Curbing avoidable employee absences


Avoidable employee absences are a hidden killer of corporate profitability. Many leaders don’t realize that short-term, unplanned absences can cost the average medium-sized company millions of dollars in payroll expenses not to mention lost productivity and business disruption. To get this financial sinkhole under control, HR leaders must get a handle on the problem and consider some innovative technological and business fixes.

Many types of worker absences are inevitable.  However, the unplanned and avoidable ones may be the most harmful.  Unmanaged or misunderstood, they can quickly lead to operational disruptions and cultural toxicity.  A variety of studies have estimated the aggregate costs of unplanned absences such as sick days and casual non-attendance.  A recent Conference Board of Canada study of 401 medium- to large-sized public and private firms found Canadian workers miss an average of 9.3 work days per year.  This costs employers 2.4% of their gross annual payroll (a $16.6B hit to the economy).  This number is likely understated as it does not include indirect costs like finding replacement worker costs, project delays or missed deadlines.   The absentee problem may be even bigger in the U.S.  A 2010 online survey of employees from 276 organizations conducted by Kronos/Mercer Consulting  found employee absenteeism produced 5.8% of extra payroll costs not including indirect costs.

Blind spot

Surprisingly, only 46% of employers admitted to tracking absences and exploring their causes, according to the Conference Board.  There are understandable reasons for this neglect.  Firstly, many firms cannot quantify the problem or understand its root causes because they do not have the right tracking systems, or because the data is siloed.  Bill Shapiro, CEO of Workplace Medical Corporation, says “If absence costs showed up as an expense line on the divisional P&L statement, it would it would get a lot more attention. The problem is that it is has been too difficult to get a hard number for that cost.”  Secondly, when it comes to reducing labour costs, unplanned absences play second fiddle to other priorities like headcount rationalization since these direct costs are easier to calculate.

Help is on the way

New methodologies and technologies are now available to better diagnose the problem and reverse its negative effects:

Big Data

Anecdotally, we all know that days preceding or following a long weekend or important game will tend to spike absences.  Big Data strategies — understanding what is really going on with attendance and staffing data across the organization and how it correlates to other variables like weather or sporting events — can give firms the insights and predictive tools to fix the problem and optimize practices.   To wit, theFinancial Times relayed a story about a British retailer who submitted the staffing records for thousands of its employees for an independent Big Data analysis.  This analysis discovered the retailer was paying more than 150 employees who had called in sick years earlier and had simply disappeared from the workplace.  Moreover, Big Data learnings can also help managers refine workflow design to minimize physical stress on employees.

Dedicated solutions

Traditionally, unplanned absences are handled manually or within a larger HR information management system. This approach is too primitive to address the issue in real-time, objectively, and proactively.  New, specialized systems address the problem head on by monitoring absences, aggregating the data and tracking the case, from day one.   In Workplace Medical’s solution, an absent employee would first contact a call centre. A service representative would log the absence in specialized software, provide the employee next steps and immediately notify his or her supervisor and HR department.  The rules-based software automates the management of the case including facilitating early intervention, tracking the length and cause of absence and identifying employee patterns.

Gamification

Integrating gamification strategies — a combination of game principles, behavioral psychology and enabling technologies — into attendance practices and processes could minimize the number unplanned absences.   Many firms like SAP and Microsoft have used game playing to promote long-term behavioural change around the adoption of new initiatives and the alteration of long-established practices. They have also used it to increase productivity for mundane or repetitive tasks. Gamification programs work by providing each employee or team significant intrinsic rewards — through enhanced status, feedback or recognition — when they play the game (i.e. comply with attendance policies).  Considerable research has shown  incorporating intrinsic rewards into workflows and practices is more effective than using extrinsic rewards (e.g., pay) or punishment.

Challenges

Dealing with this problem should be a corporate priority.  However, the fix should be designed and implemented with care.  The strategies mentioned above could breed mistrust and resentment; some employees may perceive management as Big Brother watching over them or manipulating them. Moreover, the HR group may be resistant to giving up control of the process to a third party that could expose HR’s dirty laundry, as was the case with the British retailer.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

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