With absenteeism on rise, payroll can step forward

Payroll professionals can provide insightful data and help influence company strategy
By Sarah Dobson
|Canadian HR Reporter|Last Updated: 11/14/2008

Brother International sensed there was some impropriety when it came to employees and time and attendance but its manual system, generated from workers punching in at various locations, provided little insight or confirmation.

Issues with absenteeism were “more than anything an unknown because they spent so much time processing the payroll, they didn’t have a lot of time to do verification,” says Jim Westcott, research manager of business transformation processing at market research firm IDC, which surveyed Brother on behalf of Ceridian. “They really didn’t have any good understanding of absenteeism or those other issues that go along with manual timecard entry, like a friend picking up their friend’s time sheets as they go in… and how they were impacting the business.”

So the business machines manufacturer automated its payroll system and saw positive results in the areas of payroll processing and workforce performance.

Absenteeism is a growing concern for all employers. The weekly number of employees failing to report for work because of an illness or disability has increased steadily over the past 10 years, according to Statistics Canada. In 1997, the average was 431,000, or 3.8 per cent of the workforce; in 2006, it had almost doubled to 758,000, or 5.4 per cent of the workforce.

The increase can be attributed to several factors, such as an aging workforce or improvements in sick-leave entitlements, according to Statistics Canada. In addition, work and life are less separate domains than before and more workers are having problems balancing work and family demands, according to the Health Canada report

Reducing Work-Life Conflict: What Works? What Doesn’t?

Many employees are in poor mental health, reporting high levels of perceived stress, burnout and depressed mood, says the report, and the direct cost of absenteeism due to work-life conflict is about $3 billion per year.

Whatever the nature or cause, absenteeism is on the radar more than ever, says Judith Plotkin, vice-president of business development at Vancouver-based Wilson Banwell PROACT Solutions. And payroll folks are in a position to notice the trends and report back on areas of concern, helping to introduce programs to combat the issue, such as wellness initiatives.

“They are the holders of information and data that’s important and certainly seeing trends around absenteeism and absence and disability,” she says. “They could bring value to the people they’re working with by sharing that data and helping use that data to inform programs.”

Brother was keen to find tools and solutions to focus more on high-value or strategic HR, says Westcott, “capturing employee information — time and attendance, absenteeism — as well as productivity metrics.”

The business machines manufacturer upgraded to Ceridian’s automated Time & Workforce Management Solution, which includes a swipe-card system that automatically captures employee data and sends it directly to the provider to process the payroll. As a result, processing was reduced from five days to one and a half.

Payroll and HR were also able to spot trends and issues in workforce performance and production that allowed them to improve scheduling and time-to-completion, says Westcott. In a business where inventory trends are key to success, making sure they can schedule and manage labour for workforce performance is a huge benefit.

Now the company can be more proactive and identify areas of absenteeism and work with employees on how to resolve those issues going forward, he says.

Data is power

How much HR and payroll can do depends on the payroll system and what access to data they have, but data “is power,” says Plotkin, and it creates benchmarks for disability and absenteeism programs that in turn create return on investment and, hopefully, buy-in from the company.

There are several methods available to deal with absenteeism, the most obvious being time and attendance systems, says Winnipeg-based Lyndon Peters, product manager of time solutions at Ceridian. These can range from basic time sheets to punch-in time cards to more sophisticated options, such as web clocks or biometric scanners to avoid “buddy punching.” All of these help to quantify costs and implement discipline, he says.

Technology solutions can help reduce 80 per cent of the costs associated with preparing for payroll, he says. Ceridian’s Time & Workforce Management Solution can generate schedules and track actual time claims versus what’s scheduled while eliminating manual data entry, handwriting and re-entering of data, and reduce errors and management’s involvement, he adds.

“The supervisor doesn’t have to look at every transaction, it highlights transactions that are the exception, so it frees up supervisors to not have to deal with that. If an employee is doing what’s expected, it should flow through seamlessly to payroll,” says Peters.

Even with a salaried environment, the system defaults to pay what’s scheduled and changes if someone is absent. And while, typically, time tracking is done more for job-costing purposes in a salaried environment, it can make an impact in other areas, such as employee resentment.

“People will wonder why they bust their butt to get to work on time for the same paycheque (as late co-workers),” says Peters. “There are ripple-through costs, on morale and a productive environment.”

Some companies are introducing a points system to deal with absenteeism. They develop a formal policy that explains when an employee reaches various thresholds, she will be held accountable, such as a verbal warning from a supervisor for several late arrivals at work.

“You get an e-mail from payroll sent to a supervisor who then talks to the employee,” says Peters.

Negative (or enforcement) policies help manage and control absenteeism through the consistent implementation of rules, while incentive programs reward and encourage employees. This can involve payroll tracking absences and if there are fewer than a certain number of days away in the last six months, an employee earns a day off or cash reward.

Greater security

A time and workforce management system is also extremely important from a litigation perspective, says Peters.

“You have to document and prove you have clearly indicated to an employee what expectations you have of them and if they have violated that, so it’s as simple as generating a report. That’s invaluable… if it gets to termination and resulting litigation.”

If the automated system is implemented in a rigorous way that’s consistent, it will have a positive impact on the workforce, says Curt Finch, chief executive officer of Journyx, a provider of web-based time tracking based in Austin, Texas.

“You can get into a lot of trouble if the manager is really casual with letting certain people take time off. If employees prove bias, such as unreported absenteeism or lateness, you can be at risk for a lawsuit,” he says.

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