Reference no: EM132191981

Besides getting less vacation than workers in many other countries, Americans often don’t use all the time that they do get, and what vacation they take is spent in small slices and often in contact with the offi ce, according to most surveys on the subject. An important distinction for workers in the United States is that there is no federal law mandating that companies pay employees for time off or that they grant them a minimum amount of vacation days unpaid. This is not the case in most of the rest of the world. The typical practice in the United States—among large companies anyway—is 15 days paid vacation and 10 days of paid holidays for full-time employees with 10 years of tenure, according to a survey conducted by human resource consulting firm Mercer. Another study, however, by the Center for Economic and Policy Research (CEPR), found the norm to be much lower when considering companies of all sizes and workers of all tenures: 9 days of paid vacation with 6 days of paid holidays. It also estimates that almost one in four U.S. workers don’t get any paid days off at all. To provide some context for this, all members of the European Union, by contrast, must provide workers with a minimum of 20 paid vacation days a year plus public holidays. Some specifi c examples from other countries include Finland with 30 required vacation days and 14 public holidays, France with 30 vacation days and 10 public holidays, and Australia with 20 vacation days and 11 public holidays. In fact, of the countries surveyed, only countries like Vietnam, the Philippines, and Thailand have less vacation than the United States. To compound the problem, most vacation time is accumulated in the United States based upon tenure. So, for example, an employee may get 10 days of vacation until she has more than 5 years of tenure, at which time she would get an extra 5 vacation days. Joe Robinson, who runs the Work to Live Campaign and advocates for a minimum paidleave law in the United States, contends that a vacation system based on tenure, which is typical at U.S. companies, leaves U.S. workers with consistently low vacation benefits given how frequently people change jobs during a career. While it is not legally required, Procter & Gamble has taken a slightly different approach to the vacation issue. In May of 2004, P&G’s senior management orchestrated a company wide important announcement: There would be time off for good behavior. P&G workers learned they had been granted a two-day vacation bonus, a reward for the company’s sustained excellent performance over the previous four years, during which time P&G’s stock rose from $60 a share in the mid-2000s to more than $106 a share in May 2004. “We’ve never before offered a company performance award such as this, but you’ve earned it,” the chairman wrote to employees in an e-mail. Employees will have the option of taking two days’ pay instead of the time off. A spokesman for P&G said that the cost of the bonus “will be in the millions, though it isn’t material from an accounting standpoint.” The cash involved would be equivalent to a less than 1 percent bonus. Nevertheless, P&G’s gesture had people pondering the value of time off as a motivational tool.

Discussion Questions

1. Do you think P&G’s “across the board” days off reward will motivate employees to perform?

2. What principle of distributing rewards is P&G using?

3. Do you think that making vacation contingent upon performance is a good or bad idea? Why?

4. How do you think top performers are likely to react?