Guest Post: Freedom and Responsibility: Why Netflex Scrapped Its Vacation Policy by David Burkus

David Burkus is one of the most readable and thought-provoking folks talking about progressive management and leadership.  His new book titled Under New Management debuts on Amazon 5.  I am pleased to host the following guest post.

This original post was inspired by concepts from chapter three of Under New Management. This case study examines Netflix’s decision to completely scrap its standard vacation policy immediately following its move to a publicly traded company, relying instead on the maturity and common sense of its employees to do the right thing.

b1e8b0cd-f5de-4901-853c-2dac404c4a62Freedom and Responsibility: Why Netflix Scrapped its Vacation Policy

When Netflix went public in 2002, company leaders weren’t expecting to end up changing their long-standing vacation policy. Before it becoming a publicly traded company, Netflix’s vacation policy looked like those of most companies: you get a certain number of vacation days per year, and any days left over you lose, roll over, or get paid extra for at the end of the year. This kind of policy is largely a holdover from the industrial age, when factory managers needed to ensure that all shifts were properly covered.

At Netflix, people received ten vacation days, ten floating holidays, and a few sick days. Employees were on the honor system, keeping track of the days they took off and letting their managers know when and how many they took. Freedom and responsibility are strongly valued in the Netflix culture, but after going public, culture and regulations collided. The first collision was instigated by the company’s auditors, who claimed that Sarbanes-Oxley rules for public companies required Netflix to account for all time off taken by employees and that the honor system was inadequate for tracking. Continue reading