Do Workations Pose Risks for Businesses?

The term "workation" has been a buzzword in recent years, blending “work” and “vacation” into a single concept. Employees pack their laptops alongside their bathing suits, committing to work hours in tropical settings or bustling cities halfway across the globe. To employees, it’s an antidote to burnout and an appealing balance of productivity and relaxation. For businesses, though, the growing trend raises some important questions.

How do workations affect productivity, team dynamics, and company culture? Could this seemingly innocent trend pose hidden risks for your business and workforce operations?

This article dives into the workation phenomenon, exploring its potential impact on employers and outlining actionable steps HR managers can take to ensure it works for—rather than against—the business.

Understanding the "Workation" Trend

Workations have gained popularity thanks to flexible remote work policies, widespread digital collaboration tools, and employees placing greater value on work-life balance post-pandemic. A report by TravelPerk highlights that searches for "workation destinations" have increased by 300% since 2022, and many companies are starting to introduce policies to accommodate employees seeking new ways to work.

While workations sound appealing, they come with complexities for HR professionals tasked with overseeing workforce productivity and compliance.

What Does a Workation Look Like?

A typical workation allows employees to work from a destination outside their ordinary workspace while still adhering to required work hours and deliverables. Examples include:

• A marketing executive working poolside at a hotel in Bali
• An IT professional based in Ohio working for two months from a beach house in Florida
• A global sales manager conducting Zoom meetings from a villa in Tuscany

While the physical locations vary, the key idea is constant connectivity and availability to perform tasks, regardless of where an employee is.

Why Workations Are Popular

The workation boom stems from modern workplace trends that focus on employee well-being and flexibility. Benefits to employees include:

• Burnout Recovery: Combining a change of scenery with manageable work obligations can alleviate stress.
• Productivity Boost: A refreshed employee may return with better focus and higher levels of energy.
• Retention: Offering flexible work policies can appeal to top talent, reducing turnover rates.

But while these perks sound positive, businesses are still grappling with whether these perceived benefits come with potentially high workplace risks.

The Hidden Risks of Workations for Businesses

Though workations have upsides for employees, they present several potential challenges that HR managers must anticipate.

1. Declining Productivity Despite the Promise

While workationers may commit to working as usual, distractions like sightseeing, socializing, or unexpected internet outages could result in underperformance. According to research from the Workforce Institute, 38% of global remote workers admit to being less productive while working away from home environments.

Warning Sign for HR: Are remote deliverables suffering during periods when employees are on extended workations?

2. Time Zone Confusion

Employees working abroad or across time zones can create scheduling headaches for managers. Missed meetings and inconsistent communication are pitfalls for teams requiring frequent collaboration.

Warning Sign for HR: Critical tasks are delayed because of misaligned schedules or employees' underestimating their time-zone impact.

3. Legal Liabilities

When employees conduct business from outside their regular state or country, they could inadvertently expose your business to tax, compliance, or labor law challenges. For example, a European employee working from California might require tax handling unique to U.S. work conditions.

Warning Sign for HR: Does your team understand cross-border tax reporting to prevent unnecessary penalties for the company?

4. Team Cohesion and Inclusion

Workations can create a divide between employees physically present in office environments and those dialing in from exotic locales. This culture disconnect could lead to seemingly heightened privilege perception, thus harming morale.

Warning Sign for HR: Are in-office employees disengaged or feeling less appreciated compared to those on workations?

5. Burnout Rebound

Counterintuitive as it may sound, some employees risk burnout post-workation. Regular work demands combined with travel fatigue, planning pressures, and overwork in an unfamiliar location can leave employees mentally exhausted.

Warning Sign for HR: How rested are vacationing employees once reintegrated into their original office climate?

How HR Managers Can Navigate Workation Trends

Workations don't have to become a threat to your business—if managed effectively. Here’s how HR managers can strike the right balance between empowering employees and safeguarding company operations.

1. Establish Clear Policies

Define expectations for workations in advance. Clarify whether employees need approval for destinations, what work hours they must maintain, and minimum deliverable standards to prevent misunderstandings.

Example: Create a formal workation request form to track location, dates, and the employee’s goals during the trip.

2. Monitor Performance Metrics

Assess productivity gains or losses linked directly to workations. Use KPIs like project completion rates, client satisfaction, and team feedback to evaluate whether policies are improving outcomes.

Example: Track patterns to identify high- or low-performing workationers with tangible metrics.

3. Address Legal Complexities Early

Consult experts or a legal team to ensure compliance with local laws if employees work abroad, particularly regarding payroll taxes and labor regulations.

Example: Partner with third-party consultants familiar with international labor and tax management.

4. Cultivate Team Inclusiveness

Encourage inclusive activities that keep your core team engaged while allowing workationers to integrate virtually. Transparency is key to avoiding resentment within teams.

Example: Organize hybrid social events or team-building programs designed to accommodate remote staff participation.

5. Educate Managers and Employees

Equip managers with strategies for overseeing distributed teams while helping employees understand the expectations tied to workations. Balanced preparation benefits both sides.

Example: Deliver training modules for team leads on managing across time zones.

A Measured Approach to Workations

The rise of workations reflects a desire for flexibility in a changing workforce—but they shouldn’t compromise your company’s operations. With clear strategies, HR managers can mitigate risks while reaping benefits like improved engagement, retention, and satisfaction among employees.

Want to make managing workation policies simpler? At SD Mayer & Associates, we’re here to help you streamline HR processes and optimize compliance strategies as your business evolves. Contact us today to learn how we can partner in your success.