KANE'S BEVERAGE NEWS DAILY

Most Employees Call in “Sick” for Reasons Other Than Illness
Poor Morale Adds Up to Even More No-Shows
Tips for Effective Absence Management

Two-thirds of U.S. workers who call in sick at the last minute do so for reasons other than physical illness, according to the findings of the 17 th annual CCH Unscheduled Absence Survey. CCH is a leading provider of human resources and employment law information and services and part of Wolters Kluwer Law & Business ( hr.cch.com ).

The 2007 CCH Survey found that while 34 percent of people call in sick to work at the last minute due to “personal illness,” 66 percent are taking time off to deal with personal or family issues.

“Most people today are juggling the demands of busy personal and professional lives, and are trying to do their very best in both places,” said CCH Employment Law Analyst Pamela Wolf, JD. “Organizations need to stop the tug of war with people for their time, and become a partner to employees to help them, and the business overall, be more successful.”

Employers, however, have failed to make significant headway against the costly absenteeism problem that takes billions of dollars off the bottom line for U.S. businesses. The nation’s largest employers estimate that unscheduled absenteeism costs their businesses more than $760,000 per year in direct payroll costs, and even more when lower productivity, lost revenue and the effects of poor morale are considered.

According to the 2007 CCH Unscheduled Absence Survey, conducted for CCH by Harris Interactive®, the absenteeism rate was 2.3 percent in 2007, down slightly from 2.5 percent last year.

The CCH Survey also found that for many employers, it’s no surprise when employees are likely to be no-shows. More than two-thirds (68 percent) report finding a discernable pattern in unscheduled absences, with 37 percent of organizations reporting the most noticeable pattern is people calling in sick on Mondays and Fridays, followed by 17 percent recognizing the most noticeable pattern occurring around holidays such as Christmas or the Fourth of July and 13 percent reporting their most noticeable pattern of unplanned absences occurs during flu and hay fever seasons.

The CCH Unscheduled Absence Survey, conducted by CCH for the past 17 years, is the definitive survey on absenteeism in the workplace, measuring the rate, cost and reasons associated with unscheduled absence in the U.S.

The survey found that Personal Illness accounts for only 34 percent of unscheduled absences, while 66 percent of absences are due to other reasons, including Family Issues (22 percent), Personal Needs (18 percent), Entitlement Mentality (13 percent) and Stress (13 percent).

The challenge for both employees and employers is that, for many people, demands on the home front have changed at the same time demands of the workplace have increased.

“Many employees today are asked to give 110 percent on the job – to do more with fewer staff, work long hours and handle work-related issues after hours from home,” said Wolf. “But these workers may also be part of dual-earning families, or they may be single parents or caregivers for aging parents. They are willing to go the ‘extra mile’ for the company, but they are also taking back the time when they need it to care for themselves and their families,” said Wolf.

The cost of this tacit give-and-take arrangement is too high to go unchecked, according to CCH.

“Unscheduled absenteeism is a problem that no organization can afford to ignore – either from a cost or productivity standpoint. With the appropriate programs in place, businesses can significantly reduce the number of last minute no-shows, improve the work environment for all employees and realize substantial savings,” said Wolf.

One of the first steps in partnering with employees is offering an appropriate range of work-life and absence control programs.

“Traditional sick leave and inflexible time-off policies may put an employee in the position of having to conjure up a cold and take off an entire day when they really just needed two hours to take a parent to a pre-arranged medical appointment,” noted Wolf.

By offering a range of programs, employers can reduce last minute no-shows, benefiting both the business and the employees who keep it running.

The CCH Survey examined a wide range of work-life programs and asked employers to report on the programs they use and their effectiveness in controlling unexpected time off.

On a scale of 1 to 5 (with 5 being most effective), the work-life programs rated highest for reducing unscheduled absences are Alternative Work Arrangements (3.6), Telecommuting (3.5), Compressed Work Week (3.3), Leave for School Functions (3.2)and Flu Shot Programs (3.2).

Of the work-life programs offered by employers, the top five in use are Employee Assistance Plans (72 percent), Flu Shot Programs (66 percent), Wellness Programs (60 percent), Leave for School Functions (54 percent) and Alternative Work Arrangements (54 percent).

“This blend of programs, focusing on flexibility and good health, is a promising sign that employers are trying to partner with employees to help them balance the personal and professional aspects of their lives,” said Wolf.

She notes, however, that companies can be even more effective. Overall, survey results indicate that companies remain challenged in making sure they have the most effective programs in place to meet employee needs. In some cases, the CCH Survey found that the programs employers view as most effective in combating unscheduled absenteeism are not the programs that are most used.

