2005 CCH Unscheduled Absence Survey
Costly Problem of Unscheduled Absenteeism Continues to Perplex Employers
Two out of Three Workers Leave Employers in a Lurch for Reasons Other than Illness
(RIVERWOODS, ILL., October 12, 2005) – With the cost of last-minute employee no-shows climbing, U.S. employers are still struggling to find effective programs that keep healthy workers on the job, according to the 15 th annual CCH Unscheduled Absence Survey by CCH INCORPORATED (CCH). The 2005 survey found that while the rate of unscheduled absenteeism barely budged since last year, the average per-employee cost has risen to $660 per employee – costing some large employers over $1 million per year.
CCH is a leading provider of human resources and employment law information (hr.cch.com) and a Wolters Kluwer company.
What may be of most concern to employers is that almost two out of three employees who fail to show up for work aren’t physically ill, according to the CCH survey. The survey found that Personal Illness accounts for only 35 percent of unscheduled absences, while 65 percent of absences are due to other reasons, including Family Issues (21 percent), Personal Needs (18 percent), Entitlement Mentality (14 percent) and Stress (12 percent).
The CCH survey found that both the Entitlement Mentality and Stress numbers are higher in 2005 than in the previous two years (Entitlement Mentality: 2004, 10 percent; 2003, 13 percent. Stress: 11 percent in 2004 and 2003.)
“Lean staffing levels over the past several years have intensified workloads for those employees who avoided layoffs. Now that the labor market is opening up, those survivors may not be as fearful of losing their jobs and may be taking the mental health breaks they feel they deserve,” said CCH workplace analyst Lisa Franke, CCP, SPHR. “Employers may even see a ‘culture of entitlement’ emerge as the economy strengthens further.”
According to the 2005 CCH Unscheduled Absence Survey, conducted for CCH by Harris Interactive ®, the absenteeism rate was 2.3 percent in 2005 down slightly from 2.4 percent last year. The average cost of absenteeism rose to $660 per person per year, up from $610 in 2004. Notably, the survey only measures direct payroll costs for paid, unproductive time. The high cost of absenteeism hurts organizations even more when other costs, such as lost productivity, morale and temporary labor costs, are considered.
Companies with low morale saw higher rates and costs of unscheduled absences. The rate of unscheduled absenteeism is twice as high at companies with Poor/Fair morale (3.2 percent) than those with Good/Very Good morale (1.5 percent).
The CCH Unscheduled Absence Survey, conducted annually by CCH for the past 15 years, is the definitive survey on absenteeism in the workplace and the only one that measures costs associated with unscheduled absences. A special review of CCH’s findings on employee absenteeism and employer trends over the past 15 years can be found on the CCH Press Center at www.cch.com.
Organizations Search for Solutions
Employers are concerned about the impact of unscheduled absenteeism, with nearly one in three (31 percent) reporting that it is a “serious problem,” and 87 percent stating that they think the problem may stay the same, or worsen, in the next two years.
With traditional “sick time” programs clearly out of sync with the times, the survey found that employers are increasingly offering programs to help employees manage in a more planned way the issues that take them away from work.
“Traditional sick leave policies that allow time off only for illness may put an employee in the position of having to conjure up a cold at the last minute to get the time off they really need for taking a parent or child to a pre-arranged medical appointment,” noted Franke. “The CCH survey found that employers increasingly are adopting programs that recognize that the issues keeping an employee away from work often have nothing to do with a stuffy nose.”
The 2005 CCH Unscheduled Absence Survey found that U.S. companies now offer an average of 9 work-life programs, up from 8 in 2004 and 7 in 2003.
“It takes time for the adoption of work-life programs to have an impact on absenteeism rates,” noted Franke, “and the small decline that we saw in this year’s unscheduled absenteeism rate may be the beginning of a bigger payoff for employers in years to come.”
Of the work-life programs offered by employers, the top five in usage –Employee Assistance Plans, Leave for School Functions, Wellness Programs, Flu Shot Programs and Fitness Facility – recognize that helping employees manage the many aspects of their lives is increasingly important.
“The blend of programs being offered to help people proactively manage their work schedule, family and health is a sign that employers are viewing employees more holistically,” noted Franke. “This will be very welcome news to employees, most of whom juggle the demands of their jobs with personal obligations and family responsibilities.”
On a scale of 1 to 5 (with 5 being most effective), the work-life programs rated highest by human resource executives for reducing unscheduled absences are Alternative Work Arrangements (3.5), Flu Shot Programs (3.4), Leave for School Functions, Telecommuting, Compressed Work Week and On-site Child Care (each at 3.3).
Effectiveness and Use of Work-life Programs
Absence Control Programs
Employers report they use an average of 6 absence control programs, up from 5 programs in 2004. Disciplinary Action remains the single-most used absence control program, with 90 percent of surveyed organizations reporting use. The other leading absence control programs in use are Yearly Review (79 percent), Verification of Illness (76 percent), Paid Leave Banks (67 percent), Personal Recognition (66 percent) and No Fault (63 percent).
The use of Paid Leave Banks (also known as Paid Time Off) continues to climb in popularity, rising from 59 percent in 2003, to 63 percent in 2004 and 67 percent in 2005. Paid Leave Banks provide employees with a bank of hours to be used for various purposes instead of traditional separate leave programs for sick, vacation and personal time.
Buy Back programs, under which the employer “buys back” in cash or vacation time all or some of an employee’s unused sick time, saw a 20-percent increase in popularity, from 48 percent in 2004 to 58 percent in 2005.
