5 Ways Poor Leave Management Impacts Your Business

Leave management is a crucial function of any organisation’s HR, and yet, it is often the most overlooked process. Most organisations assume that leave management is simple. After all, it’s just a matter of recording a few leaves, how difficult can it be?

However, there’s more to leave management than just “maintaining a register”. Leaves impact how a business functions, how departments plan their deadlines, and has financial implications. Poor leave management not only affects the business but also has an impact on overall employee morale. And when your employees aren’t happy, it leads to the loss of productivity and employee burnout.

5 Ways in Which Poor Leave Management Impacts a Business:

• Eats Up HRs Time
• Money Factor
• Business Factor
• Employee Burn Out
• Unhappy Employees

• Eats Up HRs Time

When there is no leave management system in place, the HR department performs this task manually. It leads to a waste of considerable time and effort on the HR’s part, which can be avoided with the use of proper technology. A leave management software can automate the process, wherein an employee can apply for leaves through an online portal. The online portal further sends a notification to the concerned reporting manager for approval. This removes the need for HR to get involved and manually track the days of absence.

• The Money Factor

Labour laws dictate that an employee is entitled to a certain set amount of leaves every year, and any additional leave comes under the purview of loss of pay (LOP). Manual leave calculations open the possibility of human-made calculation errors.

Now, imagine the cost-to-company of wrongful leave calculations. What if an employee takes 3 LOPs and the HR records only two? Think of the long-term financial implications that this would have on the company. To avoid such circumstances from occurring, a leave management system in your organisation is vital.

• The Business Factor

Poor leave management has a significant impact on the business side of things. Manually tracking of leaves often results in the lack of communication, as only the managers and HR team is aware of who’s on leave. This leads to utter confusion for the rest of the team, who might not be aware of who’s on leave and when.

The lack of communication can negatively impact your team (which we’ll discuss below) as it leads to a resource crunch. There’s an impact on productivity as well, since the team isn’t fully-staffed, leading to poor distribution of work.

• Employee Burn Out

If an employee is on an unplanned extended leave, it leads to more work for the team members. In certain cases, employees are asked to take on overtime work, perform double-shifts and give up their off-time.

If you ask employees to continually work overtime or take up additional shifts, it’ll eventually lead to employee burn out. Such employees show signs of disengagement at work. Their productivity goes down, and they tend to quit the company. When they leave, it causes strain on the remaining team members, creating a cyclic process.

Poor leave management is at the root of this problem. If an organisation can formulate plans for such situations when employees are on leave, it allows them to balance things out and ensure that stress level among the rest doesn’t spike suddenly.

• Unhappy Employees

Companies that perform leave management manually tend to be miserly about granting leaves. After all, the effort of tracking leaves, maintaining a register and performing financial calculations can be a lot for any HR team. The practice of not granting leaves thus becomes a point of contention for employees.

If an employee wants a leave and cannot get it, he/she will be unhappy and less-receptive at work. In turn, it starts the cycle of burn out leading to employee turnover. All of this can be overcome by simply using an automated leave management system, which performs all leave-related tasks, making it simpler for the HR team.

Proper leave management is crucial for organisations to not only ensure adequate tracking but also for employee engagement. With the knowledge of how poor leave management impacts a business, you should be able to take the necessary means to ensure maximum employee participation.