Several tech startups have a “unlimited” vacation policy. They mention how they trust their employees enough to take time off responsibly and don’t even track it. And yet, in most such firms, people take less time off overall and end up more stressed out.
People often take important decisions based on their immediate results – their first order consequences. But they fail to foresee how the higher order consequences, which are far ahead in time, may have larger repercussions. When a patient goes to a doctor with a belly ache, she gives him some medicine that relieves his pain – the first order consequence. But since the patient consumed that medicine, he does’t identify the root cause of his belly ache. Perhaps he is allergic to some ingredient, or perhaps he shouldn’t have overeaten at the party the previous evening. The higher order effects of consuming medicine here is that it encourages the patient’s self-destructive eating behaviour.
When a company starts an unlimited vacation policy, the first order consequence is that employees see it as a perk. A couple of them may even take a few weeks off. But the vast majority of the office is going to hold back and look at what everybody else does. Their goal would be to take a day or two lesser than the average. Pretty soon, nobody is taking too many days off for fear of being labelled a slacker. The higher order reaction of unlimited vacation time is that it discourages people to take time off even when they really need to.
These decisions aren’t restricted to individuals. On a global scale, the first order consequence of using fossil fuel was the industrial revolution. One of its higher order consequences is the climate catastrophe that we currently find ourselves in.
Higher order consequences may not always be bad. Riding a bicycle to a work has a few unpleasant first order consequences – riding in the cold, for instance. But its higher order consequence is that one develops better health and greater immunity in the long run.
Humans are a unique species, for we are the only ones in the animal kingdom blessed with foresight. However, this foresight is often myopic and lures us into making decisions that aren’t in our best long term interest. The ability to buck this trend and take decisions based on understanding higher order consequences is rare, but well known.
We call it wisdom.