Dealing with employee absenteeism
Business analysts often hesitate to put a concrete valuation on service firms because, as they note, “their inventory walks out the door every night,” referring, of course, to the companies’ employees.
Problems of such mobile inventory begin when employees don’t walk back in the door the next morning due to absences for any number of reasons. This hazard of operation applies as well to manufacturers and companies engaged in retail or distribution, not to mention all the government organizations that serve the public – in short, every employer.Work absences cost
U.S. employers an estimated 17 percent of payroll costs — a huge penalty that can make the difference between profit and loss for private organizations, or massive budget overruns for public employers.
The reasons people are absent from work usually have something to do with health — their own or that of someone else in their families. People tend to use their allowable sick leave because they confuse it with vacation days and take the attitude of “use it or lose it.” And who can blame the working mom for staying home with her sick child, or taking time during the day to tend to an ill parent.
Other people are absent from work under programs ranging from the Family Medical Leave Act to long-term disability under workers’ compensation rules. Some are absent due to problems of mental health or substance abuse.
A survey of U.S. insurers and employers indicated that on any given day, 25 percent to 33 percent of the typical work force is not at work for a variety of reasons, including scheduled time off for vacations or paid holidays, incidental absences and employee disabilities due to both occupational and nonoccupational injuries, or illnesses ranging from the mild to serious.
It gets worse: The U.S. General Accounting Office reports that three out of 10 people eligible to return to work on a given day do not, largely due to a lack of disability management by employers. That could mean that employers could cut disability costs by as much as 30 percent if they managed employee health and absences more aggressively.
The management problem stems from a general lack of coordination among all the functions that deal with employee absences. Often, companies and public organizations view employee health and disability as uncontrollable costs. They pay for absences in a variety of ways such as direct payments to disabled employees, workers’ compensation insurance premiums, employee assistance programs, medical insurance, short and long-term disability plans and sick leave.
Often the uncounted costs are even greater. These include loss of productivity and erosion of customer services that can lead to loss of business and revenue.
Direct costs of employee absences are typically managed by various individuals and departments, without coordination or cross currents of information. For the same people with the same disorder, the management of absence and the payment to employees may be handled by the supervisor (sick leave), various people in the human resources department (FMLA or short-term versus long-term disability), the employee health center (work injury and modified duty), the risk management group and insurance administrator (work injury and workers’ compensation).
All these functions are managed without much direct knowledge of the individuals involved. Many organizations are unable to answer questions such as: Is an absent person getting the right treatment from the right provider, in a timely manner?
Would an absent person be able to return to work if duties were modified to accommodate recuperation? Is absence part of a pattern that could indicate a shortfall of responsibility by the employee?
These and other questions can only be answered if employers begin a focused absence management effort that would knock down the walls separating management functions and, more important, penetrate the barriers to open communications between employer and employee.
According to one survey, companies that applied integrated disability management strategies averaged 19 percent in savings. More than a third of the companies surveyed saved 25 percent or more.
The most successful absence management programs were those that applied safety education programs to prevent injuries, return-to-work management, medical care management, use of independent medical examinations and other services that can facilitate employees’ early return to work.
The concept of facilitation of care has emerged as a keystone approach to absence management. When employees have an advocate for their prompt and effective care, the costs of their treatment and absence from work are considerably less.