In the Participation Age, a new form of payment is emerging: time.
Source: Richard Branson Is Right: Time Is the New Money | Inc.com
Richard Branson just announced he would be giving Virgin employees unlimited vacation. He’s either nuts or knows something others have yet to discover: You’ll make more money if you give people their time back.
Why we trade time for money.
The Industrial Age taught us the only way to make money was to trade time for it. The deal was clear, and always the same: You give me eight to 10 hours of your day, and I’ll give you some money. But in the Participation Age, something new is emerging. Companies are realizing that when you give people back their time, they will make you more money. It seems illogical, but it’s really quite intuitive. As usual, Branson is moving on an idea that traditionalists will discover only by watching him and other early-adapters in action.
Why would unlimited vacation work?
Why give up on a vacation system that’s been in place for 170-plus years? Because it was a bad idea then, and with a workforce that did not grow up in the shadow of the Industrial Age, it’s an even worse idea today. Almost no one under 40 can relate to a time-based system that makes no sense in a results-based world.
Branson didn’t figure this out; he’s actually coming to the party late, which makes a lot of the work world archaic and completely out of touch with how to make money today. Fewer than 1 percent of U.S. companies give unlimited vacation. In fact, America gives the second-lowest amount in the world, behind only South Korea.
Many companies have been doing this for years. Semco is a great example of a Participation Age company, which started as an Industrial Age factory making pumps in 1951. It was taken over by Ricardo Semler in 1981 and transformed into a great workplace, including unlimited vacation as just one of many principles that brought humanity back to the workplace. In 1981, it was a $4 million company. Today it’s a $1 billion company and growing, and it’s in a myriad of industries that Semler could have never imagined. Stakeholder turnover is less than 1 percent per year.
Some technology companies have been operating this way for years, and a growing number of traditional as well as new industries are adopting unlimited vacation. Evernote and NetFlix are just two examples. They are all learning that anything that gives people back control of their lives is proving to be better for the company. Just the opposite of what our Industrial Age forefathers believed.
Pay raises that encourage more vacation.
Stakeholders become deeply invested in your company as you bring humanity back to the workplace. The downside? They can start acting like old-style business owners and have to be heavily encouraged to take time off. To combat this and put teeth into our unlimited vacation position, our company, Crankset Group, gives all of its stakeholders $1,500 a year in vacation money (Evernote gives $1,000 in vacation money and FullContact gives $7,500). But you get it only when you turn in receipts that prove you’re using it for vacation.
There are Industrial Age defenders. Articles likes those recently in Time magazine view this cynically. But they are like listening to someone who drew the short straw in a high school debate and had to argue the positive effects of indentured servitude. The arguments against unlimited vacation are tortured at best.
The reality is simple. Give people control over their time, and they will build a great company, not for you, but with you.
In the Participation Age, time is the new money.