Absence can be an expensive business for employers, but are reporting tools designed to tackle the problem always worth the investment, asks Tom Washington
For organisations struggling to navigate the current economic turbulence, it is essential to ensure key staff are present and productive. Absence is a thorny issue for many employers and tackling it properly requires time and money, both of which are now at a premium. It has long been seen as hard to justify any kind of investment in absence management.
But the real cost comes when employers do not deal with the problem at all. According to the Chartered Institute of Personnel and Development’s (CIPD) Absence management 2008 survey which was published in July last year, absence, directly or indirectly, costs employers £666 per employee per year. The survey also revealed just 40% of employers undertake regular absence reporting.
Mark Eaton, director at Personal Group, believes it is vital to be able to put a cost on staff absence. “It seems amazing that companies can expect to really understand the extent and impact of absenteeism if they do not invest in measuring it,” he says.
Before employers can begin to improve sickness absence levels, they must have a reliable recording system, as well as robust policies to ensure staff know what is expected of them. “By putting systems in place from the offset to measure absence, the return on investment of implementing such schemes can be readily identified,” says Eaton.
Yet many employers lack good management information on absence because they have not implemented such tools. Some prefer to deal with the issue internally but, in reality, HR and reward teams often have few resources to support line managers in dealing with absence, while smaller organisations may have no specialist function at all.
Adrian Norris, managing director of Buck Consultants’ health and productivity division, says the biggest problem is often that absence management is performed by people who have little time or inclination to do it, and almost certainly have no training.
One solution is to implement a third-party absence management system, which can take a variety of guises. One product that has grown in popularity is helplines, which require the employee to phone in on their first day of absence to report it directly to a trained nurse, who can offer them advice. Line managers are then alerted of the reason for the absence and when the employee is likely to return to work. By removing the line manager from the equation and replacing them with a trained medical professional, an employee is, theoretically, less likely to try to take bogus sick leave.
But David Prosser, strategic development manager at Axa Icas, thinks this form of absence management, which costs about £50 per employee per year, is not cost-effective. “Blanket use of nurses on day one is wasteful, inappropriate and extremely expensive,” he says. “Most commentators say the majority of sickness absence is genuine, so speaking to a nurse on day one of what might be your first absence for a year, because of a cold, is potentially antagonistic. We don’t think this is building on employer-employee trust, which is even more vital at the moment.”
Other management systems remove initial human involvement altogether. Automated services, whereby employees call a hotline to record their absence and the nature of their condition, are a cheaper option, starting at about £10 per employee per year. Although there is no medical advice at the end of the line, such systems can notify line managers of absences via email, phone or text message. Managers can listen to a recording of the reason for absence given by the employee.
“Notification from a third party about staff absence eliminates the administrative burden of managing absence in-house,” says Eaton. “Regular reports can identify the return on investment by showing how much absence was originally costing the company and how it has reduced since implementing an effective absence management system.”
When an employee’s absence hits a trigger point, for example, if they take four days off inside two months, a line manager will be alerted immediately, rather than having to rely on memory. This information can then be used to target problematic absences, so managers can dedicate time and resources to specific cases or hotspots. Dealing with such cases early on helps to reduce absence-related costs, such as sick pay and temporary staffing cover, as well as improving staff retention.
“This technology is the starting point,” says Prosser. “Early notification is about empowering managers. With good data, you can drill down to the issues in each team. You can then see the changes to productivity, for example, in sales revenue. Absence management is not just about cost savings in terms of salary, it is about having bums on seats and staff doing their job effectively.”
Axa Icas trialled its new absence management system on Axa’s private healthcare division, Axa PPP Healthcare. After using the automated system for a year, Axa PPP Healthcare’s absence rates fell from 4.1% to 3.6%. The number of working days lost to sickness dropped from 1,386 to 1,237 a month on average, yielding a monthly saving of over £14,000. In one telesales centre of 150 staff, the 6% absence rate was reduced to 3%, representing an additional 100 sales hours a week and extra sales revenue of £17,000 a week. Comparing the cost of the system with the value of absence days saved, the firm obtained a return on investment equivalent to £11 for every £1 spent.
