Nice Work If You Can Get It

A handful of companies offer sabbaticals -- and insist that they're worth the cost

Last winter, Intel Corp. (INTC ) paid Melanie Stagnitti to research and develop her tan. Fleeing the soggy dreariness of Hillsboro, Ore., the compensation and benefits manager and her stay-at-home husband, John, packed up their 5-year-old son and 3 1/2-year-old daughter in their Ford Explorer and, towing a trailer full of camping gear, sauntered down to Mexico's sun-drenched Baja peninsula.

For eight weeks, Stagnitti was utterly unplugged. She had no access to e-mail, voicemail, the Internet, or, for much of the time, electricity. Today she's logging 50-hour workweeks again. But all that time lounging in a hammock helped make up for the long days. "The best part," she says, "was seeing the kids outside every day, playing in the water and being free."

These days many companies view employees as profit sponges, particularly sitting-bull seniors who have received pay raises year after year. Paternalism is out; lean and mean is in. But across the economy, a stubborn minority of employers is treating workers like tenured professors, lavishing paid sabbaticals on them. Such generosity actually helps the bottom line, managers insist. Giving employees a periodic respite is an antidote to the world of networked, always-on careers that lead to information overload. Sabbaticals reduce turnover and retain wisdom otherwise lost when veteran employees burn out. A recent study in the Journal of Education for Business found that the benefits of sabbaticals outweigh the costs when a good understanding between employer and employee regarding expectations is involved. The study also found that employees return more committed and more energized. In fact, sabbaticals are so alluring that companies report that it's almost impossible for competitors to poach anyone within a few years of his bonus vacation. The absences also give managers a chance to see how well others perform while filling in for their on-leave colleagues.

The number of companies offering paid sabbaticals is small but steady. An annual survey by the Society for Human Resource Management finds that 5% of corporate respondents offer the perk. Another 18% offer unpaid sabbaticals, which are increasingly being used as an alternative to layoffs when demand slackens. But there is some flux. Cracking the whip, Steve Jobs nixed Apple Computer Inc.'s (AAPL ) program after returning as chief executive in 1997.

On the other hand, relative newcomers such as women's clothing designer Eileen Fisher Inc. have initiated sabbaticals, while McDonald's Corp. (MCD ), where the perk dates back more than 40 years, is expanding the benefit in 2006 to every five years. "What it's all about today is, how do you differentiate yourself as a company?" says Richard Floersch, McDonald's chief human resources officer. "This gives us bragging rights."


Sabbaticals originated in academia. Most colleges and universities awarded them to professors every seven years as a time for rest and reflection, as if that milestone year were a kind of sabbath. Intel (page 46) maintains this traditional schedule. Under a program that began in 1981, the Santa Clara (Calif.) chipmaker grants all full-timers a paid eight-week holiday on every anniversary divisible by seven, along with their usual three to four weeks of vacation. Stitch the time together with a few paid holidays, and it's possible to be away without interruption for a quarter of the year. Some 4,350 workers, or nearly one of every 20 at Intel, take sabbaticals in a given year.

Other programs kick in even sooner. Morningstar Inc. (MORN ), for instance, begins handing out an extra six paid weeks to full-timers at the four-year mark. Patrick Dorsey, director of stock analysis at the investment-research outfit, used his first sabbatical in 2002 to go on an around-the-world honeymoon with his new bride, Katherine. Jetting from Morningstar's headquarters in Chicago to South Africa, with a layover in London, they went on a 10-day safari, then flew to Australia for 10 days and New Zealand for two weeks. Being gone so long -- Dorsey didn't communicate with the office once while overseas -- allowed him to really relax. "This may sound like a platitude, but you come back and you're ready to rock and roll," he says.

Won't regular old vacations do? Studies have found they don't allow enough time for rest and reflection. A third of employees don't even take all of their time off, with the same number reporting that they feel chronically overstressed at work, according to a recent study by the Families & Work Institute.

Despite the obvious appeal to employees, most businesses are less extravagant when it comes to observing anniversaries. In a Hewitt Associates (HEW ) survey, 75% of employers say they give workers a gift worth up to $50 when they hit their 10-year date; 67% also throw them a party.

The big reason more companies don't offer sabbaticals, of course, is money: A company has to overstaff to be able to allow employees more time off, and that's often heresy at a time when management is scrounging for ways to slash personnel expenses. Scheduling can be a headache, too, since managers have to find others to cover for every worker away on leave.

But many HR managers argue that since sabbaticals encourage people to stick around, companies don't have to spend as much on recruitment and training. Assigning temporary fill-ins can be a plus, too. While Intel's Stagnitti was in Mexico, her supervisor tested someone else in her job. When she came back, that employee ended up staying on, and Stagnitti was promoted to a new job in HR. In addition, the generation just entering the workforce ranks time off as a top priority in survey after survey. Thus, offering sabbaticals should help attract young talent, says Hewitt consultant Raymond Baumruk.

Probably no company has handed out more sabbaticals than McDonald's. The fast-food colossus gives every salaried employee an eight-week paid leave for every 10 years of employment, from execs at its Oak Brook (Ill.) headquarters to managers of its company-owned restaurants in the U.S. That's thousands a year. CEO James Skinner went on sabbatical earlier in his 34-year career at McDonald's, and the company now has 40-year veterans enjoying their fourth getaway. This year, to attract and retain new employees, McDonald's is adding an in-between breather: an extra week off for every anniversary that ends in a five.

Like employees elsewhere, McDonald's loyalists often use their sabbaticals for blowout vacations. Not Janice L. Fields. The president of McDonald's central U.S. division, Fields travels three or four days every week to oversee 4,400 outlets. She spent her eight-week leave last winter with her retired husband, Doug Wilkens, at their second home in Florida.

She slept in. She worked out. She played golf. She cooked. She watched Oprah. She reconnected with her spouse. And she left town only once, to go to Cincinnati for her grandson's eighth birthday. After 27 years at Big Mac, she deserved a break. And thanks to the company's sabbatical program, she got one.

By Michael Arndt

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