1 October 2014

Managing absence in the workplace effectively

Do you know how much absenteeism is costing your organisation? Find out how you can improve your company's overall bottom line as well as improve the motivation and satisfaction of all staff.

Many estimates exist of the organisational costs of absenteeism - $100 billion per year in the US (Dept of Labor Studies) and £14 billion in the UK with sick days alone costing almost £29 billion per year (CBI/Pfizer). It is also estimated (Kronos Global Absence Survey) that unscheduled absences cost organisations 8.7% of payroll each year, whilst another study (PwC) identifies the full cost being as much as 35% of base payroll.

Another reason why it is critical to come to grips with absence in the workplace is the ever growing body of legal regulations. The Kronos research shows that compliance with these requirements is now the greatest organisational concern followed by tracking and measuring activities. Their research also supports other evidence that in each country, managers and staff had to take on more work due to absenteeism (78% of companies using this method) and their stress levels increased. Indeed, stress is now the most commonly cited reason for absence (33% - CIPD) and in a Cranfield study including corporate finance organisations, managing stress was a major factor in changing company policy on flexible working.

Figure 1 below summarises the direct and indirect costs of absenteeism. Do you know how much each one of these items costs your organisation? Apparently 52% of US companies with over 2,000 employees do not (Liberty Mutual) against 20% in the UK (but this is an overall figure and only a small minority measure more than the total figure).

But even if you do know, are you actively doing something about it? The Liberty Mutual study found that nearly three-quarters of organisations believe it is possible to reduce employee absence but only a third have a target in place to do so.

There is huge potential for you and your department to make substantial impact to your organisation’s bottom line as well as improve the motivation and satisfaction of all staff.

The key elements of how to achieve this are listed below. But please remember, it’s not about using an approach that was successful elsewhere, each company, its culture, staff and circumstances are different and one size does not fit all. Certain aspects need to adhere to the relevant legal requirements but for best results, how you do it should be tailored to your own company’s situation.

In addition, all aspects require fair and consistent implementation or you might find yourself with more problems!

1) Ensure you have clear policies in place including the consequences of not following the required procedures.

  • Evaluate implications of restricting sick pay and ensure managers don’t think of the contractual allowance as a target rather than a maximum as has been found in a number of organisations.

2) Communication – ensure all managers and staff know the current policies and procedures especially when temporary circumstances are likely to increase absenteeism (eg: sporting events or weather).

  • Consult on proposed policy changes and encourage feedback and where appropriate, participation. Manage and communicate expectations and responsibilities.
  • Communicate absence management achievements and benefits.
  • Whatever system is in place, make sure people are given the information they need in a timely manner eg: sickness absence info given to the relevant manager

3) Keep up to date. Changing case law can have an impact as well as new legal requirements. Also use expert advice for guidance to ensure policies and practices are robust. Loopholes and poor wording has lost many a case.

4) Early intervention is key for both short and long-term absences.

  • Speak to those with poor attendance.
  • Investigate and assemble facts (eg: doctors notes, social media postings)
  • With long-term sickness, contact doctors and use medical information or bring in occupational health advisors if appropriate.
  • Review meetings – expectation setting and where no improvement consequences that could follow.
  • Encourage discussions for overcoming barriers for return to work.
  • Carry out return-to-work interviews.
  • Always follow up and record outcomes.

5) Proactive management strategies. Review each with the view to reduce absenteeism and minimise its impact.

  • Communication
  • Recruitment, induction and selection
  • Performance management, reward and incentive
  • Work organisation and design
  • Flexible working policies including unpaid leave.
  • Occupational health initiatives
  • Evaluate roles suitable for flexible working.
  • Actively encourage standards and an organisational culture where attendance is the norm.

6) Absence tracking software. It’s not enough just to have it, it must be used to the full. Identify trigger points (individual, departmental, role, week day etc) to review attendance and take action. Monitor trends to identify and address underlying causes of absenteeism

7) Train supervisors and managers in managing absenteeism. Staff also need training in this area – so they are fully aware of what is expected of them. Ensure recording of all absence related contact even a summary note of informal interactions.

8) Make sure that employees are motivated. Highly stressful roles and environment in corporate finance require both traditional and creative approaches. Seek feedback and provide tailored support. Involve occupational health if appropriate. Praise and recognition are important beyond financial incentives. Look for a temporary arrangements if appropriate to a staff member’s circumstances

To summarise, for all activities, on a continuous basis, monitor results, communicate and consult, revise strategic and operational plans, implement and make sure everyone knows.


Direct Costs

  • Insurance premiums
    - medical
    - workers compensation
    - short- and long-term disability
  • Salary continuation/sick leave
  • Any other benefit continuation during absence, e.g., pension contribution 

Indirect Costs 

  • Overtime
  • Job accommodations
  • Replacement workers and training
  • Recruiting costs

Other considerations

  • Employee burnout/stress
  • Higher error rates
  • Missed deadlines
  • Lost business 

Source: Liberty Mutual White Paper: The Missing Piece of Absence Management – Turning Data into Dollars

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