If your HR team needs better tools for leave management, you may find yourself wondering how to build a business case for leave management software. It’s a question that deserves a robust answer. After all, HR’s ability to process leave efficiently and effectively carries a significant business impact.
While HR may see the need for software quite clearly, leaders want hard information before devoting resources to a solution. They need to understand what the current problems are, how leave technology will solve them, and what kind of ROI new tools could generate.
Your business case needs to explain all of those factors to company leaders. A straightforward yet detailed proposal should quantify the costs your current state generates, calculate potential ROI, and generate buy-in from multiple stakeholders.
In this article, we’ll show you the essential elements of a strong business case for leave management software and offer a step-by-step guide so you can create your own.
What is a Business Case?
Before you can build a business case for HR technology investments, it’s crucial to understand what makes a business case succeed.
Business Case Basics
Put briefly, a business case is the argument for an organization to invest in something. A strong business case lays out the problem at hand and pinpoints a solution, providing plenty of support as to why that solution is the most beneficial. The best business cases use data to show why the solution is necessary and how it will ease or eliminate current pain points.
It’s important to note that a business case is different than a project proposal. While a business case chiefly explains why an initiative is worth doing. A project proposal is devoted to explaining what will be done and charting the initiative’s execution.
Executives want to receive a business case for significant investments because they want to be sure their organization’s resources are used effectively. A business case also creates accountability. It states the goals an investment should work toward, and sets the standard the team can use to measure progress later on.
What a Strong Leave Management Business Case Includes
A successful business case for leave management software should explain how the tool will strengthen compliance, payroll, benefits, and the employee experience simultaneously. A strong business case will also explore the hidden costs manual leave management creates for each of these areas. It will go on to show how the software will eliminate these costs, creating a multi-year compounding impact, as opposed to a one-time fix.
Your business case should also generate alignment from multiple stakeholders. A well-devised argument will appeal to executives across the C-suite, from the CHRO to the CFO.
To accomplish these goals, be sure to include these four key elements in your business case:
- Current state costs: Using quantifiable information, state how much your employer currently spends on leave management.
- ROI calculations: Next, illustrate what your organization could gain by investing in leave management technology, but be sure to use conservative assumptions.
- Risk mitigation: Part of the ROI of leave technology is the reduced risk of compliance errors. This isn’t easy to quantify, but you can include information about the average costs of employment lawsuits, payouts to the EEOC, and other data points.
- Stakeholder-specific value propositions: Show the value the software will generate for finance, HR, legal, IT, and key members of the C-suite.
Step 1: Calculate the True Cost of Leave Management
Your organization’s leave program may cost more than you realize. To calculate the true cost of leave management, you need to look beyond the obvious factors, like your HR team’s salaries and the price of the tools they use. Here are three factors you need to include in your calculation:
1. Operational Inefficiencies
Leave management can be an incredibly inefficient process when executed poorly. Employers have seen leave volume surge in the last three years; according to AbsenceSoft research, leave volume has grown more than 120% over three years. This trend has saddled HR with a growing workload, but most teams’ tools and processes haven’t caught up with demand.
HR teams that handle their workload manually spend most of their time on paperwork rather than strategy, limiting their capacity for building relationships with employees. This conundrum also poses a basic productivity problem: With growing caseloads, HR simply can’t get everything done.
Working at top speed with poor tools, the department may make avoidable errors. Consider payroll, for example. According to our survey, 31% of employees said they’ve had pay issues when going out on leave.
2. Compliance Risk
Next, you need to factor in the level of compliance-related financial risk your organization faces based on its current processes. When your HR team is likely to make compliance errors, the possibility of financial fallout increases.
Your organization may have to defend an employment lawsuit: a process that costs companies an average of $78,000. Depending on the charges, court proceedings, and final outcome, your company could be on the hook for an average of $40,000. Larger, more costly lawsuits have cost employers more than a million dollars.
