Reducing labour costs through absence management

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Excessive employee absences can have numerous negative impacts on the business, from lost productivity and unnecessary costs, to a diminished employer brand and decreased employee engagement and retention.  Although absence is inevitable, some number of absences taken could be preventable through better policies or enforcement.  As such, now is the time for organisations to take a good look at their absence policies and practices to find opportunities for improvement and ensure a more successful, cost-efficient approach to not just minimising the impact of absences, but managing them effectively.

The Root of the Problem

Why is excessive absence such an issue?  According to the latest data from the Chartered Institute of Personnel and Development (CIPD), absences are on the rise. The organisation found that the number of days an employee was absent per year for 2013 – an average of 7.6 days – had risen by nearly a full day from 2012.  Along with this increase in absences comes rising costs and the CIPD found that the median costs for absences amounts to £595 per year per employee.  And with an estimated one in five absence requests found to be fraudulent, the rethinking of current absence management practices should be a priority.

But before taking action to curb excessive and fraudulent absences, it is important to understand what causes absences.  Traditional causes of absences, such as the employee or a family member catching an illness, can be expected.  In short, employees will need to take time off on occasion. Many employers have sought to reduce such absences by offering telecommuting policies and flexible work hours yet these programmes only target a narrow slice of absence reasons and can introduce their own complications.  For instance, if an employee has to leave the workplace for a couple of hours due to a family obligation, the company may either consider this absence as a full day or not even record the absence at all.  These programmes can be worth the investment, but they call for a more efficient and automated way of analysing the duration and type of each absence.

Engagement 

It’s not just the costs of absenteeism spurring the need for a new approach; excessive absenteeism can also have a negative impact on the company culture and the desirability to work for your organisation. If employees are regularly asked to cover for their absent colleagues, this can cause them to become overworked and more stressed, negatively affecting morale and leading to decreased employee engagement.  Similarly, if absence policies are inconsistently enforced, some employees may perceive favoritism in how schedules and teams are managed which can also damage morale.

All of these dimensions call for smarter absence policies, as well as more sophisticated system for managing them.  Ideally, your absence management strategy should provide employees with the flexibility to have a more balanced life while still meeting work responsibilities. There is tremendous cost-saving potential here when you consider the median rate of £595 per absence and extend that across a large organisation. Over and above those cost savings, absence improvements can also strengthen the employer’s brand ability to attract a high caliber of talent.

Developing the Right Approach

So what can be done to make absences less disruptive and ultimately reduce the number of absences taken? The process should start with accurate analysis and reporting, derived from labour data captured within an enterprise time and attendance system. Equipped with this information, managers can better understand absence reasons and durations within the context of work schedules, labour budgets and other critical data. After analysing such information, patterns may emerge that may identify particular employees or groups within unusually high or frequent absence rates. While some of that behavior may be fraudulent, it’s not just about finding out who’s abusing the system; the some excessive absences may be alleviated by changes to scheduling practices, leave policies, or other workforce functions. For example, employees may simply be taking “mental health” days to attend to family matters if their formal work schedule doesn’t allow them to do so.

Making any changes, though, requires two core considerations. The company must consider how any absence management adjustments will impact day-to-day performance. For example, augmenting your absence policies may affect how shifts are filled or how easily a manager can find the right number of qualified team members to work a specific project. Changes can also be interpreted as a promotion of, or detraction from, an employee’s work/life balance.  Is the company viewed as an organisation that understands and safeguards the work/life balance needs of the employee or one that takes a heavy-handed approach with little regard for such things? As for engagement, the way the company develops its practices, introduces them to workers and handles the overall change management process can all influence perceptions and impact the long-term results.

No matter what path you take with absence, the right technology is essential to facilitate the development of and transition to a new strategy. Increasingly, organisations are looking for a single “source of truth” about time, work, and absence data, rather than having disparate systems to manage the functions of time and attendance, scheduling, reporting and analytics and absence and leave. With an effective workforce management system in place, the company can gain a contextual view of absence rates and their impact on labour cost, utilisation and schedules. What results is a more efficient administration of necessary absences supported by reliable data.

Achieving Absence Management Success

Employee absences have long presented employers with a number of challenges and recent data point to a growing concern. Companies that take a closer look at their current absence policies and find the areas for improvement and adopt the strategies and technologies that can shape a new approach will be better position to reduce the disruption and costs that absences can entail. Not only will this help preserve operating margins and productivity levels, but it will help to build a strong corporate culture that keeps employees motivated, retained and eager to perform at their best.

Article by Marcello Sambartolo, who is the UK Marketing Manager at WorkForce Software

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