How many weeks of holidays should your team get?

What is the optimum number of holiday weeks for your team to keep them balanced, motivated, productive and happy? I know of one very successful entrepreneur who gives a very generous 8.

There is no "optimum."

You need to base it first on the expectations of your employees; as Jesper points out in Europe (especially the continent and even more especially the Scandinavian countries) large vacation AND sabbaticals are normal. In America, three weeks is "generous."

I actually had an open policy (don't even track vacation days). No one took as much as 8 weeks, yet it sounded more generous than any other policy I've seen. See this question for an extended discussion.

One could think that this is determined by human physiology only; but I think cultural expectations play a large role too.

Here in Denmark the norm is 5 or 6 weeks per year. One some occasions I have seen people manage to get much more than this. They then got into problems with their spouses' holiday possibilities, the school year calendar etc.

I think you should exceed your employees expectations for companies in your area, but only just exceed them. The best way to do that is not giving many weeks vacation with salary. It is rather flexibility in when the vacation is held, and doing unexpected little things like taking everyone to a company picnic on the beach, taking everyone to a relevant exhibition etc.

Generally I've found that in most teams I've been involved with, and for myself personally, that we don't use up our vacations and they continue to accrue from year to year. Many companies have started to cap the amount you can accrue which makes it feel like you are loosing on one of your benefits. These were at typical US companies where you start with 2-3 weeks of vacation and get up to 5 after so many years of service. So for any vacation policy I'd like the option to "cash out" at some point.

Also there are natural deterrents against taking extended vacations, for instance if
you do take a long vacation, the rest of the company keeps working while you are out and you either have a ton of work to catch up on when you get back or are constantly in touch with work while on vacation, hence defeating the purpose of the vacation.

So I'd like to suggest a policy where there is a smaller number of personal vacation days but a corporate shutdown policy during the year. For example close down most operations between the Christmas/New Year holidays and the week of July 4th. Then almost everyone is off at the same time and more people tend to enjoy the time off. I know you still need some people on to handle critical issues but having the majority off at the same time makes it easier to detach and relax.

This is somewhat similar to the general practice in some European companies of having the month of August off.

At Blue Fish, we offer 3 weeks of vacation to all employees, effective right away. The young employees (recently out of university) find this to be very generous. Most large companies in the US don't offer any vacation until you have worked there for a year. And then they start employees off with 2 weeks. So the younger employees we hire compare our offer to that and like it a lot.

The more experienced employees (those with 10+ years of experience) find our offer to be fair. They have typically worked for a company for a while and have built up 3 weeks of vacation (most employers increase the amount of vacation an employee can take after 2-5 years of service). So when the more experienced employees compare our offer to their current employer, it doesn't seem as generous to the seasoned employees as it does to the young employees.