Lost time more than a disability issue

By David Brown
|Canadian HR Reporter|Last Updated: 09/04/2003

Absenteeism must be measured and managed if HR departments hope to reduce the millions of dollars spent on lost time.

“Stress management or attendance management programs focus on an individual’s coping skills or behaviour and rarely address the underlying organizational issues,” said Anne Nicoll, of William M. Mercer, in presenting the findings from a new study on time loss in Canadian businesses.

“Employers should not view absence as solely a disability or health issue. These are business issues that require management action.”

The study shows that in some cases the direct cost of absences can be more than 10 per cent of payroll. A median employer in the study spends about 3.5 per cent, or $3.3 million on absence costs, while at the low end, some participants were under one per cent.

Employers looking to reduce absences could point out to employees that time loss (for the median firm) would amount to a 70-cent premium on each hour of work, she said. That is money that could potentially go instead to wage increases or benefit improvements.

Similarly, at a workplace where employees generate revenue through direct sales, $3.3 million in absence costs equates to more than $10 million in lost revenue.

The study also found that more than 75 per cent of absence costs is for non-occupational absences, and short-term disability (STD) costs alone are more than 50 per cent of the total cost for employers.

One study released last year by Sun Life of Canada showed early return-to-work intervention is a valuable way to help contain lost-time costs.

In cases where employers began return-to-work programs soon after the employee went on STD, employees were getting back to work up to 20 per cent sooner, or on average 2.7 weeks sooner than those who did not receive early return-to-work assistance. Early intervention was also found to help 47 per cent more workers on STD return to work without going on long-term disability.

In the Sun Life study, STD claimants received an average of $300 per week in disability benefits for 13.4 weeks. By reducing the claim by the average of 2.7 weeks, the cost of the claim would be reduced by $810.

A company with 10,000 employees can expect about 600 employees to receive STD benefits in a year, according to the Sun Life study. If 10 per cent received early intervention, more than $48,000 could be saved each year.

For the study, rehabilitation counselors contacted employees and offered them services such as: identification of viable job alternatives, including light duty positions; job site modifications; and medical intervention to ensure the employee was receiving appropriate medical care.

But Nicoll said attendance management or stress management programs are most effective as part of a broad range of programs designed not only to treat the problem but prevent it in the first place.

She sited another study that showed stress was the reason for 19 per cent of all absences in 1999, up from just six per cent four years before that. Another 19 per cent of all lost time was due to employees feeling like they were due time off, up from just nine per cent.

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