Unplanned absences are costly and on the rise
It doesn’t matter how many people you employ — what matters is how many employees are working for you. Absence is a significant drain on organizations. The real problem arises when absences are unplanned — and more than one-half of absences in Canada are — and managers are unable to plan in advance and avoid the unnecessary costs.
The number of days of unplanned absences has been trending upward consistently in all sectors from an overall average of 8.5 days in 1997 to 10.8 days in 2004 and 11.6 days in 2008, according to Statistics Canada.
Generational differences
Differences among the various generations in the workforce are a significant contributing factor to the upward trend in absences.
Many employees are part of what is known as the “sandwich generation” — caring for parents as well as children. Some companies are helping these employees through attendance policies that deem it legitimate to call in sick because a child, spouse or parent is ill. This might mean some employees take more time off for illness, but it also contributes to greater loyalty and motivation.
Generation Y (born between 1977 and 1997) have a view of work that is distinctly different from earlier generations. Almost all of them value work-life balance over career advancement and developing their skill set. This doesn’t mean they don’t care about their growth and their career, or that previous generations don’t care about work-life balance, but there is an obvious change that impacts attitudes about work.
With this focus on balance, it has become normal and acceptable for people to take a day off work simply because they need a break — a “sick of work” day.
Direct costs
The costs of unplanned absences are significant. While there will always be some unplanned absences in every workplace, and there are good reasons for some of the upward trend, the magnitude of the associated cost makes it critical for responsible management to do everything it can to control it.
According to The Conference Board of Canada, the direct costs of absenteeism represent an average of 2.6 per cent of total salary.
According to human resources consulting firm Mercer, when indirect costs are included, the total cost of absenteeism is actually three times higher, at 9.2 per cent. It is estimated that the total cost of absence in Canada is 36 per cent of annual gross payroll.
Indirect costs
Indirect costs might be even more expensive. Productivity lost due to unplanned absences ranges from 21 per cent for absences under a week to 17 per cent for those over a week. A substitute worker for an unplanned absence of under a week is expected to function at about 71 per cent efficiency, according to Mercer.
The majority of the workload of absent employees is placed on the shoulders of colleagues. If colleagues are doing the work of absent employees, what happens to their own work? It either doesn’t get done, it doesn’t get done as well or the employee becomes overburdened and demoralized.
Not only do unplanned absences result in costly replacements and overtime, they also cause decreased quality of service and decreased quality and quantity of goods.
Things we can’t begin to measure include the negative impact on employee morale and increased stress levels of those still at work. The absence of a single worker affects the work of four to eight other employees.
To address this problem, it’s important to evaluate the organization’s specific situation. Understand the employee demographics and the needs of employees.
Attendance policy
From there, take the important step to creating an effective attendance policy, which is the most commonly used tool to address absences. The best attendance policy is tailored to the needs of employees. For example, a policy that emphasizes financial rewards will not be effective with employees who place more value on work-life balance.
The policy can include discipline, incentives or a combination of both which has been found most effective in turning unplanned absences into planned and therefore manageable absences.
An effective attendance policy must be clear, simple, concise and clearly communicated. A good attendance policy can’t be static; it has to be reviewed periodically to ensure it meets current needs and is getting the desired results. Any necessary changes need to be communicated clearly.
In order for an attendance policy to be effective, it has to be operationally and financially feasible and administered fairly, consistently and be perceived to be the same for everyone. Since the relationship with the direct manager is the biggest single factor in employees leaving a company, a well-managed attendance policy can also contribute to employee morale and retention.
Automated absence management system
Technology can help in the form of an automated absence management system. A good system will facilitate the tracking of time taken by an employee, follow the rules around the legitimacy of time taken and apply the policies consistently and effectively.
If the policy includes progressive discipline, managers will be notified and guided in the execution of verbal warnings, written warnings or requests for documentation.
Managers can also be guided in the opportunity and method of applying rewards. Management and executives will have timely information to allow them to identify trends and problems and to determine cause and effect so they can be proactive in managing and reducing the costs of unplanned absences.
Aileen McNabb is the national manager for solution consulting in Canada at workforce management solutions company Kronos. She can be reached at [email protected] or (905) 366-1276. Ian Vallieres is a solutions consultant for Kronos. He can be reached at [email protected] or (514) 335-5351.