Having a system to produce the necessary data is vital, but it can still prove ineffective if certain internal policies are not in place. Support and leadership is needed from the top down, and line managers must be trained to understand different types of absence, intervention methods and how to conduct return-to-work interviews. Mike Clarke, head of rehabilitation at Remploy, says: “In our experience, a vocational approach to absence, with the line manager more actively involved, often generates better results.”
Timely intervention could involve the line manager directing an employee to other available health and wellbeing perks. For example, workers can be referred to employee assistance programmes for stress or occupational health schemes for musculoskeletal problems. This maximises use of the benefits package.
Dr Peter Mills, chief health officer at Vielife, says promoting these benefits generally, rather than just for specific cases, will reduce overall absence. “There is no point in collecting data if you do nothing with it,” he says. “Appropriate intervention and proactive health programmes do reduce absence and increase productivity. As a stand-alone approach, it can be quite difficult for an HR director to go into a board meeting and get investment in an absence management service, but absence management sits very nicely as part of a general organisational health strategy.”
Although these management systems enable employers to highlight key trends in absence behaviour, Dr Leslie Bowie, research director at MidlandHR, says this gives only part of the picture and far more data is needed to ensure organisations are in control of absence. Quarterly staff satisfaction surveys, the results of which can be correlated with absence data, should be a fundamental strategy, he says. “Organisations have got to start looking at more data on their employees and how they feel about their employer, colleagues, remuneration and so on. A lot of appraisals occur only once a year and in terms of trend analysis, if you were talking to a statistician, they would not be able to predict anything.”
Bowie says such predictive analytics can be used to identify potentially problematic absence that requires early intervention. “It is really just probability and looking for patterns in absenteeism,” he explains. “If an employee fits into a pattern of low satisfaction, disengagement and voluntary absence, which led to someone leaving the organisation in the past, then employers can be alerted. It is not condemning anybody, it is simply alerting the line manager about someone who is falling into that pattern.”
For employers that do not have a budget to implement an absence management system, there are other, less statistical ways to justify their expenditure. “Everyone is talking about return on investment, but we all recognise it is hard to get a tight grip of,” says Norris. “Where possible, employers shouldn’t get too caught up with hard data. In other words, if they can exist on the more intuitive sense that what they are doing is taking them in the right direction and supporting better engagement, attendance and productivity, then data becomes less important.”
How cost-effectiveness is measured will continue to vary from business to business. But one thing is certain – putting support in place as early as possible is likely to reap greater benefits for the organisation. “It will both increase the likelihood of a return to work and reduce the drain on limited resources,” says Clarke
Case Study: Aunt Bessie’s†
Food manufacturer Aunt Bessie’s employs 500 staff and, until 2004, had struggled to achieve a return on investment with a manually-administered absence management system.
It now uses a system in which staff call in to an automated voice-prompted line if they are going to be absent. The system removes the need to enter reason-for-absence codes from one HR system to another, eliminating duplication and potential errors.
Using the system, provided by Kronos, Aunt Bessie’s has significantly improved the way that absence is monitored and measured, resulting in a 27% fall in absence levels at its main site since the system was implemented.
Carol Fletcher, HR manager, says moving away from a manual system means absence data can be accessed easily by the business. “The real-time availability of data now ensures an absent employee is spotted within seconds of their official start time, enabling production managers to take immediate action to either call in agency staff or transfer an employee from another line,” she says. “Calendar-type displays show us exactly when an employee was absent over a year and we can easily spot trends, such as Monday absences or absence immediately before or after a holiday.”
Case Study: Westminster City Council
Westminster City Council sees the management of sickness absence as a key business driver and keeps a close eye on its strategy to ensure it is as effective as possible.
Involvement of line managers was identified as key. The council decided that sickness absence management information should be provided to line managers daily and the managers trained to interpret the data and respond to sickness issues effectively, through departmental champions who have been charged with communicating the sickness absence management strategy.
It was also suggested that regular updates on corporate performance should be made available to senior management.
Trevor Webster, strategic HR manager at Westminster City Council, says an excellent return on investment around such initiatives is achievable. “These proposals were endorsed and supported by the chief officers and resulted, after the first 12 months of operation, in a reduction in the sickness absence rate of over two days per employee per year on average, and a saving of more than £800,000.”