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Jeff Booth is the co-founder and CEO of BuildDirect.

It's a refrain heard at companies across North America: Good talent is hard to find. Despite the sputtering economy, highly skilled employees are in short supply, especially in the IT sector. That's one reason my company announced a new perk for team members starting in the new year: unlimited vacation. In doing so, we follow in the footsteps of industry leaders south of the border, including General Electric, LinkedIn and Netflix.

How desperate is competition for top talent in this country? Nearly a third of Canadian companies complain that they can't find the skilled employees they need. In Vancouver, the talent crunch has hit the burgeoning technology sector especially hard. Additionally, once you've got the people you want, you're now challenged to keep them: lifelong employment with one company is a relic and many are looking at changing jobs, if not careers, every three years.

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That said, the underlying motivation for unlimited vacation goes beyond responding to a temporary condition in labour markets. At a much deeper level, by extending freedom to employees, companies build a culture of leadership and accountability. And that's where some of the most profound benefits lie.

Too many companies design policies for everything from vacations to lunch breaks and work schedules with their worst employees in mind. HR teams develop blanket rules aimed to keep the lowest performers in check. The results are predictably patronizing and measurably counterproductive. Skimping on vacations, for instance, leads to workers that are stressed out and disengaged, consequences that cost U.S. businesses $450-billion in lost productivity last year.

An alternative approach is extending freedom to employees. By turning the tables – expecting the best of your team, rather than the worst – you encourage everyone to rise to the occasion. Freedom to manage one's own time builds a spirit of entrepreneurship, shared responsibility and accountability. At its core, unlimited vacation is about thinking like a leader, rather than a follower, and encouraging employees to focus on actual results rather than hours logged.

This won't work at all companies, but it will work in the right contexts. If you've hired right, you have career-minded employees, not freeloaders. I know this is the case with my own staff. They aren't taking a job with BuildDirect because of our vacation policy – they're deciding that they love the challenge. If you're worried that your employees are going to take a sudden six-month sabbatical starting the day before their sales numbers are due, then this policy probably isn't for you.

Finally, there's no shortage of empirical evidence showing that rested employees, who have time to recharge and take time off, are happier and more engaged. Repeated studies have proved that people who take time off are more productive afterward. (One researcher claims that productivity can spike by up to 80 per cent.) Conversely, taking fewer vacation days has been shown to decrease overall performance.

This isn't rocket science, but it's all too easy to lose track of in our haste to squeeze every last drop of performance from team members. In my mind, all this does is perpetuate a vicious cycle. Once work becomes overwhelming, our personal lives inevitably suffer. And without a solid foundation outside the office, how can we expect to come in and perform? This is as true for an executive or manager as it is for a front-line employee.

Ultimately, unlimited vacation shouldn't be looked at as a luxury, and it's certainly not a licence for employees to loaf or goof off. It's a productivity tool to take promising companies to a whole new level. I expect we'll be seeing more of it across Canada in the years ahead as the tech economy continues to expand and the demand for talent rises ever higher.

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