This is a great article with some interesting proposals. It mirrors my experience with the "unlimited" vacation policy at my cargo-cult startup employer quite strongly.

The article didn't touch on one of the biggest selling points for pseudo-unlimited vacation policies at startups: It frees the company from having to account for and, depending on state laws, compensate employees for unused vacation time. Unused vacation time is a financial liability in many circumstances, so pretending you don't track vacation time frees you from owing employees any extra compensation when they leave.

Also, it makes your job offers appear more attractive in comparison to other companies' offers. Unlimited vacation time, in theory, is more desirable than even a generous offer with 5 weeks of vacation time. Unlimited > limited. In theory.

Honestly, after deeply burning out within a company with a supposedly unlimited vacation policy, I wish we had just had a defined and tracked vacation policy. We're allowed unlimited vacation, as long as we don't have any big outstanding tasks to finish. The catch is that we're a startup trying to accomplish too much with too few people, so everyone is always too busy to take vacation.

This has all sorts of unexpected consequences that leave the company worse off in the long run. Smart employees quickly learn that taking on new responsibilities will quickly lock them out of taking vacation time. The solution? Don't take on new responsibilities so you can justify vacation time when you need to.

Meanwhile, a few bad apples will always exploit the unlimited vacation policy, leaving the remaining employees with more work. Naturally, this makes the remaining employees even less able to take the vacation they need. To make matters worse, management responded by strongly and publicly discouraging any use of vacation rather than addressing the few people who abuse the system.

Compounding our problems, the new unspoken anti-vacation sentiment from management drives everyone to conceal their vacation plans until the last minute. If you announce your intent to take vacation a month from now, that gives management an entire month to come up with reasons to deny your vacation. But if you announce on Thursday that you'll be out all next week and the flights are already booked, there isn't much that can be done. As a result, we have to scramble to make ends meet every time someone disappears for 1-3 weeks without notice. And of course, management tightens the strings even further on anyone who formally asks for vacation time in advance because we're already short-handed due to other's vacation.

Finally, the unlimited vacation policy is strongly at odds with our management's strong stance against any form of working from home. Those of us who aren't disappearing at the last minute for 3 week vacations to foreign countries have attempted to alleviate the resulting burnout by working from home a few days per week. Management clamped down on that as well, demanding that we spend our days physically in the office. As a result, it's now more advantageous to not work at all than it is to work from home for a couple days each week because working from home is taboo while spontaneous unlimited vacation doesn't actually conflict with policy.

Burn out abounds. Those who need vacations never have the opportunity to take it or feel too guilty to force it. Those who need to work harder are M.I.A. all the time. Employees are choosing to switch companies or quit outright as the strings are tightened further on working from home or actually taking time off.

In short, poor management and the resulting unintended consequences and misaligned incentives from a poorly executed unlimited vacation policy can have disastrous effects on the well-being of the team. Like any management-style fad, it must be implemented with attention to the details. Cargo-cult implementation that cherry-picks only the pieces that are convenient to the company (no tracking, better sounding offers, less financial liability) will quickly burn out employees as the unfair elements of the system come to dominate. This article has some interesting suggestions that I would love to see implemented by my company, though.