Leave management is one of the most important HR processes which consume a small but significant portion of managerial time. Although this does not take too much time, yet approving leaves is a delicate balancing act. On one hand, HR has to ensure compliance with leave policy and ensure availability of sufficient resources for business continuance, while on the other it has to improve employee satisfaction. Most of us have witnessed bitter manager-employee relation on issuing of leaves making leave management a strategic task for the organization.
Strategic Value of Leave
While many companies may not take leave management seriously, research shows that poor leave management has had a bad impact on business performance. It can impact project deliveries and employee morale negatively. Here are some critical business issues, directly related to leave management:
- Meeting project delivery deadlines: Availability of manpower directly impacts the project delivery schedules. While committing to delivery dates, managers need to keep in mind the availability of sufficient resources. They need to know the peak leave periods and should commit delivery dates accordingly. Also, when crucial projects are nearing deadlines, they should approve leaves prudently.
- Legal issues: Every country has legal rules for employee leaves. For instance, the Family and Medical Leave Act(FMLA) in the United States – with its broad definition of medical conditions and generous leave provisions – can scare employers, especially smaller companies who rely on a handful of key employees. Failing to comply with the complicated requirements of this law can result in serious liability for both companies and individuals. Similarly, in India THE FACTORIES ACT CHAPTER VIII, Annual Leave with Wages, lays clear guidelines for leaves. Non-compliance with these rules increases the risk of being sued by the employees and penalized by government authorities.
- Emotional factors: Getting leaves on time is a major employee satisfaction factor. Employees have several personal needs which require their absence from work. Read another of our post on denying leaves can cause emotional stress where we studied a case of mismanaged leave request.
- Financial implications : Accrued leaves are financial liabilities on organizations, especially paid and privileged leaves that need to be reimbursed at the time of separation or as and when required by employee according to the leave policy. If employees do not take enough leaves, the financial liability of the organization increases and the HR should report this to management at regular intervals.
- Performance vs. leaves: Work-life balance has a direct impact on an employee’s performance. Both, employees who do not take enough leaves (and suffer from stress) and employees who take too many leaves (and are careless towards job)have negative impact on their performance. Both types of employees need to be monitored carefully and coached on maintaining a productive work-life balance.
- Leave trends: Many employees tend to take leaves during the festive seasons. An HR manager should keep a watch on the times when a large number of employees apply for leave. These metrics help senior management in decision making especially regarding project delivery dates.
- Employee availability: This shows the number of employees available for work in the current quarter or at any given time period.
- Employee leave balance : This shows the remaining leaves of various types for the employees, both department and company wise. This helps the finance department estimate accrued leave liability of the company at a given time.
- Leave rejection : This show the number of leaves rejected by the manager in the last quarter / six months. Increasing number of rejections must be reviewed, as these may impact the employee’s morale.
- Leave acceptance : This shows the number of leaves approved by the managers in a given duration.
- Employees with “No leave in the quarter”: This gives the list of employees who have not taken any leave in the quarter. HR Managers should find out the probable reasons and even counsel employees, if they are putting themselves under stress.
Role of technology
Maintaining compliance or managing leave data can be difficult when done manually or by using excel . HR technology can significantly simplify leave management and add value by streamlining the organization’s leave data. Here are some key challenges that an automated leave management system can resolve:
- Accurate information: Provides accurate information about leave balances, leave trends etc. which allows you to forecast available resources at any point of time.
- Conveying policy rules: Uses in-built systems to convey leave policy rules like maximum / minimum number of days, holiday calendar management according to location etc. Employees can, at any time, refer to the leave policy before applying for vacation days.
- Compliance to leave policy: Often, lack of knowledge about organizational leave policies, lead to negligence of leave policy rules by employees and managers. A Leave Management System uses inherent rules that do not allow employees or managers to bypass rules while applying for or approving leaves.
- Instant information about employee’s leave history: Allows manager and HR to look at leave history of the applicant. Leave history for the department or company can also be extracted immediately.
- Saves time: Online leave balance visibility can remove a tremendous strain on HR where as much as 15% of their time is spent in handling queries on leave balance for employees.
- Improves discipline: Leave, when paired with attendance, can improve accuracy and build discipline in any organization. For instance some companies may have a policy of enforcing a leave without pay if an employee is absent from work without the manager’s permission.
- Multi-location holiday management: Leave when paired with location specific holiday calendars can help calculate the correct number of days that an employee applied for leave.
If you are an HR Manager, a CEO or a Line Manager who want to automate leave-related details, our consultants will be happy to discuss your leave management issues and guide you with appropriate solutions.
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