As organizations continue to navigate the evolving landscape of remote work, the anticipated increases in employee leave requests have become a prominent topic of discussion. During these unprecedented times, companies struggle to strike a balance that leaves them financially in the black while meeting their employees’ needs.
The surge in work-from-home and hybrid work schedules, driven by the recent global pandemic, has led to a significant shift in workplace dynamics. This could be a source of frustration for employers who assumed that their standard operating procedures would revert back to normal when the pandemic ended. Many companies are unsure how far they need to alter their regular practices to remain current with the changing times.
Based on the 2023 Employee Leave of Absence Forecast Survey by leading leave and accommodation management platform AbsenceSoft, human resource leaders have recently seen substantial increases in employee leave requests. In 2022, they jumped between 20 and 40% and are expected to increase again by up to 60% in 2023.
Why Is This an Issue?
According to researchers, even with the Family and Medical Leave Act of 1993 (FMLA), the U.S. is unfortunately among the few countries that do not guarantee paid sick leave or family and medical leave for employees. Although FMLA provides up to 12 weeks of unpaid leave per year, that leaves many workers and their families unprotected in their most significant times of need.
To further exacerbate the problem, many employers are exempt from FMLA due to the size of their business and the number of full-time workers they employ.
Since states can make their own medical leave rules, many are adopting far more generous regulations than the federal requirements given by FMLA. In fact, a number of states have created leave programs that guarantee paid time off to family caregivers and working parents.
However, this still leaves access to PTO at the employers’ discretion for most employees.
Reasons for Increases to Employee Leave Requests
As businesses seek to predict and accommodate these scheduling changes, it is helpful to understand what is driving them. The three main contributors to these leave request increases are related to the following:
Mental health concerns and burnout
Care for family members
Although flexibility with work schedules was initially seen as a necessary accommodation during the COVID-19 pandemic, it has become an essential employee benefit.
Why This Trend Is Likely to Continue
The ability to successfully navigate a balance between their workalike and home life has become a greater priority for many employees. In fact, it can significantly influence how long someone will remain with the company. The more they feel their individual needs are being met by their employers, the more likely they will experience a sense of loyalty to the company.
Therefore, it’s no wonder that many companies are introducing more paid time off in their 2023 benefits packages. This not only helps to retain current employees, but it also goes a long way to attracting potential new hires.
Navigating the Future
Over the past two years, retaining staff and recruiting new talent remains an ongoing issue for many companies, but managing staff time off has been by far one of the most difficult aspects of running a business. Calculating employee eligibility and ensuring compliance with a variety of laws, as well as company policies are two of the primary difficulties, making employee leave management one of the most challenging tasks for businesses.
Plus, many corporate leaders have found it hard to effectively manage their employees’ absences. Some are still relying on outdated methods, like spreadsheets, calendar reminders, and sticky notes. This archaic approach has proven to be inefficient leaving 44% of HR professionals stating that their organization is only marginally or not at all effective at the task.
Unfortunately, many businesses are unprepared to counter the potential legal action that may result as a consequence of mismanaging employee leaves. Adopting administrative software that performs the duties related to managing employee leave can simplify the process while ensuring accuracy and compliance. Thereby, relieving the associated tension between HR leaders and employees.
As employee leave requests from concerns such as burnout, illness, mental health issues, and caregiving responsibilities increase, organizations must continue to address them. They can do this by promoting employee well-being, providing flexible policies, and fostering open communication to mitigate the impact of increased leave use.
By recognizing and addressing these unique stressors, organizations can more effectively support their employees and maintain a healthy work-life balance in the remote work environment.
“What are the most important SaaS Metrics for my business?”
A quick search of this phrase will bring up a variety of different answers, each varying slightly, none necessarily conclusive and specific to your own business. Chances are you’ve probably spent some time in a search surrounding this exact phrase. Jumping from site to site, you’re likely to find a variety of answers, each pointing to different answers, different opinions, and different priorities. Which one is correct? How can all these SaaS finance experts have divergent views?
As we like to say, there is no one Golden Metric. You have to find the right combination of metrics to best and most accurately tell the story of your business. Insufficient or inaccurate metrics can give your faulty projections and unreliable timelines, of course. However, even squeaky-clean metrics that don’t relate well to your business can cause confusion and add little value to your finance strategy.
