Boost Employee Loyalty with Extra Vacation Days

Looking to boost employee loyalty at your company? Try offering workers more vacation time.

It may sound counterintuitive, but giving extra vacation time to employees, and in some cases awarding actual trips, can be one of the most cost-effective ways to improve retention and motivate workers.

According to research conducted by the Society for Human Resource Management, employees are willing to trade extra cash and even benefits for extra time off. Perhaps that’s not surprising at a time when leaner staff levels require employees to work harder and longer.

Despite what many business owners might think, giving more time off doesn’t necessarily translate to lost productivity at work. A study by Xylo Inc., a web-based work/life solutions firm, found that 93 percent of employees believe taking time off increases their productivity, while 98 percent think vacation time improves their performance at work.

Offering more time off is as simple as changing your vacation policy. If you decide to make that move, do it across the board; don’t reserve additional vacation time for only your upper echelon. Not only do you run the risk of stirring resentment, but also the impact of the benefit is lessened. After all, front-line and entry-level workers may be the least committed and therefore are precisely the ones you should target to build loyalty.

You can take the time-off strategy a step further by rewarding excellent employee performance with a trip. Target areas for improvement in each of your departments and set up an award incentive. For instance, you can inspire improved performance in your sales department by offering the top-two quarterly sellers a trip. Or reward employees who communicate with clients, such as clerks, cashiers, and project managers, by offering a trip to the employee who receives the most positive customer reviews for a particular period.

When it comes to motivation and appreciation, these kinds of trips score high on employee wish lists. A Clemson University study found that employees rate trips at the top of all incentives, scoring them a 6.4 out of 7, trailed by cash (6.0) and merchandise (5.41).

Of course, a trip is only as incentivizing as it is appealing to employees. When designing a reward program, survey your employees to find out about their interests and where they would like to go. A younger workforce, for instance, may prefer trips for two, while a more established staff will probably prefer to travel with family. Use those considerations to determine the kind of trip you can afford to offer.

In general, Xylo Inc. found that certain kinds of vacations appeal to employees more than others. Active vacations lead their list: 34 percent of those surveyed said they prefer outdoor activities. Visiting museums and sightseeing came in a distant second. Top domestic destinations are Florida, California, Arizona, Nevada, and Hawaii, while international favorites include the Caribbean, Mexico, the Bahamas, and Italy, according to Incentive Magazine. These kinds of trips don’t come cheap, but right now incentive trips are less expensive than in the past. According to a joint survey between the Incentive Research Foundation and Corporate Meetings and Incentives Magazine, spending on incentive trips dropped from $3,256 in 2000 to $2,617 in 2010 for the average person.

In the end, compared to other big-ticket items such as raises and increased benefits, vacation is the most affordable and effective method of saying thank you to your employees, engendering loyalty and fostering productivity. An added bonus is that employees, whether they’re given a trip or simply more time off, will come back renewed and refreshed and better able to serve your company.