Jason Freedman was looking to hire a new employee at his startup, and he knew just the applicant he wanted for the job. The only problem was that the candidate’s current gig had left him frustrated and exhausted to the point of burnout, which was why he was on the market.
“Every other company he was talking to was asking, ‘How soon can you start?’ ” says Freedman, co-founder and CEO of 42Floors, a San Francisco-based commercial real estate search engine. Freedman wanted the guy, but he didn’t want him coming in haggard and beleaguered. So he made him a job offer with one stipulation: The candidate had to take a two-week paid vacation—before his first day. Delighted and relieved, the candidate accepted.
“We called it a pre-cation,” Freedman says. “It was only a couple of weeks, but he just came in so refreshed and energized, it was amazing.”
Freedman decided to begin offering pre-cations to all his new hires. “The day they get their offer letter, it’s kind of like Christmas morning, in that they have a new job and they’ve already thought through the vacation they’re about to go on. We have a guy who’s about to start next week, and he’s in Thailand right now. It’s like, ‘Yeah, have a great time! And when you get back here, work your ass off.’ ”
It’s the perfect job perk for our overworked times. Americans work longer days and take less vacation than anyone else in the developed world. Worker productivity has increased by 80 percent since 1973. Meanwhile, 40 percent of Americans get less than seven hours of sleep per night. We deserve a break.
Yet many of us, especially in competitive fields, are hesitant to take even the relatively small amount of vacation to which our jobs entitle us. Our work ethic remains a point of pride even as it saps our energy and enthusiasm for the job.
Some well-off employers, including many Silicon Valley startups, have responded by offering their workers unlimited vacation. Atlassian, a San Francisco- and Sydney-based enterprise software company, does not track vacation days for its 300-plus U.S. employees. Yet it says it has seen no significant uptick in the total amount of time its workers take off.
So, like 42Floors, it gives them a little push, handing every new hire a travel voucher and encouraging them to take a trip before their first day. Atlassian dreamed up the idea in 2010 as part of a revamped recruitment campaign designed to spend less on recruiters and more on things that would directly benefit new hires.
“We want people to bring their best every day, and we want them here for the long haul,” says Jeff Diana, Atlassian’s chief people officer. “Changing jobs is an important shift, and we want to give people time to recharge, spend some time with family. Because once you start a new job, you kind of jump all in.”
The pre-cation policy flows from Atlassian’s view that memorable perks and a livable workspace make for happy employees without busting the company’s budget. Company bonding events like barbecues at San Francisco Giants games are frequent and well-attended. After five years of service, employees are asked to take another break and given $3,000 toward the vacation of their dreams. And instead of end-of-year cash bonuses, top performers get personalized packages delivered to their houses. The packages include fancy chocolates, confetti poppers, bottles of Champagne, and a hand-written letter from a superior about what makes the employee so valuable. Oh, and they come with grants of equity in the company.
The thoughtful touches make such an impression that they sometimes overshadow the monetary rewards in employees’ minds, Diana says. “People have the letters framed on their mantle. I have to ask them two or three times, ‘Great, so what did you think about the equity?’ ”
Atlassian’s “high-touch” approach to human resources has made it a mainstay of “best places to work” lists in both the U.S. and Australia. The company tells me that “regrettable attrition” rates for its employees are in the single digits, and 90 percent of respondents in an employee survey said they hoped to remain with Atlassian for a long time.
It would probably be premature to call the “pre-cation” a trend. While there are probably a few others out there, Atlassian and 42Floors are the only companies I could find that offer it, and both say that they came up with the idea independently; neither had heard of any others offering the same perk.
David Lewin, professor emeritus at UCLA’s Anderson School of Management, says the concept is a new one to him as well. But it reminds him of a somewhat similar practice that’s common among companies that hire MBA graduates: “Especially in economic growth periods as opposed to recessions, they will negotiate over their start date. It happened a lot in 2006 and ’07, it happened in the late ’90s, and it’s starting to happen again. It probably reflects the same underlying notion: ‘We’re working our butts off, and gee, wouldn’t it be good to have a couple months off to go do whatever one does with free time, and then start fresh and ready to roll?’ ”
Lewin is skeptical of the unlimited-vacation policies that have become de rigueur in the startup world. When you can take all the vacation you want, that means you can also take as little as you want, and employees might feel insecure or uncertain about how long they can afford to be away. As for the pre-cation policies, Lewin can see the appeal but notes that they may come at a price that not every company can afford.
If you ask Freedman of 42Floors how much his pre-cation program costs his 40-person company, however, you’ll get a surprising answer: zero. “The way you would calculate it would be the total dollars spent on paid time off,” he says. “But when I look at the overall amount of vacation time in the company, if anything I wish it was a little higher.”
In the long run, Freedman is convinced the policy boosts his bottom line. “The number one thing employers need to do if they want to get the most out of their workers is to get across that we care about their well-being. When they go home for Thanksgiving, we want their mom to say they’ve never looked so healthy. That’s why they stay in the job—and they’ll reward you with their passion and hustle.”