That being said, as a finance team working specifically in the SaaS industry every day, we’d like to offer what we believe to be some of the most important metrics for your SaaS business to track. We’ve broken these down into four categories:
Customer Metrics—Customer Count, Customer Churn
Recurring Revenue Metrics—MRR/ARR, Gross Revenue Churn, Net Revenue Churn
Cashflow Metrics—Cash Burn, Days Sales Outstanding
Customer Economic Unit Metrics—LTV, CAC, LTV:CAC, Magic Number
The benefit to categorizing these metrics is to provide context as to what piece of your company’s story can be told by each individual metric.
Customer metrics help you understand the habits and trends of your customer base.
Your customer count, of course, will tell you how many of each type of customer you serve. Knowing how many of each segment (for example, enterprise and SMB customers) will give you insight into the types of resources needed to best serve each type of customer. These counts can include opening customers (# at the start of the year,) churned customers, new customers, and net new customers (your new less churned customers). All of these counts will be instrumental in evaluating your performance of sales, marketing, and customer success teams.
Customer churn is another important customer metric that shows you the number of clients leaving your business. This metric illustrates how well you are able to retain your customer base, and allows you to make adjustments and improvements based on performance.
Note: While nobody ever likes to see customers churn, this is an example of how important context is in your metrics. Losing 10 customers in one year can mean very different things depending on what type of customer they are—it doesn’t tell you much at face value. Perhaps those 10 logos were of low contract value, or companies that took up most of your support team’s time. In either case, it might not be the worst thing that they churned! Of course, if you’re losing ten high-value customers, it may be time to kick your retention strategy into higher gear.
Knowing your average revenue per account (see below) will not only aid you in analyzing the impact of your churned customers, but also tell if your remaining accounts are growing over time. It’s great to have retained your customer base—however, it’s important to take measures to increase the amount of revenue each customer on average contributes to your business through upsells, seat increases, etc. Remember: not every customer is the same—make sure you track how performance varies with each plan or product type for your business.
Recurring Revenue Metrics
One of the greatest benefits to the SaaS business model is Recurring Revenue. Instead of traditional one-time purchases, recurring revenue gives you predictable, repeatable revenue that allows you to help you identify your company’s value long-term. This is measured in MRR (Monthly Recurring Revenue) or ARR (Annual Recurring Revenue). MRR/ARR detail how much revenue you are expected to receive in a given time period and allows you to make future business decisions based on this expected revenue. You can also use this metric to evaluate the health of your business—either looking at the growth rate or as a factor in other metrics (many of them are calculated using MRR/ARR).
Understanding the revenue you have and will generate will also put certain numbers into perspective. It’s important to know which specific metrics best tell the story of your business. For example, if you take a look at your Gross Revenue Churn, you’re only seeing the amount of revenue you’ve lost in a time period. That likely won’t feel too great, and won’t paint an accurate picture of your overall performance. However, if you also consider Net Revenue Churn, you’re able to see how expansion and upsell revenue offset the revenue that has churned.
Your existing customer base may be putting your net revenue churn closer to zero, or even negative churn. If that’s the case, you may not need to focus too much on revenue that has left your business when your existing business may be earning those dollars back. Once again, using the metrics that tell the appropriate story of your business are what are really going to help you in the long run. You can also take a more detailed look into the different types of churn here.
Knowing your different churn metrics lets you focus on improving your recurring revenue not only by shrinking churn, but also by increasing the number of opportunities to expand and upsell your existing, loyal customer base.
Cash is king. Knowing where it’s going and why can help you optimize flows and assess efficiency. Cash burn keeps track of how much money your company spends in a given time period. Not only does it show you the rate at which your company is using revenue, but it also lets you know how much time you have before you run out of cash—something every company wants to be clued into. You can use cash burn to analyze the efficiency of your spending.
Your Days Sales Outstanding is another cashflow metric that is crucial to both you and your (if applicable) investors. It measures how long it takes your customers to pay you for your service, or, in other words, how long it takes to convert your sale into cash. If your customers are late on their payments, you might be in trouble when attempting to pay your own expenses with cash you haven’t yet received! Lowering your DSO will optimize your cash flow.
