Why Branson’s Vacation Policy Makes Sense

November 5, 201410:00 am1143 views

Richard Branson’s recent decision to abolish the Virgin vacation policy for a pilot group of 170 employees forced managers to sit up and reexamine their company culture. Branson is the cultural icon for mainstream business in much of the Western world. Virgin’s vacation “non-policy” legitimizes the idea of greater freedom for workers and leaders around the world.

The main message, however, isn’t about vacation but company culture. The only way to thrive in the digital economy? Trust your employees. Vacation policies, bi-annual reviews and other dated practices establish artificial power struggles within organisations, leading to predictable results: mediocrity.

Branson Moves, World Watches

The vacation non-policy isn’t a new concept. Netflix already does it, as do a handful of tech companies including VMWare, SurveyMonkey, Eventbrite and Evernote. However, Branson carried the idea from the halls of tech firms out into the corporate mainstream.

Branson built his reputation by embracing the “why not?” Why not build a spaceship? Why not establish the new benchmark for luxury travel with Virgin Upper? And although not every “why not?” venture was so successful — see his experiment with vodka — it sent a message to employees that anything is possible. Failure isn’t the end of the road.

Branson’s relentless pursuit of innovation is rightfully admired by the business world, because it demonstrates that even the most outlandish business ventures can succeed as long as you have the culture back them up. Inspired success like Virgin’s evolves from enthusiastic, hardworking employees. The most brilliant team in the world will eventually go fallow if the work environment and corporate culture don’t motivate success.

Trust Matters

The average employed American spends more time on work-related activities than sleeping. Whether those hours pass pleasantly or painfully impacts everything from employee satisfaction to top-line revenues.

Harvard Business School professors James Heskett and John Kotter once found that firms with “performance-enhancing” cultures had, on average, 416 percent more revenue than counterparts that didn’t focus on corporate culture. Branson put it more bluntly: “If it weren’t for a bunch of well trained, motivated and, above all, happy people doing their bit, we’d never have launched a record label, never mind a fleet of 747s.”

Specific ingredients for a good culture vary but the bottom line is trust. Only in a trusting environment can workers communicate openly, know roles and expectations, be honest about progress and, in the end, function as a real team.

Management’s role? Provide the connective tissue for trust and feed communal motivation. Vacation abusers and freeloaders won’t last in a collaborative, transparent environment. Yet most companies — especially in Singapore — do the modern equivalent of glaring onto the factory floor and frightening workers into moving their hands faster.

The outcome is mediocrity, employee frustration and a lack of job satisfaction. The common cause? At least anecdotally, many incidents of managers with no insight or background into company operations or organisational inertia inhibit policies and work arrangements that may actually create a positive work environment.

Flexible Corporate Policy

Every workforce mirrors the technology that enables it. Hunter-gatherers collaborated in small teams around spears, knives, and baskets. Industrial Revolution workers performed simple tasks in massive factories, overseen by managers in elevated windowed offices.

Today, mobile devices and cloud-shared information put the means of production into everyone’s hands, decentralising collaboration and requiring managers to take on an enabling, rather than a commanding, role in team and group hierarchies. Efficient command & control requires greater trust in and autonomy of modern workers.

Bi-annual reviews, excessive bureaucracy and vacation policies establish artificial windows of control. The real focus should be on how to nurture trust. There’s no reason to stress out employees twice a year — and prove managerial lack of awareness — when having an ongoing conversation with the workforce is more productive.

Requiring sign-offs for time off is moot when one-quarter of your employees are remote contractors, distributed around the world. Imposing 10 days of vacation puts company rigmarole before employees as humans. Company policy must become flexible. Otherwise, it’ll create friction with the realities of the digitised workforce.

What Richard Branson has figured out is that if your company is growing, your culture is working. If your company is stagnating, tweak the culture. It’s not about tradition or management’s sense of control. As Apple, Google, Netflix, and Virgin have shown time and again, a flexible, collaborative and trust-based culture feeds the bottom line.

Credit: VentureBeat

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