Agreed. What I've seen happen is the company becomes destructively divided into two camps: Those who have a slightly too healthy work-life balance and take liberal amounts of vacation, and those who have a tendency towards work-aholism, take little vacation, and grow to resent the first group as a result.
What works much better is to just decide on what's an acceptable amount of vacation, say 3 weeks, and tell everyone that's what they get; take it or leave it.
What works much better is to just decide on what's an acceptable amount of vacation, say 3 weeks, and tell everyone that's what they get; take it or leave it.