Customer Unit Economics Metrics
Customer Unit Economics Metrics help you understand the value, behavior, and cost of each average individual customer (or “unit”). They act to answer very important questions about your business, such as:
How much revenue does one of my customers generate in their lifetime? (LTV)
How much does it cost my business to acquire each customer? (CAC)
How profitable are my customers to my business? Am I spending too much in relation to how much revenue they generate? (LTV:CAC) You can view a video about that here.
These metrics are crucial to understanding the value of each average customer. By understanding the above metrics, you can optimize your customer’s value to your business by either lowering your acquisition costs or taking measures to increase the amount of revenue they generate for you.
Another important metric to consider is the SaaS Magic Number. This is a unique metric that measures the efficiency of your Sales and Marketing efforts. It measures how much revenue growth is earned for each dollar spent in Sales and Marketing. From there, you can analyze if you’re spending too much, or whether you could afford to spend more to get an ever greater return. Combined with other Customer Unit Economics metrics, the Magic Number paints a picture of the efforts, benefits, and lifespan of each customer going in and out of your business.
Overall, any online search can give you a list of metrics that are crucial to your SaaS business. However, to understand which are important for you to know, you need to understand the context and importance of each metric. Before incorporating any into your strategy, make sure you think about which ones will best tell the story and answer the relevant questions for your company. Only then can you begin to better understand and optimize your business.
This is Guest Post by Mandy Leavell of KIP Sense.
KPI Sense is the CFO platform for SaaS businesses. Tech-enabled automation paired with SaaS expertise at one low monthly cost. Learn more at kpisense.com.
This is a guest post written by Launchways strategic partner, Larry Levy of CFO Options.
Have you thought about outsourcing some function of your business but now sure if you should? Maybe you’re uncomfortable outsourcing something that you think should be handled by an employee.
Whatever your current thoughts are, keep in mind that no company or organization is fully independent of other vendors, suppliers or service providers. To give but just one example, if you need to get something to a customer, do you have one of your employees drive it to the customer or do you put in the mail, FedEx, UPS or a messenger service? More often than not, you use a service. The point is all companies outsource some things, and they do this for a variety of reasons including:
The outsourced company is set up to do this more efficiently and better than you can
You don’t have the time to do it yourself
Your time is much more valuable doing other things that bring your company and your customers the highest value
You can’t afford and/or it doesn’t make financial sense to keep resources around to do things that don’t need to be done all the time (i.e. on a full-time basis.)
While it is customary to outsource functions like delivery, processing of payroll and preparation of income tax returns, other functions that can be outsourced are less common and you may feel less comfortable outsourcing them. Examples include marketing strategy and execution, bookkeeping, human resources and IT.
When considering outsourcing a function, the first thing you should think about is whether the area under consideration is a core strength of the business. Is it something that sets you apart from your competitors and allows you to provide exceptional service and results to your customers? To the extent the answer is yes, these are functions you should probably keep in house.
The second question I would ask is am I devoting resources to this function that can be used better in other areas? As an example, do you have a CIO fixing employee’s computers? Or, do you have a CHRO processing payroll? These are examples where the people taking care of these tasks are over qualified for the task. If doing these tasks is preventing them from getting other higher value things done, outsourcing the lower level task could make sense. Contrarily, if the time they spend on these things is small and doesn’t get in the way, outsourcing is probably unnecessary and costly.
Third, do you need expertise in some area, say marketing strategy, but you don’t need it full time? If so, I would strongly consider outsourcing. The alternative, bringing in highly compensated talent on a full-time basis when the function only requires a fraction of a full-time role, is both costly and can set up a pattern where people in your organization are not fully utilized. And potentially worse, they start taking on lower level tasks to keep themselves busy. When this happens, the company may be spending more than it needs to for their various functions and thinking that it needs.
In summation, outsourcing gives companies the opportunity to have another party (person or company) get certain work done when they don’t have anybody on staff with expertise or the time to get it done and/or it doesn’t make sense to bring that expertise in house because the needs are not close to full-time.
About the Author
If you’d like to discuss this further including how CFO Options helps its clients with a variety of strategic financial management as well as tactical bookkeeping and accounting solutions, please reach out to Larry Levy at llevy@CFOoptionsinc.com.
This is a guest post written by Launchways partners Rada Yovovich and Chanté Thurmond, representing The Darkest Horse, a next generation Diversity & Inclusion consulting firm.
