According to new research, only one-fifth of organizations are very confident in their compliance processes—and about 70% rate their audit confidence at a 3 out of 5 or lower.
Most organizations “lack systematic approaches to ensure audit readiness and deliver employee experiences that meet modern expectations,” write researchers from Pulpstream in the firm’s recently released The State of Leave Management report. That is leading many companies to struggle with balancing compliance confidence and operational complexity, which can have significant implications for talent strategy.
Among the pressures facing HR leaders navigating an evolving leave management landscape are higher leave volumes. This is due to factors including changing wellbeing expectations among employees, workforce education and regulatory expansion, says Marc Rodriguez, CEO of Green Leaf Business Solutions.
“Employees today are far more aware of their rights under federal, state and local leave laws,” he says, “and many states have expanded paid leave programs that require active coordination from employers.”
To complicate matters further, many organizations are overseeing multi-state workforces. Pulpstream’s proprietary report—based on surveys of HR leaders and employees, federal data, regulatory analysis and more—found that two-thirds of companies are facing “exponential complexity” from multi-state operations.
Rodriguez says leave management approaches are often fragmented and lack centralized oversight, with data scattered across multiple systems and manual tracking being common. This drives up the risk that the company won’t be able to convey consistent decision-making during an audit.
Shrinking HR teams with broader responsibilities also play a role, he says.
“Even well-intentioned HR teams struggle to keep pace with evolving regulations, documentation requirements and deadline management, while also supporting the broader employee lifecycle.”
Balancing automation and oversight
Audit-ready leave management in this modern environment requires repeatable processes and dedicated ownership, Rodriguez says.
While technology is part of that solution, it’s critical that HR teams find an effective balance between automation and human review.
Tech, for instance, can manage everything from eligibility calculations to compliance alerts—a key in complex, multi-state operations with changing regulations. But organizations should remember that “oversight and judgment can’t be automated away,” Rodriguez suggests.
An effective partnership between automation and human ownership can enable leave management to have more clearly defined processes and consistent administration, without which the risk for compliance issues, operational disruption and reputational damage can soar.
When ineffective leave management is present in an organization, “the hidden cost is strain on HR teams and managers,” ineffective leave management and the erosion of trust, both internally and externally, Rogriguez says.
“Organizations that don’t treat leave as a managed, strategic function often find themselves stuck in a cycle of exceptions and corrections,” he adds. “Those that do are better positioned to protect the business, support employees and scale with confidence.”
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