How much paid vacation for startup employees?

I've never been a fan of a set amount of vacation time or sick time. Being a startup, your first few employees should be people that work hard, and play hard. Meaning, if it takes you 9 months of 60 hour weeks to get going, they'll be at your side day in and day out.

Then when they want to take a couple weeks off to backpack across Iowa, you not only allow it, but you actively ensure that no one from work calls them and that they do zero work related activities while they are out.

This approach not only gives your employees the flexibility they need/want, but it will help instill that feeling of "my boss has my back" and will start to build a reputation for your company as "the" place to work around town.

For your employee handbook you'll probably need some sort of number of days written down to cover yourself in case you make bad hiring decision.

Remember that in some jurisdictions, there are laws about giving your full-time/part-time employees a certain amount of annual leave/vacation.

i.e. In Australia, full-time employees are entitled to 4 weeks paid leave per year. This has to be earned though, so you can enforce that they must work a full 12 months before taking leave.

Vacation? At a Startup? I don't understand =)

I think two weeks is pretty standard. However be weary of spending your angel round on paid vacations - startup employees hopefully have the same vision of greatness that you do. Ask them what's fair. They might surprise you.

Justyn

Initially, as it sounds like you have very few employees right now, you may want to look at how much time you need to get your product out the door, then double that, and determine how much of a problem that would be if people are heading off to vacation.

You will want to look for people that are as excited about your idea as you are, as you need people willing to dedicate themselves, as your core group, so you may want to look at offering some equity, after a vesting period.

The reason being, that, though you may offer vacation time, I would suggest that it be paid time off, so that people can have their vacation and sick time, as you don't want to limit how often they can be with a sick child, and initially 3 wks may be enough, assuming that is at least the legal minimum, with the understanding, perhaps in the contract, that after 1 or 2 years that it will increase.

If they are forgoing their vacations to work long hours to help you, you may want to let them know that when the product is launched and money is coming in that you will do something for their sacrifice. One company I knew of would spend all of the money they made over what they predicted on something like a cruise for all their employees and families.

Treat them like you would want to be treated. However, note that these are employees, not founders with equity - they won't have the same incentive to work all day every day for 2 years. You can't expect that. It would be nice, but they have an inherently different motivation that you will have.

Don't skimp on the benefits. Make it a great place to work and you will get rewarded.

Similarly, if they aren't working out or contributing - let them go.

We give our employees three weeks up front. It sets their expectations.

Having managed employees as an engineering manager (albeit not at a startup), my input to this question is to formulate a base compensation/benefits package that is fairly conventional and rational, including vacation. In the U.S., for example, something like 2-3 weeks might be reasonable. My experience is you'll actually have to encourage your top performing employees to take their allotted vacation, and these employees will also be very accommodating and flexible w.r.t. tight deadlines, forthcoming product releases, etc.

As other answers have suggested, the downside of having limited vacation, or an unwritten vacation policy altogether, is that you'll turn away some good candidates who have a reasonable work-life balance, family commitments, etc. I think you also run the risk of working your best employees to the point of burn-out and/or resignation, especially the ones who'd feel uncomfortable asserting themselves to explicitly ask for time off. However, if you want your company to be chock full of type A workaholics with no work-life balance, that's your choice too! :-)

BTW - There was an interesting book called "Small Giants" which I read a few months ago - In this book, I recall the CEO of a profiled company also used the word "rational" to describe his/her views towards formulating a base package of compensation and benefits. This same CEO was also prone to doing special things for the employees (e.g., trips with CEO to see a customer, extended time off, etc.); however, these things came as a real treat to the employees, since it wasn't a substitute (or "make up") for normal benefits.

At two previous start-ups (one I co-founded), we used a unique model recommended by my partner. We gave folks 27 days of time off per year and that included vacation, holidays and sick leave. So, if you wanted to work Xmas day, you could do that and take that PTO at another time. This model requires a lot of trust and probably wouldn't work well in a larger company.

Startup employees work their tails off, and should get a minimum of 3 weeks of vacation. Anything less than that and your good employees will walk at the earliest opportunity.

In my last angel funded startup we chose to have "2+2" vacation policy. It was born after CEO and I looked at a lot of performance management research, best practices around the world, and decided to not follow what everyone else was doing. I looked at other startups with "unlimited" policies and I spoke to my counterparts in those companies. Just as research I found earlier, real utilization of vacation time in "unlimited vacation" companies was really bad. It was the worst in companies running on Agile.

What does "2+2" policy look like? You take 10 business days straight and you also have another 10 business days to take in half-day minimums. The only vacation time you can accrue and roll over to the next calendar year is from the 10-days in half-day increments "bucket" (for accounting and compensation purposes).

One very good intended "side-effect" of having an employee out for 10 business days straight (including executives) is that if company is not able to perform at 100%, that means there is a weak spot in the organization that can cripple the business. Those vacations served as small operational drills every year.

I ended up being quoted in Wall Street Journal (twice), Entrepreneur, and Harvard Business Review in regards to that vacation policy.