HR.com: A Practical Budgeting Approach to Parental Leave for People Leaders
This article is republished from HR.com.
Most companies don’t plan for parental leave until someone’s already packing up their laptop. And by then, it’s too late.
Let’s start with the numbers. According to a survey by Parentaly, fewer than one in ten parental leaves are supported with an external backfill in the U.S. That’s right; just six to seven percent of leaves have an actual human in place while someone steps away. Which means the remaining 93 percent? Their work gets absorbed by someone else. Or worse, no one at all.
The Leave Gap Is Getting Wider
Now add in the reality that leaves are getting longer. Twelve weeks used to be the standard, but more organizations are offering 16, 20, even 26 weeks or more. That’s progress. But it also creates a bigger gap. Teams are already smaller than they used to be. The pace is faster. And the expectations? Higher than ever.
So, what happens when someone goes on leave? Everyone else picks up the slack. Except there is no slack. There’s no extra capacity. Most teams are already operating at or beyond their limit. You cannot stretch something that is already maxed out.
And when there’s no plan, there’s real risk. Risk to the person going on leave. Risk to the team. Risk to the business.
Let me give you a real example. A high-performing account manager took parental leave. Her clients were handed off, but the colleague covering her accounts didn’t have the bandwidth. Follow-up fell through. Clients didn’t feel taken care of. Revenue dropped. She returned from leave to find every one of her accounts gone. The company laid her off.
She didn’t fail. The system did.
Smart Businesses Budget for Backup
If you’ve ever been part of a team where someone goes on leave and no coverage is provided, you already know what happens. Burnout, missed goals, and low morale are all on the table. I’ve heard from countless professionals who’ve worked weekends for months to hold things together. Not because they wanted to be heroes, but because they had no other choice.
So, what should leaders do? Plan for it. Budget for it.
This isn’t about offering a “perk.” This is a business decision. A smart one. You don’t need to cover every role with a full-time interim. Some roles might need that. Others might only need part-time or project-based support. That’s the beauty of a fractional model. It gives you the flexibility to right-size the coverage based on the actual need.
At Mother Cover, we work with companies to design exactly that –– full-time or fractional support to protect the people, the priorities, and the momentum of a business.
How to Build a Leave Coverage Budget
If you’re wondering how to budget for this, here’s the playbook:
1. Estimate the number of leaves. Look at historical data or use a rolling average from the past few years.
2. Create a company-wide leave coverage budget. Start with a top-down estimate based on total headcount and an expected leave rate. This gives you a baseline budget number as part of annual planning.
How to calculate it:
Total annual compensation cost for your workforce (payroll + benefits)
Estimated % of employees who will take extended leave in a year (parental, medical, caregiving, etc.). A conservative range is 5–8%.
Apply a coverage factor (30–40% of annual comp for each leave, based on length)
Apply a premium (1.2 to 1.5) for interim support
Example:
Total payroll = $10M
Leave rate = 6% of employees
Coverage = 35% of a year
Premium = 1.3
$10M x 0.06 x 0.35 x 1.3 = $273,000 annual leave coverage budget
That’s your starting point to present in budgeting cycles.
3. Tailor budget by role when needed. When a specific employee plans to step away, calculate their coverage using a similar method:
Take their total annual compensation
Multiply by the percentage of the year they’ll be gone
Apply a 1.2 to 1.5 premium for interim support
Example:
$160,000 total comp
Leave = 16 weeks (~30% of year)
Premium = 1.3
$160,000 x 0.30 x 1.3 = $62,400
That becomes your flexible coverage budget for the role, with options to scale up or down based on whether you go full-time or fractional. Not every role needs the same investment, but every leave deserves a plan.
4. Position it clearly with the team. Present this as a proactive measure to protect retention, performance, and morale. For most companies, this line item represents one to two percent of payroll. The return is far greater.
What You Don’t Plan For Will Cost You
Turnover, lost revenue, and employee disengagement are expensive. Keep in mind: burnout doesn’t show up on a balance sheet until people leave or projects stall. By then, the damage is done.
Budgeting for leave before it’s needed tells your people you are ready. It tells them they don’t have to choose between showing up for their family and keeping their job. It tells the team they won’t be crushed with extra work when someone steps away.
It tells everyone your culture is real.
So no more scrambling. No more guilt. No more making it up as you go.
It’s time for executive teams to plan, to budget, and to lead.
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