The Long-Awaited “Future of Work” Has Come Early, and Brought Surprises Galore
Particularly in the last few years, Thought Leaders have been heralding the approach of “The Future of Work,” imagining a model of what “work” would look like in a world of abundant emerging technologies including artificial intelligence, robotics, and automation. That future vision has typically focused on the need to manage a shift of the workforce to virtual, remote, and alternative models to full-time staff (gig-based, contract-based, and part-time labor, for example).
Enter COVID-19, and the timetable has changed, and brought with it a number of unexpected features. In a matter of weeks, we’ve seen non-essential workers being told to work from home (WFH) while sheltering-in-place. Organizations, in an effort to recalibrate their budgets in tightened consumer and supply chain markets, have done their best to be creative by adapting HR policies and employment contracts to allow for safer working conditions, flexible hours, and many have reduced their workforce resulting in employees being shifted to subcontractors, part-time status, or have simply been laid off, forcing them to seek new income opportunities from home.
Who would have guessed that these disrupting shifts to work-from-home would coincide, hand-in-hand, with equally disrupting shifts to school-from-home, making working parents into teachers as well? And who would have predicted the explosive and breathtaking speed of almost-universal adoption of Zoom and other web-conferencing services?
This is not the graceful, opportunity-driven entrance into the future we may have envisioned. In fact, initial waves of surprises produced longings for a “return to normal.” But, more recently, subsequent waves of signals from the future have pointed toward possible shapes of things to come. Many uncertainties remain, but some things have become quite clear. We most certainly aren’t going “back to normal!” The past has passed, and it is not coming back. Winners and losers will be defined by their agility in adopting new technologies, by the ability to learn and innovate quickly, and by how well they attract and retain top talent.
Competing for Talent in the Future of Work
In a world where more companies’ workforce is remote/virtual, the geographic and financial constraints of recruiting melt away. Suddenly, teams have an opportunity to pursue a truly global talent pool in a more democratized way—allowing them to expand their talent search beyond their local zip codes.
The expansion goes beyond geography. Entire populations of people for whom a traditional office role is challenging, unsafe, or even impossible are finally able to access the labor market in a more equitable and inclusive way. These include, just to name a few:
Individuals with significant physical disabilities
Individuals who are gender nonconforming or going through a gender transition
Individuals with phobias or other mental health challenges
Individuals with chronic or acute health conditions
Caregivers, whether for children or aging/ill family members
These types of barriers to workplace accessibility can be easier to accommodate in a remote-work context. Individuals can curate their space and constraints to meet their own needs, particularly if their organization provides proper technology, infrastructure and policies to support them.
The Best Talent is Diverse
The greatest talent in the world includes members of populations who are suddenly gaining access in this new normal. If your organization is hiring the best talent without bias, members of your team will represent a wide array of cultures and identities.
Not only is diversity an inevitable outcome of unbiased recruitment practices, but the data shows diverse teams far outperform homogenous teams. This ROI has been proven time and time again — reports by Forbes, Mercer, the Harvard Business Review, and many more demonstrate that a diversified workforce drives innovation and business growth — bottom line: diverse organizations perform better.
Here’s How: Practice Inclusion and Equity Throughout your Employee Lifecycle
It starts with Attraction.
Inclusive employer branding, content marketing, events and continuous networking
Talent Acquisition and Recruitment.
Engaging diverse talent, identify diverse sourcing opportunities, curb unconscious biases, reduce barriers to application process, create transparent process and develop culturally intelligent communication practices
Hiring and Onboarding
Transparency, over-communication and personalization can make all the difference
Combat bias by building a fair and consistent processes
Build interview guides and scorecards that are clear and objective
Promotion of wellness programming is more important now than ever before
Re-evaluate and optimize for equity and gender parity
Employee Engagement and Training & Development
Make it a regular practice to check-in with your employees. Conduct pulse-surveys that specifically gauge inclusion, equity and belonging. Click here to learn how The Darkest Horse can help your organization with this!
Cultivate an inclusive culture
Offer inclusive and accessible learning experiences and develop clear learning/career pathways
Here’s your opportunity to acknowledge, celebrate and reward for each team member’s cultural contribution, unique ways of working, and fostering a culture of inclusion!