HR’s not the only team determining your compliance risk, however. Managers profoundly impact your organization’s exposure to risk. Because many managers receive inadequate training on leave management, they are liable to botch processes and breach protocols, which could easily result in serious compliance errors.
3. Talent Costs
Here’s a sobering reality: When employees encounter a poor leave experience, 36% start looking for a new job and 14% quit. This leaves employers searching for new talent. Research shows that employers spend between 50% and 200% of an employee’s salary in hiring a replacement. This expenditure becomes an damaging expense when employers face multiple employee exits.
But recruitment costs aren’t the only cost associated with leave-related turnover. Turnover also impacts productivity. When an employee exits the organization, the rest of their team shoulders their workload. What’s more, when team members hear about a colleague’s bad leave experience, their morale and company loyalty may suffer.
Step 2: Build Your ROI Model
Once you’ve calculated how much your leave program costs, it’s time to determine how much your organization could save by implementing leave management software. Here are three ways technology can generate savings.
1. Efficiency Gains
When your organization adopts leave technology, your HR team will begin to work much faster. Most organizations see up to 66% less time per case through automation. They’ll also spend less time fielding employee requests. When employees have access to self-service portals, they have 30-40% fewer questions for HR.
These time savings result in greater capacity for HR. With the right technology, leave managers manage an average of 59 cases simultaneously, up from 28 with manual methods.
Time Savings Example
Let’s say an organization sees 500 leave cases per year.
- With manual process, it takes HR roughly 2,000 hours to manage these cases.
- With intelligent automation, however, HR can manage these cases in about 750 hours.
- This transformation saves the organization 1,250 hours, or about 0.6 FTE.
2. Risk Avoidance
Leave technology doesn’t just increase the quantity of HR’s output. It also elevates the quality of their work, resulting in stronger compliance and fewer risks. When HR uses a platform with a foundational compliance engine, for example, the likelihood of expensive compliance mistakes is minimized.
To drive real value, a leave platform must track 200+ federal and state laws out of the box, including the FMLA, the ADA, the PWFA, and state-paid programs. Updates should be automatic and effective from day one, without HR needing to rebuild workflows or monitor legislation manually. The system should also support configuring unlimited company-specific leave and accommodation policies and correctly calculate outcomes when multiple laws overlap.
Let your financial team know that by insourcing FMLA administration and using a purpose-built leave management software to manage requests and claims, an organization with 5,000 employees can expect to save 5-7x times their expenditure. Even better, that isn’t even inclusive of the potential cost savings of lawsuit prevention, which can be more than $400,000 per case.
Leave technology will also prevent your team from making accidental overpayments. AbsenceSoft’s Payroll Calculations module, for example, helps HR and payroll teams automatically estimate leave payments, coordinate state benefits, and export everything from one centralized platform. Our platform pulls in your employee’s pay history and applies state benefit offsets, resulting in fewer errors, faster handoffs, and significant cost savings for your team.
3. Elevated Employee Experience
A purpose-built platform allows HR to offer employees a better leave experience. Here’s how:
Total ROI Snapshot
- Self-service portals: Having to navigate leave by phone tag or email chains is a key driver of poor employee experience. A modern platform improves the experience for employees by providing a mobile-friendly portal where employees can request leave, upload documents, check status, and receive updates at any time.
- Clear communications: Consistent communication is often the difference between a good leave experience and a poor one. In our research, 48% of employees cited “clear process and knowing what to do” as a key driver of positive leave experiences. A platform with multi-channel communication, branded templates, and automated touchpoints guide employees through each step of their leave without manual effort.
- Convenient user experience: A comprehensive leave platform should support bi-directional text messaging that saves all communications in the platform, attached to the case. This is far more convenient for deskless and frontline workers, and gives employees a way to complete simple mobile uploads to save time on paperwork.
- Human support: When HR can process leave and accommodations requests more quickly and accurately, employees get a smoother experience. They also get better access to support, directly from HR. The right technology gives HR more time to spend with employees. Freed from paperwork, HR can lend a listening ear or a helping hand.
