Extra vacation leaves (Simple cost-benefit analyis)

​In the Philippines, companies are mandated by law to provide employees with 5 days service incentive leaves (SIL) for every year of service. This benefit can be used by employees when they’re sick or when they want to take vacations. Any other leave benefit outside of this is voluntary on the part of companies. However, many software companies here provide extra time off, depending on the tenure of employees or performance of projects or the business itself.
 
I’m writing this post because I’ve been asked by colleagues at work how much in terms of extra days off software companies should be giving their employees and whether or not giving extra vacation leaves actually translates to net benefit on the part of the company. Here’s what I think:
 
How much extra days off to provide?
 
In general, it depends on what you as the company want to achieve out of giving the extra benefit. If you’re doing it to be competitive, then it makes sense to look into what your top competitors are giving.  
 
Most companies I know of give 5-20 worth of extra days off. Bigger companies tend to give more as they have extra capacity to absorb workload when employees take leaves. Other companies provide paid time offs, which allows employees to accumulate extra days off by working extra hours/days under certain conditions.
 
 
Does it translate to net benefit on the part of the company?
 
Yes. Here’s a simple Benefits – Cost  = Net benefit calculation that supports this.

​Take note that the numbers above are arbitrary, although their relative difference to one another reflects their real-life value.  For instance, I place high value on new ideas and better decisions.  I think they’re directly related to company bottomline. Better decisions mean better output and less mistakes. More new ideas mean more new opportunities to grow and improve as a company.
 
As with the health part, there’s a lot of research published online pointing to the fact that taking time off improves people’s mental health and work attitude. You can Google them out if you want.
 
Here’s a few from what I found:

• “Vacation helps shrink stress and anxiety while boosting the mental and physical health of the entire family.” - Centerstone, a not-for-profit community-based behavioral health healthcare network
• Men who take frequent annual vacations were 32 percent less likely to die from heart disease than their counterparts who forwent vacations. – American Medical Association
• “Leisure, including vacations, contributed to more positive emotions and fewer negative feelings and depression.”  - Pittsburgh Mind-Body Center

In summary:
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5 days SIL can cover flu, personal emergencies, and others but may not be enough to give employees an opportunity to really unwind and destress. Like cars, people need maintenance, and the way to do it is to go off the road for a while and allow the mind and body to heal and recover. The rewards in terms of long-term productivity and output are all worth it.