When Goldman Sachs, the investment bank known for its culture of hard work, recently told its senior bankers that they could take as long as they wanted, the policy change immediately catapulted it into the ranks of the most favorable companies. to U.S. employees.
Managers should “take the vacation they need so they can keep running, be competitive, work productively, but take care of their families,” Goldman CEO David M. Solomon told CNBC.
But the bank move has not resulted in much applause in a place where employees build their careers to be available to customers anytime, anywhere. Goldman, in particular, has long been proud of this ethos, so much so that its leaders rarely use all of their vacations and often give up out-of-office messages. Some are even known to carry holiday satellite phones.
“It sounds psychologically reassuring and part of Goldman’s crop with a softer, softer image of Goldman,” said Mike Mayo, a banking analyst at Wells Fargo. “The reality is, it won’t make a difference. It’s like telling a restaurant owner that you can have an unlimited vacation; will that change the way the owner works?
Some observers have been downright cynical about Goldman’s motives, calling the policy a cost-saving move. In the past, if employees had a fixed number of unused vacation days, the bank had to pay them for unused days when they resigned. But unlimited vacations mean that the bank does not have to pay them anything.
“This was totally driven by finance,” said Veehtahl Eilat-Raichel, CEO and co-founder of Sorbet, a company that buys unused vacation days from employees of other companies and puts cash on the cards. prepaid. Unlimited paid time off is “located as if it were an incredible benefit for employees, where in fact it is very bad for employees and amazing for employers,” Ms. Eilat-Raichel.
Goldman Sachs, which recorded a record profit of $ 21.6 billion last year, said any cost savings were incidental.
“Our focus is to encourage our people to take more free time, rest and recharge,” said Bentley de Beyer, the bank’s global head of human capital management. “We are proud to join many other companies in introducing a flexible policy that requires a minimum amount of time out of the office to continue to create resilience and sustained performance.”
Unused vacation days have long been a financial challenge for employers. When employees leave, especially senior executives, with high salaries and mountains of untouched vacation days, the company often has to pay them for their unused free time. It has become an even greater financial strain for companies in recent months, given the huge turmoil in the labor market.
The return of plans to return to the office
Although Covid cases are on the rise again, companies are still trying to get back to some kind of face-to-face work, amid hybrid work models and office renovations.
According to Sorbet, the average U.S. employee has about $ 3,000 in paid time off at any given time. Entrepreneurs across the country owe about $ 272 billion on unused vacation days, Sorbet found.
While companies like Netflix and LinkedIn have long been offering unlimited employee vacations, the option has become popular lately. In a hot job market, unlimited paid time off can serve as a recruiting tool and indicate to a potential hirer that the company values the well-being of employees. But in practice, unlimited holidays are often more beneficial for the employer than for the employee, because they are usually accompanied by a policy of removing unused days from their accounts.
Research has shown that employees with unlimited vacations often take less time off because they do not want to be overwhelmed or perceived as unmotivated. A 2017 study by the human resources platform Namely found that workers with unlimited vacation days took an average of two less per year than those with a fixed number of vacation days. And employers who tell workers to retire as many days as they want usually don’t have to pay them for the vacation days they don’t use.
In other words, unlimited vacations can allow entrepreneurs to position themselves as attentive and thoughtful, while reducing their own financial investment.
At Goldman, the new policy has upset bankers in part because Mr. Solomon has been adamant about a return to office.
Mr. Mayo, the banking analyst, said he was surprised to see how many people worked in the office when he went to Goldman headquarters for his first in-person meeting during the pandemic. Mr. Solomon worked regularly from the office and urged executives to show up in person, a tactic that led some bankers to leave the company.
Goldman CEOs and partners are typically assigned 20 days of vacation or more, depending on the length of their term, said a company representative who asked for anonymity to discuss staffing issues.
Under the new policy, more than 1,400 senior bankers will no longer have a limit on their free time, although all employees are expected to take a minimum of 15 days a year from 2023, according to a note The New York Times. . The 15-day stipulation is to provide some structure to junior employees, who will also have an additional two days off. To make sure the changes are maintained, the company will monitor the vacation days taken and address the issue if necessary during performance discussions, the representative said.
Senior bankers who take less than 15 days will not receive the rest, the person said. By 2017, Goldman had already ruled out a policy that allowed employees to accumulate unused vacations, but some long-term employees still have reserved days from previous years.
“It’s a great thing: they trust their seniors to do the right thing because they’ve earned their advantage, they’ve dedicated their time and they’ve been successful,” said Paul Sorbera, president of Alliance Consulting, an executive. of Wall Street. research company.
Still, there are risks. Employees who sue “old school” executives can jeopardize their careers if they take too much free time, Mr. Sorbera. And in an industry where it is common to work with parental leave and abandon vacation plans, change can be slow.
“A new policy cannot be established and the next day the executives come out and explode the same whip as before,” he said.
William R. Gruver, a former Goldman partner who spent two decades in the company, was skeptical about indefinite vacation policy. “I don’t think they’ll really leave the job behind: they’ll work from the mountain or the beach,” Mr. Gruver, who served as chief operating officer of Goldman’s stock division until 1992.
Mr. Gruver compared his love of work to an addiction, but after that contributed to a breakup and health problems, he left at age 48 and continued teaching at Bucknell University. He now works in a think tank.
In recent years, Goldman has rolled out family leave benefits. He gave 10 days off for Covid-19 outages, which were used by about 4,000 employees. In 2019, he extended parental leave to 20 weeks from 16 weeks.
Goldman’s holiday benefits are echoed by those offered by other financial companies, such as BlackRock, a giant asset manager, and Bridgewater, the world’s largest hedge fund.
Long before Wall Street, the technology industry adopted flexible leisure time and was aware of its potential disadvantages. In his 2020 book, “No Rules Rules,” Reed Hastings, co-executive director of Netflix, talked about the company’s unlimited vacation policy, instituted in 2003, and noted that profit worked best if leaders set an example by taking time off. .
But Robert Sweeney, a technology executive, said when he worked at Netflix in 2011 and 2012 he was embarrassed to ask his manager for free time. Mr. Sweeney recalled a period in that year when he had been working 80 hours a week to introduce a new product. When he completed the project and asked for a vacation, he said, his supervisor reprimanded him for leaving when another important deadline was approaching.
In 2012, when Mr. Sweeney started his own company, Facet, which does technology hiring, mimicking Netflix’s unlimited free time policy. But he found that his employees were taking very few days off and many were tired. Eight years later, Mr. Sweeney changed Facet’s policy to offer a minimum of 25 vacation days a year, and executives had the discretion to grant more to high-performing people.
Experience has made him suspicious of employers who offer unlimited vacations. “They claim they are in favor of employee health and leisure, but they are not really committed to that,” Mr. Sweeney.
Kate Kelly contributed to the report.