What is the purpose of a holiday shutdown?

Question

What financial or other advantages are there to a company enforcing a holiday shutdown?

For example: Christmas Eve and Christmas are paid holidays. Everyone is required to take off the other three days that week as either vacation days or unpaid leave.

Answer 1

The company saves money on various overhead expenses during that time such as running the lights, air-conditioning/heating, staffing the cafeteria, not needing as many security guards on duty, less pc's powered on, first aid supplies being used up, etc.

Even if they didn't shut down, a significant portion of their staff will probably be on vacation anyway since people travel for the holidays, schools are closed and they may not have childcare, etc. With such a reduced staff available to work, the amount of work that can be gotten done rapidly decreases. Key decision makers aren't available to resolve design decisions. Collaborators who know how a system is designed aren't there to answer questions. Subcontractor's office is closed. etc. Plus those at work may have reduced morale and productivity. Many people, intentionally or not, may work at a slower pace or spend more time chit-chatting or doing stuff unrelated to work, or goofing off in some way.

Additionally, having a complete shutdown allows the company to do scheduled maintenance on the actual facility that would take longer than a weekend, without the risks of employees being in the way/injured/inconvenienced/etc. Or they may want to have auditors do inventory or other tasks that may be easier an empty office.

And then there's also the type of person who is a bit of a workaholic and will not take any vacation or other downtime ever unless it is forced upon them, such as in a shutdown situation. So a shutdown may help prevent burnout and keep employees more balanced as a whole (even though, financially, it may work to the disadvantage to those who are forced to take an unpaid day off or more).

Answer 2

I used to get really angry about this one, once upon a time, even though I generally have that period off anyway.

And therein lies the problem. So many people have the whole week off that sometimes the business cannot really operate. The few people who turn up only do so for a day or two and don't work particularly hard -- at least not towards the projects they normally would; I have known people who will go off and innovate instead and that's not necessarily a bad thing.

If the company doesn't need skeleton cover for that week, why not just close the office down? That way, you don't run into the problem of having to reject people's requests for holidays.

It makes good business sense, even if it is a bit irritating being told when you can take your holidays. How big an impact that is depends on how many days you usually get in a year. If it's only 10 then 3 days is a lot. If it's 25 then not really.

Answer 3

This is quite common in Germany, and I have mainly seen it for these reasons:

1. In many factories, there are machines and assembly lines which must either be fully staffed or shut down. For example, in a car factory, you cannot shut down the line that assembles the doors, but keep the main assembly line running. This means that only a certain percentage of employees may be on leave on any given day. However, there are times (such as between holidays and in the summer) where the majority want to take time off, and the only way to do this is to make everyone take time off, because the factory cannot operate with only 30% of regular staff. This point applies doubly to factories that must run 24/7 or shut down completely, such as steel works, coking plants and many chemical plants.
2. Some companies mainly provide support and services directly to customers in real-time, such as call centers and technical support providers. For these companies there is simply nothing to do if most customers are on holiday, so they migth as well shut down for the time, too.
3. In office-type work, collaboration with coworkers is often an important part of work (think agile development or similar). In theses companies, if too many coworkers are away, the remaining workers arguably cannot work efficiently any more, so it may make financial sense to have them take off time, too. This makes sure that either everyone is there, or everyone is away, maximizing time for collaboration.

In software development, I have many seen shutdowns because of the last point, though the second point may also apply if they provide e.g. telephone support for customers.

Also, shutdowns for reasons 2 and 3 tend to be for short periods of time where almost everyone will be away (mainly the time between Christmas and New Year, and sometimes "bridge days" between holidays). Shutdowns for reason 1 are often for several weeks in summer (so-called "Betriebsferien", i.e. "company holidays", which are even codified in German employment law).

Answer 4

I worked for a large corporation with a significant demand cycle who enforced shutdowns in order to avoid layoffs during the low times in the cycle. The following were the reasons given:

• Unused vacation time is accounted for as a liability on the balance sheet. Having a lot of people take it looks as good on paper as paying off debt.
• Some kinds of businesses, it's difficult to send some people home without sending everyone home, like assembly line manufacturing.

Those were the reasons the company gave. Personally, I think the savings are insignificant compared to the effect on attrition. In other words, when companies think they're headed for a layoff, they first try to get people to leave voluntarily. Since long-time employees can generally absorb the time, and often plan on taking that vacation time anyway, a shutdown will annoy least the people who you most want to keep.

Answer 5

This kind of policy really depends on the type of company and how responsive to customer/client needs they need to be. The number of seasonal and hourly employees a company has as compared to salaried positions may have an impact. The companies that I've seen have the least flexible vacation policies are small ones (the boss/owner is on vacation so everybody else is too) and large companies with a lot of unionized hourly workers.

The main financial advantage is not having to pay hourly employees for less efficient work due to holiday distractions and lack of workers. While this doesn't impact what salaried employees are paid, it can impact general company policy. Some think it's better to have salaried and hourly employees follow the same rules to simplify things.

Of course, sometimes you'll find companies that are the opposite. At a medical services company I worked at people were expected to work through holiday periods whenever possible.