“The fact that two of the programs that companies rated as most effective – Telecommuting and Compressed Work Week – are not also among the most used signals the need for employers to step back and assess if they have the right programs in place for their people,” said Wolf.

The 2007 CCH Unscheduled Absence Survey found that U.S. companies offer an average of 9 work-life programs, down from 11 in 2006. And, w hile the majority of employers still offer an array of different programs, the survey also found a decrease in the number of employers offering specific work-life programs. Four out of the five most effective programs showed a decline in use. Among programs seen as “most effective,” Flu Shots is the only program to see an increase in usage, now offered by two-thirds (66 percent) of employers, up from 64 percent.

With health care costs continuing to climb in the U.S., employers may be trying to offset these high costs by eliminating programs that are perceived as being “nice to have,” versus “need to have.”

“Some organizations view work-life programs as a soft benefit that can be taken away without much pain, but this short-term view can have negative, far-reaching consequences – on unscheduled absences, employee morale, recruiting and retention and the bottom line,” warns Wolf. “Employers need to fully consider the real costs of eliminating these programs before taking action.”

Employers report they use an average of 5 absence control programs, down from 6 in 2006. Disciplinary Action remains the single-most used absence control program, with 89 percent of surveyed organizations reporting use. The other leading absence control programs in use are Yearly Review (82 percent), Verification of Illness (74 percent), Paid Leave Banks (60 percent) and No Fault (59 percent).

The survey found that Paid Leave Banks (also known as Paid Time Off) continue to be the most effective absence control program, with a 3.6 rating. Paid Leave Banks / PTO provide employees with a single bank of hours to be used as they see fit, instead of managing separate days for sick, vacation and personal time. Other top programs include Disciplinary Action and Buy Back (3.4), Bonus (3.3) and Verification of Illness (3.2).

The survey again found a lack of alignment between what programs employers are using and what they determine to be most effective. For example, Paid Leave Banks / PTO were not used by 40 percent of companies surveyed. Another two of the most effective programs, Buy Back and Bonus programs, were the least used by companies.

“Year in and year out, employers report that Paid Leave Banks work best to combat unscheduled absenteeism,” said Wolf. “They offer employees more flexibility in how they use their time off, which enables them, and the business, to plan for most absences.”

It’s a win-win situation, yet Paid Leave Banks / PTO has never taken the top spot in terms of what organizations use.

“Some employers fear they are losing control if they give employees more opportunity to manage their time,” she said. “But, the fact is, it is better for businesses to work with their employees to plan for absences than to be blindsided by them.”

Wolf also warns that organizations need to ensure that the absence control programs they favor do not have unintended consequences.

“Disciplinary Action, for example, is very popular with employers, and can be effective, but it can also drive the wrong behavior if it encourages employees to call in sick with a made-up excuse or to come to work sick – a costly problem known as presenteeism,” she said.

It’s probably no surprise that the more unhappy employees are, the more reasons they’ll find not to come to work. The effect of morale is reflected in the 2007 CCH Unscheduled Absence Survey, which found that organizations with Good/Very Good morale experienced a 2.0 percent unscheduled absence rate while those reporting Poor/Fair morale had a rate of 2.7 percent.

Morale influences the reasons people call in sick at the last minute, with 70 percent of unscheduled absences attributed to reasons other than Personal Illness for organizations with Poor/Fair morale, compared to 62 percent for those with Good/Very Good morale.

Organizations reporting Poor/Fair morale were more likely to experience unscheduled absenteeism due to Entitlement Mentality (17 percent) and Stress (15 percent) than organizations reporting morale as Good/Very Good (11 percent and 10 percent, respectively).

Employers are well aware of the effect morale plays on absenteeism. According to the CCH Survey, more than twice as many employers (44 percent) with Poor/Fair morale consider absenteeism to be a serious problem, while 21 percent of organizations with Good/Very Good morale share this concern. Additionally, 27 percent of organizations with Poor/Fair morale report that absenteeism has risen in the past two years, while only 12 percent with Good/Very Good morale report an increase. The future outlook is also pessimistic for employers with Poor/Fair morale, with 36 percent predicting an increase in unscheduled absenteeism in the next two years; 19 percent of employers with Good/Very Good morale share this concern.

With 66 percent of the workforce calling in sick for reasons other than illness, and the disconnect between programs employers use and those that are most effective, the CCH Survey shows that companies have the opportunity to improve the success of their absence management programs.

“The first step to implementing an effective absence management program is to have a good understanding of your employee population and their needs,” said Wolf.

