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Leave Management System: Costs, Considerations, ROI

9 min read
leave management system

Taking time off is good for employees; it prevents burnout and increases job satisfaction. Leave management, however, can be a headache for overworked HR teams. Poor absence management can lead to understaffed shifts or costly legal problems. To make sure employees get time to recharge and managers don’t lose their minds, many businesses rely on a leave management system.

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Take Advantage of an Attendance Management System for Employees

What is a leave management system? This software takes care of all time off needs, helping to organize employee holidays and leave requests so there are no surprises down the road. This will not only save valuable man-hours wasted on inefficient systems. It will also limit your business’s liability, by making sure hours are in compliance with paid time off (PTO) and overtime laws.

Leave management systems are useful for all businesses, but they are especially key for hospitality and retail businesses, where an understaffed shift can have a serious impact.

3 Signs You Need an Online Leave Management System

If you are wondering if you can afford to invest in an online leave management system, we have a question for you: can you afford not to? Here are 3 signs that you are more than ready to take the plunge.

  • You feel like the business concierge.

HR managers have a lot to do, and fielding time off requests is a heavy burden. Ensuring requests comply with company policy, running them past the appropriate supervisors, and then balancing the schedule again to make sure there’s adequate coverage can take a long time! If you crave time to concentrate on the bigger picture, it may be time for a change.

  • Shifts go uncovered.

If you are managing leave manually, there may be mistakes and miscommunications which lead to missed shifts. This will stress and stretch employees who need to cover an understaffed shift. Even worse, customers notice. In restaurant and retail, businesses depend on repeat customers. This means one bad customer experience can lead to future losses. If you want to minimize human error and keep your business running smoothly, it’s time to consider software.

If you are using spreadsheets to track employee hours, PTO accrual, or absences, you are opening your business up to legal liability. Be better than excel! Your employees are valuable, so provide them with the professionalism and transparency they deserve. If you’re stuck doing it the old-fashioned way, leave management software can help you modernize your system.

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6 Things Leave Management Software Can Do For You

Leave management software can clean up your books and keep employees and supervisors happy. Here are the big benefits:

  • Eliminate Paperwork:

Go green! In addition to reducing unnecessary and clutter, getting rid of paperwork is good for the environment. Bonus: With an online leave management system, there will be no more lost or mislaid request forms. Everything will be in one (digital) place.

  • Reduce the Effect of Human Error:

Automation means no more scheduling errors. Online requests which can be accepted or rejected mean no more miscommunications. Meanwhile, schedule visualization tools will prevent understaffed shifts.

  • Improve Communication:

Stop fielding requests on the fly! If employees are currently making leave requests by email, post-it, verbal, and courier pigeon, software will streamline and centralize the process.

  • Increase Transparency:

With the right software, both management and employees can review attendance and time-off data at any time. With the information that is always up to date and available, employees can relax and trust the data.

  • Equal Enforcement:

Does your staff try to bribe you with pie and compliments to get their vacation requests approved? A leave management system ensures each request is treated fairly and is in compliance with company policy.

  • Software to Track Vacation and Sick Time:

Track PTO and vacations efficiently to ensure your business is in compliance with regulations.

8 Top Features of a Leave Management System

By now, you probably agree: it’s time to invest in leave software. Here are the key  leave management system features to look for as you shop around:

  • Automated Absence Requests 

When employees need time off, they can send absence requests to managers ahead of time. Managers will be able to review the request on their own time and approve or reject the request digitally. Further, automation prevents miscommunications and limits last-second alterations and changes.

  • Team Calendar Overview with Leave of Absence Tracker

Managers can take a bird’s eye view of the schedule with team calendar overview capabilities. These will allow supervisors to see who is on the schedule and easily pinpoint holes. This means that the floor will never be understaffed again!

leave of absence tracker

  • Easy Holiday Policy Input

A good leave management system will allow HR managers to create different categories of leave, such as sick leave, annual time off, or general holiday. Employees can choose from these categories when making a request. This is an efficient way to make sure employee absence requests adhere to company policy– even before they are made.

  • PTO Management Limits Liability

In order to adhere to paid time off accrual and overtime regulations, it is important that businesses track time off closely. Leave management software will limit legal liability and ease managers’ minds.

  • Generate Custom Reports with an Employee Monitoring System

Data is the backbone of an efficient company. Using time off software will allow supervisors unprecedented insight into habits and trends of employee time off requests. With this information, managers will be better equipped to make strategic decisions for their business.

  • Integration with Other Tech

Employees should be able to access their schedules through the tools they regularly use, such as Google calendar and Slack.

  • Mobile App with Attendance Monitoring System for Employees

For increased accessibility, choose leave management software that has a mobile app. Employees will be able to make their requests on the go, and employers will be able to approve them just as quickly.

Attendance Monitoring System

  • A Free Trial Before You Commit

It’s a bad idea to sign up for a system before you know how it is going to work for you. Make sure to take advantage of leave management system free trials. Once you know it’s the right fit, you can commit!

Compliance With FMLA Leave Management Software: When an Employee Takes  a Leave of Absence

In addition to sick days and vacation days, some employees may need to take a longer leave of absence. Don’t worry! It will be easy to manage with time tracking software.

Federal and state laws regulate mandatory leave of absences, including medical absences, military leave, jury duty, and other state-mandated leave. Employers must grant job-protected leave to eligible employees in these situations.

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. 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.

Manage these absences effectively while making sure you adhere to the law with a leave management system. A good leave management system can revolutionize the way your business tracks vacation, sick leave, and more. Make sure to invest in an employee vacation tracker so that employees and supervisors can spend less time organizing vacations– and more time enjoying them.

How to Calculate the Benefits of Leave Management System

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.

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Metrics to Consider to Calculate the 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 of Time Off Management 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.

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.

Written by Valerie Slaughter

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