacation, and barely one in 10 takes a break for two weeks straight, according to the nonprofit research firm Families and Work Institute. But at Netflix, it's estimated that most employees take off about 25 to 30 days per year, using the time to stay at home with the kids, travel to Cambodia or visit relatives in India. It's "estimated" because Netflix does not record vacation time, said Ms. McCord.

"I've never terminated a salaried employee for being tardy or being absent," she said. "There have been issues when people didn't come to work -- but the issue is the work, it's not the time off."

Among half a dozen corporate HR experts nationwide, none could name a company with such a widespread and successful unlimited vacation policy. Microsoft tried with executives in the 1990s, but few managers used more than a few weeks.

The roots of the Netflix culture grew partly from difficulties at Mr. Hastings' first startup, Pure Software (now part of IBM), where Ms. McCord served as director of HR. He made tens of millions at the company, but along the way, Pure lost its spark.

"We had this great early culture; but after we went public, we had a lot more normal rules," Mr. Hastings said. "You didn't need a bathroom pass to go to the bathroom, but it kind of felt like that sometimes."

In 1998, Mr. Hastings lured Ms. McCord away from a four-day-a-week consulting gig to join Netflix, persuading her with a vision of "the company we always dreamed of." They've since created a billion-dollar corporation that retains the feel of a family business, where the CEO knows the majority of the 200 or so workers at headquarters by name, partly because he and Ms. McCord hold small group meetings with all recent hires.

At one such gathering a few years ago, an employee argued that it didn't make sense for Netflix to track vacation days. "You're not measuring my daily hours, so why are you measuring the number of days I work?" he asked. Mr. Hastings and Ms. McCord agreed, but the company's attorneys took some convincing.

As remarkable as the rules might sound, Netflix employees weren't surprised.

"We don't think of it as a perk," said John Ciancutti, a Netflix director of engineering who is traveling for several weeks in the Galapagos Islands with his mother this spring. "It's just emblematic of the way we work here."

The company's work-hard/play-outside-the-office culture is one reason Ms. McCord believes that Netflix avoided the post-public offering exodus that plagues many technology companies. Five years after the IPO in 2002, six of its seven top executives are still with Netflix.

The worker-oriented rules aid retention in the lower ranks, too; Mr. Ciancutti joined as a junior engineer in 1999. And the culture allows the company to hire independent, creative types like Director of Product Management Todd Yellin, who spent much of his first several months on the job traveling to Los Angeles to complete work on an independent film.

Yet open-minded treatment of workers isn't without its challenges. Chief among the problems at similar programs, according to Ms. Sladek, is that managers are inconsistent. Some might grant their team two months vacation and two days working at home per week, while others choose two weeks and no telecommuting.


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