Total ROI Snapshot
Let’s consider what ROI could look like at an organization of 5,000 employees. With a workforce of this size, the organization likely sees 250 leaves per year.
- After the first year of investment, the organization would likely save about $75,000.
- Conservatively, this generates a value returned of $647,000.
- So how long does it take for the company to see payback? Less than two months.
Step 3: Tailor Your Message by Stakeholder
Once you’ve gathered the essential information, ensure your business case aligns with the priorities of key stakeholders. Highlight different outcomes for different parties. Here are a few ideas:
- For finance, summarize the fast payback, clear cost avoidance, and the ability to scale leave volume without adding headcount.
- For HR leadership, focus on capacity relief, consistent decision-making, and confidence that the team can handle growing workloads without burnout.
- For executives, highlight retention, employer brand protection, and the operational resilience needed to support growth and change.
- For legal and compliance, emphasize audit-ready documentation, well-documented ADA and PWFA interactive processes, and reduced legal exposure as laws continue to expand.
Step 4: Structure Your Business Case Document
At the onset of building your business case, you may feel daunted. But don’t worry too much. A business case doesn’t need to be overly complicated or exceedingly lengthy. In fact, it’s better to present a document that’s clear and concise.
When creating your business case, consider anchoring the conversation on four straightforward questions:
- Where are we today? Include factors such as leave volume, growth, HR time per case, states covered, and employee feedback. Include plenty of current state documentation.
- What are we investing in? Discuss technology, implementation, and any external support.
- What do we get back? Highlight time savings, lower turnover, reduced risk, and a better employee experience. In this section, it’s best to use conservative assumptions. It’s better to underestimate potential achievements than to overpromise ROI.
- What happens if we wait? Consider rising leave cases, increased errors, eroded trust, and HR capacity becoming the bottleneck. Remember: Doing nothing is not neutral if you have manual processes, tech solutions that aren’t purpose-built, or an outsourcing arrangement that isn’t working out. If your organization chooses to continue with these options, it will have to absorb significant costs year after year.
Common Pitfalls to Avoid
For your pitch to succeed, you’ll need to build a bulletproof business case. Here are a few common mistakes that could hinder your argument:
- Using aspirational vs. conservative projections: When discussing potential ROI, use leaner estimates. Overstating the savings software could generate may lead to frustration and disappointment down the road.
- Ignoring platform or model fit: Choosing a leave management solution today is about more than comparing features or pricing. The real decision starts with understanding which operating model fits your specific workforce and business goals. To learn more about choosing the right solution for your team, download AbsenceSoft’s HR Guide to Evaluating Leave Solutions.
- Failing to address implementation concerns: Implementation is an important aspect of a business case. Discuss how a vendor addresses implementation and how they’ll provide support throughout your partnership.
- Not quantifying “do nothing” costs: Show stakeholders what could happen if your organization continues to use manual processes, faulty outsourcing, or lackluster software. Your company will continue to face these costs as time goes on.
- Missing stakeholder-specific value props: An overly generic business case won’t win the attention of multiple stakeholders. Ensure your pitch speaks to key figures directly, aligning with their priorities.
Advocating Effectively Doesn’t Have to Be Hard
Here’s how to build a business case for leave management software in a nutshell: quantify current costs, project clear ROI, and create stakeholder alignment. It’s not difficult to create a strong argument for purpose-built leave tools, but it’s incredibly important. The right leave tools pave the way for greater efficiency, stronger compliance, and an enhanced employee experience.
While these tools require some investment, modern leave management pays for itself faster than most teams expect. By boosting HR’s productivity and eliminating compliance risk, employers see fast, strong ROI. If you’re curious about the savings AbsenceSoft could generate for your organization, check out our ROI Calculator.
Ready to create a business case for leave software? Download a business case template. Or schedule a demo with one of our team members to learn more.