Cash Bonus or More Vacation Time: Which Do You Choose—and Why?

When it comes to rewarding workers financially, cash isn’t always king.

Companies frequently give employees monetary bonuses, but a new study suggests that paid vacation time is a perk employers should also consider.

The study’s authors say that while they didn’t explicitly look into whether employees prefer time off, the study found that receiving extra vacation time rather than bonus money makes workers feel less like a mere cog in a wheel and more like people who are recognised and valued as individuals with a life beyond work.

It makes them feel more human, in the researchers’ terms.

And that feeling benefits employers as well as employees, says Sanford DeVoe, a professor at the Anderson School of Management at the University of California, Los Angeles, and one of the study’s authors.

Feeling more human is strongly correlated with higher job satisfaction, greater engagement with work, better relationships with colleagues and less inclination to leave a job, he says.

Feeling seen

In one experiment, the researchers asked about 1,500 participants to recall times when they received a monetary bonus or paid time off—all had received both—and how that made them feel.

Participants responded to the question on a 7-point scale, from feeling more like a robot on the low end of the scale to feeling more human on the high end. Monetary bonuses were given an average score of 5.04, compared with 5.4 for paid vacation time.

“While that difference may sound modest numerically, it represents a meaningful psychological shift,” says DeVoe. “It’s the difference between feeling neutral and feeling genuinely seen as a person.”

The authors then sought to better understand why paid vacation time made employees feel more human. In another experiment, about 500 participants were asked to imagine starting a new job where they might be awarded a bonus. Some were told the bonus would be an extra week of vacation, others were told it would be an extra week of pay.

Participants were then asked about their expectations for being able to keep their work and home lives separate in the new job. Those who could hope for a bonus of extra time off expected more separation between their work and personal lives than those whose potential bonus would be extra pay.

They also reported feeling more human on the 7-point scale. This suggested to the researchers that time off makes people feel more human because it creates a clearer psychological distance from work than a monetary bonus.

No interruptions, please

In a third experiment, the researchers further tested the idea that clear boundaries between work and personal lives were driving their results.

Two hundred participants were told to imagine being on a vacation and receiving two texts, including one from their mother. Half were told the second text was from a friend and half were told the second text was from their boss.

The authors then measured how human participants felt after each scenario. The average score for those receiving a text from a friend was 5.4 on the 7-point scale, compared with 4.16 for those receiving a text from the boss.

The difference in the scores “demonstrates that even minimal work intrusions can undo the psychological benefits of time off,” says DeVoe. “It shows that it’s not just time away that matters—it’s whether work actually lets go.”

All of this is important for employers looking to get the most out of their workers, he says. “For managers concerned with sustainable productivity, giving people uninterrupted time away from work can be a powerful lever.”

The Apple growth and profit machine is wavering, and the boost from price increases might not be enough to keep it going at historic rates. That dials up the pressure on Apple’s new chief executive, John Ternus.

The company saved the bad news for its earnings call, an hour after it posted its results for the September quarter, projecting that for the current quarter its high-margin services business will continue to slow and that its widely watched gross profit margin will continue to fall.

Apple AAPL -1.83%decrease; down pointing triangle shares had been flat in post-close trading but declined as much as 4% after the company made the projections, which fell short of Wall Street estimates.

The impact of high memory costs are weighing even more heavily on the company, Ternus and Apple Chief Financial Officer Kevan Parekh said on the company’s earnings call. Apple has stockpiled cheaper components purchased earlier, but those inventories are dwindling.

When Ternus took over as Apple’s third chief executive of the past 29 years on Sept. 1, he inherited sky-high expectations. The men he followed were among the most successful company leaders in American business history. Steve Jobs revolutionized consumer devices multiple times. Tim Cook expanded Jobs’s creation to spectacular heights.

The expectations are reflected in Apple’s huge valuation. Oppenheimer analyst Martin Yang noted that Apple stock trades at 36 times next year’s expected earnings, a premium to the overall market, even though its earnings are only expected to grow 1%, which is slower than its tech peers.

“We see insufficient upside to justify the premium,” Yang wrote in an investor note, adding that Apple needs to boost iPhone sales growth and turn around its slowing services business to make him more bullish.

Investors have bid up Apple shares because it has been a port in the AI storm—a reliable and capital-efficient business that stands apart from rivals which are spending hundreds of billions of dollars racing to the AI frontier.

While others invest in data centers, Apple has been pouring its own cash into buybacks and dividends. But that safety may be challenged if Ternus can’t speed up Apple’s innovation engine.

Apple’s lagging performance in AI was evident when its new “Siri AI” chatbot arrived this past quarter. Its long-maligned assistant was already stale the day it arrived, surpassed by agents such as Instinct and Muse that can complete multistep tasks for consumers, while Siri still sets kitchen timers.

Apple needs to give people reasons to buy its devices as they get more expensive. The company raised prices across the board last quarter to help offset higher costs. Without compelling new features, a big question is whether consumers will slow the frequency of iPhone upgrades.

The new iPhone Duo appears to be a bright spot. Consumers are scooping up the $1,999 foldable smartphone despite mixed reviews—so many that Apple can’t keep up with demand. Shipping dates jumped out to January soon after the device went on sale, a disappointment for the normally reliable Apple supply chain.

Apple said its revenue grew 12% in the September quarter, slightly ahead of Wall Street’s expectations. Its widely tracked gross profit margin, at 47.9%, also came in just ahead of analyst estimates.

Apple will need to find new growth avenues because a reliable engine during the Cook era—the services business—is slowing. Courts and regulators worldwide have limited Apple’s ability to charge developers big fees to distribute apps through its App Store, the biggest component of the company’s services segment.

One of its most lucrative App Store fee generators has been the ChatGPT app from OpenAI. Around the time Apple accused OpenAI of trade-secret theft this past summer, OpenAI began redirecting potential subscribers to pay via its website instead of the App Store, skirting Apple’s tollbooth.

Apple’s valuation has bumped up against a ceiling in recent weeks. Six times it traded above a $5 trillion market capitalization intraday before finally closing above the threshold, which it has already fallen back below.

News Corp, owner of The Wall Street Journal, has a commercial agreement to supply news through Apple services.

Cash Bonus or More Vacation Time: Which Do You Choose—and Why?

New research suggests that bonuses make employees feel more like a mere cog in a wheel.

Feeling seen

No interruptions, please

Apple’s growth engine is showing signs of slowing, as rising costs, weaker services growth and AI competition challenge its profitability. With John Ternus taking the helm, the pressure is on to reignite innovation and sustain investor confidence.