Strategic Benefits of Online Leave Management System

By: Gireesh Sharma
Date: July 23rd, 2009
Posted in: HR Best Practices, HR Technology, HRMS (HRIS), Human Resources | 23 Comments »

Leave Management is one of the most important HR processes, that consumes a small but significant portion of managerial time. While managers are usually overloaded with projects & hunger for resources, approving subordinates leaves is a tight rope walk. On one hand HR has to ensure compliance with leave policy & ensure availability of sufficient resources for business continuance; while on the other hand it has to improve employee satisfaction. Most of us have witnessed bitter manager-employee relation on issues of leaves. Thus, leave management becomes an important strategic task for the organization.

Strategic Value of Leave

While many companies may take the leave management “not so seriously”, research shows that poor leave management has had bad impact on business performance. It can impact project deliveries and employee morale negatively. Here are some of the critical business issues, that are directly related to leave management.

1. Meeting Project Delivery Deadlines: Availability of manpower directly impacts the project delivery schedules. While committing Project Delivery dates managers need to keep in mind the general availability of sufficient resources. They need to know what are the peak leave months/ weeks and should commit the delivery dates accordingly. Also, while crucial projects are nearing dead lines, they should approve leaves prudently.
2. Legal Issues with Leave: Each country has legal rules for employee leaves. Like FMLA (Family and Medical Leave Act) in United States – with its broad definition of medical conditions and generous leave provisions -it 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, lay clear guidelines for leaves. If organizations do not comply with these rules, they risk being sued by the employees and penalized by the Government Authorities.
3. Emotional Factors related to Leave: Getting leaves in time is a major employee satisfaction factor. Employees have several personal needs which requires their absence from work. Read our another post denying leaves can cause emotional stress, where we studied a case of mismanaged leave request.
4. Financial Implications of Leave: Accrued leaves are financial liabilities on organizations, especially Paid Time Offs and Privileged leaves which are 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 organization increases and the HR should report this to management at regular intervals.
5. Performance Vs Leaves: Work Life Balance have a direct impact on an employee’s performance. Employees who do not take enough leaves (and suffer from stress) or the employee who takes too much leave (and is careless towards job), both have negative impact on their performance. Both type of employees need to be monitored carefully and coached on maintaining a productive work life balance.

Important Leave Metrics/ Dashboards that HR should keep an eye on:

Organizations need to capture and know several leave metrics at frequent intervals for a better understanding of its human resources.

1. Leave Trends of the Company: Many employees tend to go on leave during the festive seasons. An HR manager should keep a watch on the durations when large number of employees apply for leaves. This data can be obtained from leave history records. This metrics helps senior management in decision making especially regarding project delivery dates.
2. Employee Availability Report: This report shows the number of employees available for work department wise in the current quarter or at any given range of time.
3. Employee Leave Balance Report: This report shows the balance for various types of leaves for the employees, both department and company wise. This helps Finance Department estimate accrued leave liability of the company at a given time.
4. Leave Rejection report: This report show the number of leaves rejected by the manager in the last quarter/six months. The increasing number of rejection must be reviewed, as these may impact the employee morale.
5. Leave Acceptance Report: This report shows the number of leaves approved by the managers in a given duration.
6. Employees with “No Leave in the Quarter”: It shows 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 in leave management

Maintaining compliance or managing leave data can be difficult if your leave management is manual or excel based. The HR technology can significantly simplify your leave management and add value by streamlining the organization’s leave data. Here are some of the key challenges that an automated leave management system can resolve:

1. Accurate information about leave data: Leave Management System can provide accurate information about the leave balances, leave trends etc. which allows you to forecast available resources at any point of time.
2. Conveying policy rules: Leave Management Systems have an in-build helps, messages etc. to convey leave policy rules like maximum/minimum number of days, leave clubbing, holiday calendar management according to location etc. Employees can at anytime refer to the leave policy before applying leaves.
3. 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 has intact rules, that does not allow employee or manager to bypass rules while applying or approving leaves.
4. Instant information about employee’s Leave History: A leave management system also allows manager and HR to look at leave history of the applicant. Leave history for the department or company can also be extracted immediately.
5. Saves HR’s 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.
6. 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 in attendance if an employee is absent from work without managers permission.
7. 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. These can help in implementing the leave policy of an organization and remove confusion.

What Next?

If you are an HR Manager, a CEO or a Line Manager who foresee leaves as a strategic resource for the company and want the organization get rid of leave related challenges, our consultants will be happy to discuss your leave management issues and guide you with appropriate solutions. Please fill the below form with your corporate email ID and telephone number and our consultants will call you back.