Leave Management Software: How Much Money Can You Save?

The HR team has a lot on its plate. From onboarding new employees to conducting exit interviews, HR oversees every step of the employee lifecycle. These days, most of the administration that currently takes up the HR team’s time can be streamlined with automation. Leave management software takes the hassle out of scheduling time off and will liberate the HR team so they can focus on big-picture problems.

Businesses that have efficient leave management will see a big return-on-investment (ROI). Intuitive and transparent administrative processes lead to reduced human error, happier employees, and a de-stressed HR department. Here, we’ll discuss how much you’ll save when you invest in leave management software.

Absence & Leave Management Software


How to Calculate the Benefits of Leave Management Software

When evaluating the ROI of a leave of absence software, we must consider both tangible and intangible benefits.

  • Tangible ROI

This is a traditional form of return. You invest X to receive Y. For example, automation will reduce the number of hours the HR team spends processing time off requests. If an HR professional currently spends 10 hours a week managing time off, software may help to bring that number down to 2. This saves 8 hours of labor. If that employee makes $45/hour, 8 hours is worth $360. Saving $360 a week translates to $1440 per month, or $17,280 a year. That’s a lot of money– but it’s not the ROI.

We still need to subtract the cost of the leave management software. Factorial (which has many capabilities beyond leave management) costs $3 per month per employee. That means a company of 100 can expect to pay $300 per month or $3600 a year. We subtract this cost from the money saved: $17,289 – $3,600. The net return is $13,689 per year. We divide the net return by the cost of the investment and multiply by 100: (13,689 ÷ 3600) x 100. This is a 380% ROI. Not bad!

  • Intangible ROI

This is not as easily measured. Intangible ROI refers to things that don’t have a concrete numerical value, such as employee satisfaction and long-term company success. For example, say employees love the ease and transparency of the new system. They get to spend less time haggling over their vacation and more time enjoying it! This helps improve employee satisfaction, which in turn improves employee workplace productivity and retention. Employers will certainly save money in the long run by holding on to talented and knowledgeable employees. They’ll also save the costs associated with vacant positions, and hiring and training new employers. However, it is difficult to put an exact price on employee satisfaction.

time off requests

How to Determine Leave of Absence Management Software ROI

There are several ways that leave management software helps businesses succeed in tangible and intangible ways.

  • Time Saved Through Automation

With leave software, employees can send time off requests to their supervisors electronically. They can select the type of leave from categories (sick days, personal days, bereavement leave) pre-designated by management. Managers can review all relevant requests on their own time and accept or decline the request as necessary. Keeping everything in one place means no requests get lost in someone’s desk or cluttered inbox.  Requests that need approval from multiple supervisors will automatically be sent to the appropriate parties. This automation keeps time off requests organized, saving valuable time, and reducing opportunities for human error. Time is money! Simply streamlining requests gives the HR team an opportunity to address more pressing issues.

  • Boosted Employee Morale and Retention

Good leave management software will have portals where employees can review schedule updates and check on their time off requests. This kind of accessibility and transparency will lead to increased employee engagement and long-term success. Happier employees are more productive and more likely to stick around to contribute their knowledge and expertise to the business. The attrition rate reduction is a major goal of every company. By limiting turnover, a business can avoid costly hiring processes and lapses in productivity that accompany vacant positions.

  • Reduced Liability Through Increased Compliance

Certain states require employers to track Paid Time Off (PTO) accrual. Businesses will also need to track time off to stay in accordance with Family and Medical Leave Act (FMLA) laws regulated unpaid time off. Failure to correctly track time off whether it is paid or unpaid can lead to big costs down the road. If a business fails to provide government-regulated time off or overtime pay, they may be hit with legal penalties or even costly lawsuits! Time off trackers can offer the protection and peace-of-mind businesses need.

Measure ROI HCM Software

We have already explored how automated requests could generate a huge ROI. Let’s explore some other ways that leave management can increase productivity and profitability.

The Cost of Absenteeism

Through the reduction of errors, efficient leave management software can prevent missed shifts and holes in the schedule. For example, an employee working in a bookstore makes a verbal time off request. Her manager agrees to think about it but never gets back to her. The employee assumes the request has been approved and is two states away when her shift starts on Friday. The manager has to reshuffle the other 5 employees so that someone is covering the register. This takes them off their usual tasks of unpacking boxes from distributors, helping customers, and organizing shelves. All of this together reduces the number of books sold.

How many times a month does this bookstore have understaffed shifts due to a faulty leave management system? This month, it happened 3 times. Let’s say that every missed shift costs the bookstore $300 in missed sales. That means that the bookstore lost $900 to absenteeism this month. That’s $10,800 a year!

If leave management software can avoid these instances of absenteeism, it will in effect make the business $10,800 a year. To determine ROI, we subtract the cost of the software. Assuming the bookstore has 24 employees, Factorial would cost $72 per month, or $864 a year.

Net profit: $10,800 – $864 = $9936

ROI: (9,936 ÷ 864) x 100 = 1150%

It’s important to remember that leave management software will save businesses time and money in a variety of ways. It will reduce absenteeism in addition to saving hours of manpower. Investing in good software will ultimately lead to higher profit cost-effectiveness.

Compliance With FMLA Leave Management Software

In order to stay in compliance with FMLA regulations, employers must track employees’ time off carefully. FMLA guarantees employees 12 weeks of job-protected unpaid leave under. They may use this time to recover from illness, care for a sick family member, or welcome a new child.  Employers who do not offer the full 12 weeks may be subject to penalization.

Absence tracking software can make sure that the employer upholds their obligations to their employees and provide the benefits employees deserve.

Best Leave Management Software for You

When you shop around for leave management software, you might be overwhelmed by the choices. It is important to look for leave management software with capabilities that will work for you and your company. Make sure to find software with automated requests, an employee portal, and a free trial. Investing in leave management software now will lead to savings down the line.

Simplify Employee Time off Requests with Leave Management Sofware

Written by Valerie Slaughter

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