Leave management is one of those tactical HR functions that we’re required by law to get right. With more than 300 state, local and federal laws/regulations with which to comply, U.S. employers have to stay on top of an ever-changing morass of guidelines that impact their employees in very personal ways. It’s not just about vacation or PTO.
Workforce Management has published trend survey data on this topic and even though the subject of tracking employee time off is pretty tedious, the issues surrounding it are business critical. The 2011 trend survey, published in early 2012 and sponsored by WorkForce Software, is amazingly interesting. I know, surprising, right?
For example, unless you’re the one responsible for ensuring compliance with all applicable laws/regulations, did you know that 40% of employers report an error rate of 3 or more unearned leave days per 100 employees per pay period? That’s pretty big from a payroll expense perspective. And what do you do when you find out? Clawback the unearned time? And how do you do that? Take time out of next year’s leave pool? Ouch.
That’s why I found it really interesting that when the survey asked employers what the greatest negative impact of non-compliance was, Employee Morale was far and away the biggest impact. Regardless of the employer’s size.
Here’s why this makes sense to me: I learned early in my leadership career that you have to get employees’ compensation right. You have to pay them the right amount; you have to pay them on time; and you have to manage their time off accurately. You can’t screw up any of these and not impact morale. And if you screw up any or all of these up more than once you’re sunk.
And so it really isn’t surprising that more than litigation fines/costs and brand equity/reputation, employee morale is HR’s biggest concern in ensuring compliance in managing time off. I don’t think this concern is driven by the old “touchy-feely” rap that HR used to get. This is cold, hard reasoning about the cost to the engagement and retention of employees if the organization can’t get the basic building blocks of paying people correctly right.
So reducing the error rate isn’t just about reducing payroll dollar mistakes, it’s about productivity and morale. There’s more interesting data in this report. You can download it here.