But, surprisingly, most employers don’t seem to consider the changing needs of their workforce when it comes to helping people manage their professional and personal lives. Given the demographics of the working population are starting to change dramatically as the Baby Boomers begin retiring and the millennials are entering the workforce, a whole new generation with an entirely different outlook and set of expectations is emerging.

Yet, the CCH Survey found 79 percent of employers do not anticipate that changing workforce demographics will affect the work-life or absence control programs they have in place. That’s a red flag for CCH’s Wolf.

“Organizations can’t just stand still and hope the same programs they had in place 10 years ago will be effective for the next generation of employees, or for older workers who are remaining in the workforce longer,” she said. “Businesses that want to do something to control chronic unscheduled absenteeism need to act now.”

The challenge is for a business to balance its performance goals with what else is important to its people and implement the right mix of effective work-life and absence control practices that meets these needs.

CCH recommends that organizations take the following five steps to ensure they have effective programs in place.

1. Capture and analyze information about absence trends and patterns:
Involve management, HR and employees in the process.
2..Research work-life and absence control program options and best practices.
3. Evaluate program options:
Assess programs compared with employee and business needs:
Conduct program cost-benefit analysis;
Evaluate effectiveness, benefits and costs of current programs;
Evaluate opportunities, benefits and costs for implementing new programs, as well as eliminating ineffective programs.
4. Communicate programs and policies:
Issue advance information and guidance to managers to help them be effective in talking to their teams and administering the programs;
Issue all-employee communications with information about programs and guidance on how they can be used most effectively;
Annually reissue communications to remind employees of programs and policies in place, and their effective use.
5. Formally reevaluate employee and business needs and effectiveness of absence management programs every three to five years, or more often if major changes occur within the organization.

On the other side of the absenteeism issue, employers are faced with the problem of presenteeism – when employees come to work even though they are ill. While employees are well-meaning, their good intentions may have ill effects as they deliver lower productivity and also pose contagion risks to other employees and perhaps customers.

Thirty-eight percent of employers reported that presenteeism is a problem in their organizations. Of significant concern is that of the employers who said presenteeism is a problem, 87 percent report that sick employees who show up to work are suffering from short-term illnesses such as cold and flu, which can be easily spread.

“The cost of presenteeism may be hidden, but it is extremely high,” said CCH Employment Law Analyst Brett Gorovsky, JD. “The upward spiral begins with lost productivity and climbs from there – with increased safety and quality risks, and of course the risk of infecting others. Those people then also either miss work, or come to work sick where they are a risk to others and their diminished productivity, quality and attention to safety continue the costly cycle.”

Solving the presenteeism problem means that employees need to take personal responsibility and employers need to ensure that workplace culture and policies do not encourage the wrong behavior.

“Employers need to discourage the hero worker, whose cough used to be a badge of honor,” said Gorovsky. “This short-sighted approach is bad for business, as well as for employees.”

The 2007 CCH Survey asked employers what they are doing to reduce presenteeism. A majority of organizations (54 percent) report that they send sick employees home, while 40 percent educate employees on the importance of staying home when sick and 34 percent foster a culture that discourages employees from coming to work sick. Thirty percent of employers say they use telecommuting programs as another way to deter presenteeism.

At the same time employers are combating presenteeism, there is a concern that some traditional absence control and sick day policies may actually encourage the behavior.

“Organizations with traditional sick-day policies enforced by disciplinary action are making it difficult for employees to do the right thing,” said Gorovsky.

If, for example, an organization allows each employee five sick days a year, and takes disciplinary action on the sixth absence, an employee who has been wiped out with the flu for several days early in the year may choose to come to work ill rather than risk the discipline. The CCH Survey found that fear of discipline was the reason that nearly half of employers (49 percent) say sick employees are on the job.

Other reasons employees show up for work even though they are sick: 65 percent have too much work / deadlines; 56 percent say there is no one available to cover their workload; 55 percent don’t want to use vacation time; and 49 percent want to save sick time for later in the year.

Some employees can offset the risk of a poor health year if their employer allows them to carry over the sick days that they didn’t use in healthier years. Only 42 percent of organizations surveyed, however, allow employees to carry over sick time from one year to the next – a decline from 44 percent last year.

Having paid sick leave and PTOprograms are effective ways employers can help manage presenteeism. Sixty-nine percent of employers reported having paid sick leave or paid time off in place as preventive measures to help control presenteeism.

The issue of presenteeism grows even more serious when the possibility of a pandemic is considered. In addition to taking steps to ensure employees don’t come to work sick under any circumstances, a growing number of employers are implementing pandemic plans. Twenty-seven percent of companies report they have a plan in place in the event that a large percentage of employees become ill. That represents almost a 100 percent increase since 2006, when only 14 percent of companies surveyed had such plans.