This is also an opportunity to re-evaluate your performance metrics. Some questions you may want to ask yourself includes:
Is your process fair, equitable and inclusive?
Are your policies unintentionally punitive or do they lean towards corrective action?
Create, support, and invest in Employee Resource/Affinity Groups
The Future is Yours!
Now is the time to catch the wave of change and surf it to success—don’t get pulled into the undertow of clinging to old ways of working! Here are a few steps to move your organization towards the future of work:
Harness the inclusion capacity of your organization. Identify the innovative, forward-thinking, and inclusion-minded changemakers in your organization. Activate them toward a goal of fostering inclusion. Empower them to set audacious goals and affect disruptive change when needed, and support them with leadership buy-in.
Get help. When you have reached the bounds of your team’s capacity for in-house inclusion efforts, partner with inclusion experts like The Darkest Horse to bring in external support for consulting, training, facilitation, and events/experiences.
Use the right tools. Work with an HR and Benefits expert like Launchways to ensure your HR processes and benefits packages meet the needs of a modern workforce.
About The Darkest Horse: The Darkest Horse (TDH) is a women and minority-owned next-gen consultancy firm helping the workforce and organizations explore the intersections of Radical Inclusion; The Future of Work; Emerging Technology; Health, Well-Being and Human Potential.
The Darkest Horse partners with organizations to empower diverse talent to thrive by embracing emerging technologies and instituting strategies that maximize human potential.
If not, now is the time! Illinois just became the 11th state to
permit recreational cannabis. Governor Pritzker signed this legislation, as
promised, on June 25, 2019. Beginning
January 1, 2020, the Cannabis Regulation and Tax Act (“Act”), will allow
adults (21+) in Illinois to possess and consume cannabis. While there is a lot
“rolled” into the 600 plus page law (pun intended), there are
significant employment pitfalls for employers with regard to enforcing drug
free workplaces. We are here to assist
you in avoiding these pitfalls and give you some practice tips in preparation
of the new law taking affect.
The good news is, the Act expressly permits employers to adopt and enforce
“reasonable” and nondiscriminatory zero tolerance and drug free workplace
policies, including policies on drug testing, smoking, consumption, storage,
and use of cannabis in the workplace or while on-call – which is obviously good
However, on the flipside, the Act’s language indicates that employers are not allowed to take an adverse action against an applicant or employee for their marijuana usage outside the workplace. This is bad for employers since it makes it much more difficult for employers to identify and address use of marijuana by employees due to issues with marijuana testing not being like alcohol testing which calculates more accurately impairment at the time of testing. In particular, the Act amends the Illinois Right to Privacy in the Workplace Act (“Right to Privacy Act”), which prohibits employers from restricting employees from using legal products outside of work. Specifically, the Right to Privacy Act is amended to provide that “lawful products” means products that are legal under state law, indicating that recreational and medical marijuana are legal products that must be treated like alcohol and tobacco. Thus, employers may not discriminate against an employee or applicant who lawfully uses cannabis (recreationally or medically) off-premises during nonworking and non-on-call hours. Again, a difficult task given a test for marijuana alone will not be enough since testing does not include current impairment.
Much like with the Illinois medical marijuana law, this Act changes the
emphasis from whether an employee “used” marijuana while employed, to whether
the employee was “impaired” or “under the influence” of marijuana while at work
or working. As a result, drug testing without any other evidence of the
employee actually being impaired at work or while working will open the door to
legal challenges. Specifically, refusing
to hire, disciplining, terminating, refusing to return an employee to work or
taking an adverse action against an employee or applicant who fails a
pre-employment, random, or post-leave return to duty drug test for marijuana
will arguably create a claim for the employee against an employer for a
violation of Illinois law.
For example, an employee who undergoes a urine drug test (which shows use
of marijuana within 30-45 days) following a workplace accident may argue that
“recreational cannabis was lawfully used outside of work, and the
accident/injury was unrelated to the employee’s legal use of cannabis outside
of work.” Without more than the drug
test result, the employer would be in a vulnerable position to argue against or
defend such a claim. However, if the
employer completed a post-accident report, which included a reasonable
suspicion checklist, in which a trained
supervisor observed and recorded symptoms/behaviors of drug use, the employer
would be in a much better position to take an adverse action against the
employee and dispute any such claim by an employee based on the observations
and positive drug test.
