Absenteeism is one of the most significant employer issues that companies face today. The costs from unscheduled absenteeism can reach as high as $1.17 million annually for companies with 1,000 to 2,499 workers, and up to $2.16 million a year for those with 5,000 to 9,999 employees.
“Unscheduled absenteeism also affects employee morale and productivity, and can have an impact on the overall success of many companies,” says Sally Stephens, president of Spectrum Health Systems in Indianapolis. She estimates that many organizations set aside 3 percent of their budgets to compensate for absenteeism, which averages eight days per employee per year.
Smart Business spoke with Stephens about absenteeism, how it can hamper a company’s progress and what organizations can do about it.
How does high absenteeism affect company performance and progress?
Employers today are continually faced with challenges in managing costs, including the costs associated with unscheduled absenteeism. Unfortunately, unscheduled absenteeism will only increase with the increase in stress-related illnesses and the incidence of chronic conditions.
Productivity is affected when employees carry an extra workload, or when companies need to hire new or replacement staff, or when employees are required to train them. At that point, both staff morale and employee service may suffer. Financial costs include payments of overtime and the cost of replacement staff, while administrative costs include the extra staff time required to secure replacement or reassign staff.
What other impacts can absenteeism have on a firm’s growth?
As a company grows, the tendency toward higher rates of absenteeism increases. Women are absent more frequently than men, and single employees are absent more frequently than married employees. Younger employees are absent more frequently than older ones, but the latter are absent for longer periods of time. Unionized organizations have higher absenteeism rates than nonunion organizations.
How can a business reduce absenteeism?
Traditional methods of absentee control based on disciplinary procedures have proven highly ineffective.
The good news is that absenteeism can be controlled through attending to the physical and emotional needs of employees. Companies can also accurately track absenteeism, thus gaining insight into the root cause of absenteeism. Areas to examine include: whether absences are seasonal, or occur on certain days of the week; individual employee history; reasons for absenteeism; and dollars associated with absenteeism.
One good way to attack the problem, for example, is by implementing policies on causal absenteeism, such as those that occur on Mondays (after a long weekend) or Friday (in anticipation of a long weekend).
Where do companies go wrong when it comes to absenteeism?
Too often they overlook the emotional and physical needs of their employees, and neglect to implement a comprehensive absenteeism-tracking program. Other areas of concern include improper implementation of policies and procedures on absenteeism, and not requiring managers and supervisors to speak with employees who were absent and have returned to work.
How can a company create an incentive plan aimed at reducing absenteeism?
To do this, firms must first create incentives for reduced absenteeism. For example, entice employees to cash in unused sick days, or dole out bonus pay for every month of perfect attendance. Companies may also want to reward workers based on their age, and just how difficult their specific job is to perform. The idea is to start with small incentives and work up to larger ones as needed.
How effective is an attendance policy?
A good attendance policy can go a long way in preventing absenteeism. Companies should also consider allowing managers to intervene with an employee who is frequently absent and investigate the prevalence of absences that might be related to personal problems such as alcohol, domestic violence or family issues (these can be referred to the employee assistance program). If absence is related to a medical problem you may have to consider allowing them to use benefits allowed under the Americans with Disability Act (ADA) of the Family and Medical Leave Act (FMLA).
Make sure you have an attorney review your policies to make sure they do not violate any state or federal labor laws. Another strategy is to implement a comprehensive wellness program that incorporates health improvement resources as well as services like a 24-hour nurseline or medical self-care education.
These benefits will support employees in improving the management of chronic conditions and general health, and help employers cultivate healthy workers who incur fewer absences.
Sally Stephens is president of Spectrum Health Systems in Indianapolis. Reach her at (317) 573-7600 or [email protected].
