Subscribe to Entrepreneur for $5

An Open-Handed Vacation Policy is a Great Perk for Employers

Opinions expressed by Entrepreneur contributors are their own.

We've all heard how taking time off can increase productivity. Breaks allow the mind to recharge and companies are beginning to allow more freedom in the workplace to help employees produce more inspired work.

So, how much time off should employees be allotted and is there a "sweet spot" that ensures optimum productivity? Here are a few practices to help determine where to set the bar:

1. Give more and employees will use less.

Oxford Economics recently analyzed the effects of paid time off (PTO) on employees and companies. The study found employees at small companies receive an average of 20 days of PTO per year. Of those days, an average of 3.2 were left unused by 84 percent of employees. The number of unused days equates to 429 million for the entire U.S. workforce.

Be generous with offering time off, particularly around the holidays, and employees won't feel restricted. Generosity begets generosity, and this applies to employee perks. Without tight restrictions, employees won't enter a famine mentality, grabbing all they can get, as if time off were a limited commodity. Give employees some freedom, and they won't need to use all of it -- at least those who are loyal to the organization.

Related:The U.S. Has Become the No Vacation Nation

2. Be performance-focused, not time-focused.

Rather than focusing on having employees at the desk between 9 and 5, look at what your employees are actually producing. Being productive means using time, but using time doesn't always mean being productive.

Instead of cracking down on timeframes, assign tasks to be completed with deadlines. Just as all individuals work at different rates, time off for each employee will vary. Emphasize task completion over work hours. If employees know they have flexibility to come in late or leave early when work is completed early, they'll be motivated to be more productive.

That's not an excuse to burden employees with large amounts of work to discourage time off. Though that method will work, according to Oxford Economics. Nearly 40 percent of employees chose not to use their time off because of their workload.

But, an overwhelmed employee will not be productive. Keep the workload reasonable to ensure employees will be able to take time off they need to remain productive. About three-quarters of employees felt refreshed, and 40 percent felt more focused when returning from vacation.

Related: The Benefits of Flextime

3. Track time and performance metrics.

How do startups determine what is a reasonable workload with nothing to compare to? Productivity potential among employees with flexible arrangements can be hard to measure. Performance varies by individual, and everyone will have a different personal benchmark.

Right from the beginning, use software or apps to track employee time and performance metrics. Notice the types of projects specific employees excel at and share performance data with them so they can see how they're doing. Use data to determine how long tasks take and compare performance of all your employees. If someone is not pulling his or her weight, the performance management platform will reveal it.

Related: 4 Reasons Sharing Performance Metrics Will Accelerate Your Business

4. Drive employee commitment through your company culture.

Pressure to avoid taking time off is more prevalent in the company culture of smaller businesses, Oxford Economics found. Additionally, at least 13 percent of employees reported feeling disapproval from colleagues when taking time off.

While not everyone uses allotted time off for various reasons, the idea of taking time off is perceived positively. The study found the majority of employees disagreed that using all PTO provided would make one less productive, less likely to be promoted and less dedicated to the company.

Considering this, limiting or discouraging time off will not make an employee more productive or dedicated. Dedication and engagement in a company must be built through a positive company culture. Employees learn culture through watching how colleagues treat each other and make decisions within an organization. Employees mimic the behavior they see.

Treat employees with respect and your employees will respect company time. Display desired values and everyone else will catch on, if they're the right fit. Don't focus so much on time. Focus on performance, great teamwork, creating a culture employees want to be a part of and time off will rarely be a concern.

Related: Richard Branson Announces Unlimited Vacation Policy for Virgin Staffers

Entrepreneur Editors' Picks