With the changes to the Right to Privacy Act, it is important for employers
to understand the potential exposure and damages. Under this Act, aggrieved
employees can recover actual damages, costs, attorneys’ fees and fines. As
such, employers should make sure their practices and procedures are practical
in light of these changes, until and unless the legislature or a court provides
Interestingly, the Act neither diminishes nor enhances the protections
afforded to registered patients under the medical cannabis and opioid pilot
programs. The catch here is that while
cannabis use is not protected under federal law, the underlying medical
condition for which the employee is using cannabis is likely an ADA and IHRA-covered disability! Much like
under the Illinois medical marijuana law, the Act appears to require employers
to take an additional step before disciplining or terminating an employee based
on a “good faith belief” that the employee was impaired or under the influence
of cannabis while at work or performing their job. After the employer has
made a “good faith belief” determination and drug tested the employee – but
before disciplining or terminating an employee – the employer must provide the
employee with a reasonable opportunity to contest that determination. Once
the employee is provided a reasonable opportunity to explain, an employer may
then make a final determination regarding its good faith belief that the
employee was impaired or under the influence of cannabis while on the job or
while working, and what, if any, adverse employment action it will take against
the employee without violating the Act. Requiring an employee to go through drug
testing is still currently the best practice as a positive drug test will
provide additional support for a
supervisor’s reasonable suspicion determination.
Here Are Some Practice Tips to Protect Your Workforce
and Diminish Risk:
Educate yourself and evaluate all Company policies and practices that touch on providing and ensuring a safe workplace, including job descriptions (especially those safety-sensitive positions). Speak to legal counsel on an intimate basis. Assess workplace cannabis-tolerance and implement policies that can be enforced consistently amongst similarly situated employees. Policies that should be reviewed (and that could be affected) include those addressing health and safety (including accident reporting, smoking, and distracted driving), equal employment opportunity policies, workplace search/privacy policies and drug testing policies. You should also review with legal counsel, your drug testing vendor as well as your Medical Review Officer, the drug testing methodology being used to make sure that such is producing results that are useful, accurate and well vetted (e.g., using a test that determines cannabis use within the last 30 days is not as helpful as one that may test usage within 6-12 hours).
Ensure managers and supervisors are well trained and capable of enforcing policies. Remember – exceptions and favoritism lead to discrimination claims. Conducting training, especially training on reasonable suspicion detection, will be necessary to avoid legal challenges to a supervisor’s reasonable suspicion determination. Creating and/or updating forms for accident reporting (including witness statements), reasonable suspicion checklists, and established protocols for addressing suspected impairment in the workplace, is now more critical than ever.
Clearly communicate management’s position and policies to employees, especially where there is a shift in current policy or practice. Educate employees on the effect of lawful and unlawful drug use and the employer’s policies regarding marijuana. Remember, marijuana is still illegal under federal law, and, thus, you may have a zero tolerance policy within your Company. We now just have to balance that right with Illinois’ newest law.
If your Company does not have a process already, institute a reasonable accommodation process and policy for employees who are medicinal users of cannabis. While a Company is not required to keep an employee who must use marijuana while on the job or report to work under the influence, you still have obligations of going thru the ADA process with the employee to determine if you can or cannot reasonably accommodate their disability so that they may perform the essential functions of their job while not being impaired.
Engage competent legal counsel to assist you in this process and in addressing difficult situations before they lead to costly and time-consuming litigation.
Also important to note: more changes are coming to Illinois for employers on January 1, 2020! On August 9, 2019, Governor Pritzker signed Senate Bill 75 – the Workplace Transparency Act – into law. Effective January 1, 2020, major new changes will forever alter how Illinois employers manage harassment and discrimination issues as well as other workplace controversies. This new law requires mandatory sexual harassment training for employees; reporting and disclosure requirements; restrictions on employment agreements and several other mandates related to sexual harassment in the workplace. Be on the look out for an upcoming blog on these details so you are prepared for the new Illinois world of dealing with sexual harassment prevention.
About the Author
Heather A. Bailey, Esq., a partner with SmithAmundsen LLC, focuses her practice on labor and employment law issues for employers for the past 18 years. Heather may be contacted directly at: Direct Dial: 312.894.3266, Email: email@example.com.