Vacation’s Impact on the Workplace

Executive Summary

Employees who take most or all of their vacation time each year perform better, are more productive and more satisfied in their jobs than those who do not, according to HR professionals. In a study conducted by the Society for Human Resource Management (SHRM) for Project: Time Off, talent managers and human resource (HR) professionals overwhelmingly agree that fully utilizing vacation leave drives higher employee performance and productivity, boosts organizational morale, contributes to employee wellness and results in higher employee retention.

However, despite employers’ perception that vacation delivers clear benefits, employees are leaving time on the table. The findings make clear that encouraging employees to use their vacation days plays a vital role in contributing to the success of the entire organization.

The findings are based on a survey conducted between August 22 and September 5, 2013 of 481 randomly selected, U.S.-based human resource professionals at the director level or above from among SHRM’s membership. 

Key Findings

The majority of HR managers agree (77%) that employees who take most or all of their vacation time are more productive in their jobs than those who do not. Further, HR managers believe that taking using vacation time leads to higher performance (75%) and increased job satisfaction (78%).

According to HR professionals, taking more vacation may boost employee performance. Seventy-two percent of SHRM members surveyed agree that if employees who are currently taking less vacation were to take more, they would be more productive. HR professionals also believe that if employees started taking more of their available time off to recharge, it would lead to higher levels of job satisfaction (74%) and increased employee engagement at work (67%).

An overwhelming majority (85%) of talent managers at “Use it or Lose it” organizations agree that employees who take most or all of their vacation time are more productive in their jobs, 16-percentage points higher than HR managers at firms with rollover policies (69%). Fully seven in ten respondents (70%) in organizations with a “Use it or Lose it” policy believe that employees who take all of their vacation will stay with their jobs longer, while just more than half (55%) of those with rollover policies agree. Project: Time Off research also found that 84 percent of employees under a “Use it or Lose it” structure take all their earned time off, compared to just 48 percent of employees who have the option to roll over, bank, or be paid out for unused time.