‘Tis The Season for Unscheduled Absences

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The average cost of last-minute employee no-shows rose to $660 per employee in 2005 according to the 15th annual CCH Unscheduled Absence Survey by CCH Incorporated. The 2.3 percent absenteeism rate, however, has barely budged from the 2.4 percent rate of the previous year's survey. CCH also reports that 65 percent of absences are due to reasons other than physical illness.

“Lean staffing levels over the past several years have intensified workloads for those employees who avoided layoffs. Now that the labor market is opening up, those survivors may not be as fearful of losing their jobs and may be taking the mental health breaks they feel they deserve,” CCH workplace analyst Lisa Franke, CCP SPHR said in the statement announcing the results. “Employers may even see a ‘culture of entitlement' emerge as the economy strengthens further.”

The survey found that absenteeism is the result of:

  • Personal Illness (35 percent)
  • Family Issues (21 percent)
  • Personal Needs (18 percent)
  • Entitlement Mentality (14 percent)
  • Stress (12 percent)

Only the percentages of those citing Entitlement Mentality and Stress have increased over levels from previous years. In 2004, 10 percent claimed Entitlement Mentality while 11 percent claimed Stress.

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Most employers (87 percent) expect the problem of absenteeism to stay the same or worsen over the next couple of years. Indeed, absenteeism is already a ‘serious problem' to 31 percent of employers, hardly surprising, with direct payroll costs of absenteeism rising $50 from $610 to $660 per person per year. Survey results also indicate that the 3.2 percent rate of unscheduled absenteeism at companies with Poor/Fair morale is more than twice as high as the 1.5 percent rate of absenteeism at companies with Good/Very Good morale. The one positive note identified by the survey is that companies are increasingly offering programs designed to assist employees in managing the issues taking them away from work in a more planned manner.

“Traditional sick leave policies that allow time off only for illness may put an employee in the position of having to conjure up a cold at the last minute to get time off they really need for taking a parent or child to a pre-arranged medical appointment,” Franke notes. “The CCH survey found that employers increasingly are adopting programs that recognize that the issues keeping an employee away from work often have nothing to do with a stuffy nose.”

American companies now offer an average of nine work-life programs, up from eight in 2004 and seven in 2003. The five most used work-life programs according to the survey are:

  • Employee Assistance Plans
  • Leave for School Functions
  • Wellness Programs
  • Flu Shot programs and
  • Fitness Facility

“The blend of programs being offered to help people proactively manage their work schedule, family and health is a sign that employers are viewing employees more holistically,” notes Franke. “This will be very welcome news to employees, most of whom juggle the demands of their jobs with personal obligations and family responsibilities.”

The survey also looked at the effectiveness of work-life programs in reducing unscheduled absenteeism and found that, on a scale from 1 to 5 (with 5 being most effective) the most effective programs were Alternative Work Arrangements (3.5) and Flu Shot Programs (3.4). Leave for School Functions, Telecommuting, Compressed Work Week and On-site Child Care all had an effectiveness rating of 3.3.

“It takes time for the adoption of work-life programs to have an impact on absenteeism rates,” according to Franke, “and the small decline that we saw in this year's unscheduled absenteeism rate may be the beginning of a bigger payoff for employers in years to come.”

Of course, work-programs are not the only way companies are attempting to rein in unscheduled absences. They are also using an average of six absence control programs, according to the survey. That's up from five absence control programs in 2004. The most common programs currently in use are:

  • Yearly Review (79 percent)
  • Verification of Illness (76 percent)
  • Paid Leave Banks (67 percent)
  • Personal Recognition (66 percent) and
  • No Fault (63 percent)

Both Paid Leave Banks and Buy Back Programs are enjoying increasing popularity among employers. Paid Leave Banks which provides employees with a bank of hours usable for various purposes has risen steadily from 59 percent in 2003 to 63 percent in 2004 to the current 67 percent. But Back programs in which the employer “buys back” in cash or vacation time all or a portion of an employee's unused sick time increased in popularity from 48 percent in 2004 to 58 percent in 2005. Both Programs are also rates as the most effective absences control programs with rating of 3.5 on a scale of 1 to 5.

Two factors, morale and generation, were identified by the survey as having a significant effect on absenteeism.

For the first time, the current workforce contains four generations of employees. Although each generation has different needs based on their stage in life, companies appear to be slow in responding to changing demographics in their workforce.

“Each generation of employees brings something unique to an organization. When employers evaluate their work-life programs they should consider employees' changing needs based on life stages,” Tulay Turan, JD, a CCH employee benefits analyst said in a prepared statement. “Inattention to intergenerational issues could have long-term consequences, affecting not just the cost and rate of absenteeism, but many other issues such as recruitment, retention and morale.”

Morale is the other significant factor affecting absenteeism. The effect of moral is reflected across all aspects of the 2005 CCH Unscheduled Absence Survey Organizations with Good/Very Good morale ratings experience half the rate of unscheduled absences that organizations with Poor/Fair morale ratings do. This translates into actual costs with 6.2 percent of the budgets of organizations having Poor/Fair morale ratings going to cover the costs of absent workers compared to only 5.5 percent of the budgets of organizations having Good/Very Good morale ratings.

Morale also affects the amount of absenteeism and the reasons for it. Unscheduled absences have been increasing over the past two years at 39 percent of companies with Poor/Fair ratings and 45 percent of Poor/Fair organizations expect the rate of unscheduled absences to increase over the next two years. This compares to only 14 percent of organizations with Good/Very Good experiencing increasing numbers of absences over the past two years and only 15 percent anticipating increases in absenteeism rates over the next two years. In addition, more employees cite Stress as the reason for unscheduled absences in organizations with Poor/Fair morale (15 percent) than in organizations with Good/Very Good morale (10 percent).

Finally, the survey explores the issue of presenteeism which occurs when employees show up at work despite being physically ill. Nearly half (48 percent) of employers report presenteeism is a problem in their organizations, up from 39 percent the previous year. Again, morale plays a role with 55 percent of organizations with Poor/Fair morale reporting presenteeism as a problem compared to 43 percent of organizations with Good/Very Good morale.

“While the direct hit to the bottom line isn't immediately evident with presenteeism, the hidden, indirect costs are very high,” Turan notes. “When someone doesn't feel well, they are simply not as productive, not is the quality of their work as high.”

For the first time, the 2005 CCH Unscheduled Absence Survey asked what employers are doing to reduce presenteeism. Sick employees are sent home by 62 percent of employers. Forty-one percent of employers educate employees on the importance of staying home when sick. Thirty-six percent of employers try to foster a culture that discourages employees from coming to work sick.

Copies of the CCH Human Resources Management Ideas & Trends newsletter which contains the 2005 CCH Unscheduled Absence Survey can be ordered by calling 800-449-9525 and asking for offer number 04509301.

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