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How unused vacation impacts your bottom line

How unused vacation impacts your bottom line

Unused vacation in the U.S.

According to CNN Money, "the average U.S. worker leaves almost half of his or her vacation days on the table." 

Employees working more than they need to—doesn't seem like a huge problem, right? At surface level, maybe not. However, a deeper look will show that when employees forgo vacation days, both the employee and the bottom line suffer. 


Financial liability

Vacation days are a grossly underutilized benefit in the American economy. CNBC reports that annually, over 200 million vacation days remain unused without opportunity for rollover. From a monetary perspective, these lost days mean  the collective American workforce willingly loses $66.4 billion in benefits every year. When vacation days are lost, the employee loses a valuable part of his/her benefits package that cannot be recovered. Essentially, the employee is losing value by forfeiting these vacation benefits.

When vacation days rollover, the employer incurs financial liability, or responsibility to pay that employee for the unused vacation days. This typically doesn’t happen until the employee has left the company—which means that the employer has a balance that cannot be paid until the vacation day is used or the employee leaves the company. By implementing a vacation policy that encourages employees to take vacation days, an employer reduces financial liability.


Productivity and creativity

Vacation utilization can also support employee productivity and even creativity. By taking a break from the office, employees temporarily separate from workplace pressures and decrease stress levels. This "stress detox" benefits the physical and mental wellbeing of employee which, as a result, increases productivity.

Not only does vacation reduce stress, it also increases creativity. In fact, according to an article published by Psychology Today, "Brain imaging studies show that doing nothing, being idle, daydreaming, and relaxing create alpha waves in the brain that are key to creative insights and innovative breakthroughs." This finding counters the common misconception that working longer accomplishes more. By breaking up that constant nine-to-five grind, employees become more efficient in the time that they work. 



As you know, one rotten apple can certainly spoil the bunch. The same applies to staff morale. It is  human nature to be affected by the mood of those around us. This phenomenon known as emotional contagion—a prevalent obstacle that mangers face. When one employee is overworked and stressed, they are likely to make other employees feel overworked and stressed.

For example: Frank has a deadline approaching for a group project. This particular project is a group presentation—which is out of Frank's comfort zone. When Frank meets with his team to go over the final project, he continually brings up things that could go wrong in the presentation. His teammates, responding to Frank's stress, become less certain and become stressed as well.

When employees have time to refresh, emotional contagion can actually boost employee morale throughout the entire office. So when an employee feels relaxed and confident, that employee is likely to make others feel relaxed and confident. Cumulatively, this now relaxed and confident workforce can perform to the best of its ability.

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