January 20, 2021

Is Poor Leave Management Tracking Costing You Money?

Tracking employee time off effectively is a core part of managing a highly productive and engaged workforce. Whether employees are taking one day off or going out on an extended family or medical leave, it’s essential to have the mechanisms in place to track employee absences and determine employee eligibility for paid and unpaid leaves.

Using inefficient processes and outdated technology makes it hard to develop a clear picture of employee time and attendance. It can also negatively affect business operations and cost you money. Here are some key ways poor leave management tracking may be hurting your bottom line:

Increased Compliance Risk

State and federal laws set eligibility requirements for employee leaves, including how much time employers must grant for certain leaves and whether leaves must be paid. For example, the Family and Medical Leave Act (FMLA) requires employers with more than 50 employees to provide eligible employees with up to 12 weeks of unpaid family or personal medical leave per year. In addition, employers in states such as California, Connecticut, Massachusetts, and New York must also comply with state-specific leave laws, some of which require paid leave.

Not only do you want to correctly track time off so you have a solid understanding of when employees are out and how often, but you also need to make legally required leave accessible to eligible employees. If you don’t have a clear process in place for managing accruals or granting leave requests, you can run afoul of state or federal laws and risk costly lawsuits or noncompliance penalties. In 2019, a single employer paid $1.3 million to settle a lawsuit for FMLA violations related to one employee.

Excessive Absenteeism

Complying with legal requirements for employee time off is only one part of the leave management equation. You also need to have the processes and technology to track paid and unpaid leaves and stay informed whenever excessive absenteeism becomes a problem. The costs of absenteeism can quickly add up. According to the CDC Foundation, productivity losses linked to absenteeism cost roughly $1,685 per employee per year. Excessive or unplanned absenteeism can add costs to your business as a result of the following occurrences:

Additional costs for replacement workers
Overtime pay for employees who fill in when others are absent
Incorrect time-off eligibility calculations, leading to employee overpayments

Low Employee Engagement and Morale

Poor leave management tracking can also result in indirect costs that negatively impact the productivity of your workforce. If you use manual processes for tracking accruals and time off or approve or deny leave requests in error, employees can become frustrated and overall morale can take a hit. This can become even more problematic if conflicting policies or poor communication leads to disputes over how much time off an employee has accrued or taken.

When employee engagement and morale begin to decline, employees may be absent more often or put forth less effort when they are at work. As a result, your organization can suffer missed revenue and profitability opportunities. According to an Engagement Institute study, disengaged employees cost employers $450-$550 billion a year.

Save Money with Better Leave Management Tracking

Managing your workforce effectively requires having the right tools to track employee time and attendance. Throughout the year, it will be necessary to comply with applicable state and federal leave requirements, monitor employee leaves and time-off balances, and ensure you have the staff to cover for employee absences. Highly customizable absence and leave management technology can help you avoid errors and build efficiency into your leave management program through the following features:

Flexible accrual policy configurations
An intuitive one-stop portal for managing time-off requests
Dashboards for reporting and time-off decision-making

When you have full visibility into employee absences and leaves, you can avoid mistakes that cost both time and money. For more ideas to help you improve the efficiency and productivity of your workforce, read our e-book, Leave Management Tools That Flex to Meet Your Needs.