Paid Leave Banks along with Buy Back programswere rated as the most effective absence control programs, each with a 3.5 rating.
Effectiveness and Use of Absence Control Programs
Overall, organizations with Good/Very Good morale rated their absence control policies and work-life programs more effective (3.7), than did their counterparts with Poor/Fair morale (2.4).
Talking ‘Bout My Generation?
With a workforce that for the first time includes four generations of employees – all at different life stages with different needs – changing demographics may offer employers the next opportunity to further enhance the effectiveness of their work-life and absence control programs. Employers, however, appear to be hesitant to act. Only 29 percent of organizations say that demographic changes in the workforce will affect the work-life programs they offer, and 28 percent say it will affect their absence control programs.
Companies may be reluctant to change programs because they perceive that it will be costly, but there are costs to complacency as well.
“Each generation of employees brings something unique to an organization. When employers evaluate their work-life programs they should consider employees’ changing needs based on life stages,” said Tulay Turan, JD, CCH employee benefits analyst. “Inattention to intergenerational issues could have long-term consequences, affecting not just the cost and rate of absenteeism, but many other issues such as recruitment, retention and morale.”
The effect of morale is reflected across the board in the 2005 CCH Unscheduled Absence Survey. The survey found that employee morale can affect a company’s absenteeism rate, with organizations with Good/Very Good morale experiencing a 1.5-percent rate of unscheduled absences while those reporting Poor/Fair morale had a rate of 3.2 percent.
And, this low morale can cost employers. Overall, the survey found that employers set aside an average of 5.8 percent of their budgets for absenteeism. When morale is factored in, however, organizations with Poor/Fair morale set aside 6.2 percent of their budgets to cover the costs of absent workers compared to 5.5 percent in organizations with Good/Very Good morale.
Morale also influences the reasons people call in sick at the last minute. Organizations reporting Poor/Fair morale were more likely to experience unscheduled absenteeism due to Stress (15 percent) than organizations reporting morale as Good/Very Good (10 percent). Also, while 20 percent of organizations reporting Good/Very Good morale believe that unscheduled absenteeism is a serious problem for them, 48 percent of organizations reporting low morale find it to be a serious issue.
Additionally, 39 percent of companies with Poor/Fair morale reported an increase in unscheduled absences over the past two years while only 14 percent of those with Good/Very Good morale reported an increase. And, the outlook by organizations with low morale is equally bleak. Forty-five percent of employers in organizations with Poor/Fair morale believe unscheduled absences will increase in the next two years. Only 15 percent of employers in companies with Good/Very Good morale shared this concern.
Presenteeism: Bottom Line Gets Hit When Employees Punch In Sick
The problem of presenteeism – when employees come to work even though they are ill and pose problems of contagion and lower productivity – is an emerging area of concern for organizations. Nearly half (48 percent) of employers surveyed reported that presenteeism is a problem in their organizations, up over 20 percent from the 39 percent who saw it as a problem last year.
Here again, morale makes a difference. Despite higher rates of unscheduled absenteeism overall, companies with low morale also have more ill workers showing up for work. In fact, 55 percent of organizations with Poor/Fair morale reported presenteeism is a problem, while 43 percent of organizations reporting Good/Very Good morale see it as an issue.
“While the direct hit to the bottom line isn’t immediately evident with presenteeism, the hidden, indirect costs are very high,” noted Turan. “When someone doesn’t feel well, they are simply not as productive, nor is the quality of their work as high.
“Then, there is the added problem of spreading illnesses to other employees who in turn either call in sick, or come in sick,” Turan added.
With flu season just around the corner, employers should consider what they can do to break the cycle. For the first time, the 2005 CCH survey asked employers what they are doing to reduce presenteeism. Sixty-two percent of the organizations reported they send sick employees home, while 41 percent educate employees on the importance of staying home when sick and 36 percent try to foster a culture that discourages employees from coming to work sick.
There is also a concern, however, that some traditional absence control and sick day policies may inadvertently encourage employee presenteeism.
Organizations that adhere to traditional sick day policies, and take disciplinary action to enforce them, may be making it difficult for employees to do the right thing. 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 may choose to come to work ill rather than risk the discipline. According to the 2005 CCH survey, Disciplinary Action is the single most common absence control program, used by 90 percent of organizations surveyed.
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 38 percent of organizations surveyed by CCH, however, allow employees to carry over sick time from one year to the next – a large decline from 51 percent in 2000.
Having a Paid Time Off (PTO) program is an effective way employers can help manage the problem of presenteeism. With PTO, the employee has more discretion as to how to use an entire bank of days, so if she’s sick, she can take a day from the bank and stay home, without the fear of being reprimanded or running out of sick days.
About the Survey
The 2005 CCH Unscheduled Absence Survey covering 323 human resource executives in U.S. companies and organizations of all sizes and across major industry segments in 46 states and the District of Columbia was conducted online by Harris Interactive ® , a leading global market research and consulting firm, from June 16 through July 5, 2005. The survey reflects experiences of randomly polled organizations with an estimated total of more than 1 million employees. The CCH Human Resources Management Ideas & Trends newsletter sponsored the survey.
The data were weighted to reflect industry distribution as represented in the Society for Human Resource Management. In theory, with probability samples of this size, one can say with 95 percent certainty that the overall results have a sampling error of +/-5.5 percentage points. Sampling error for the various sub-sample results is higher and varies. This online sample was not a probability sample.
Mean absence rates were calculated by dividing total paid-unscheduled absence hours by total paid-productive hours. Scheduled absences, such as vacation, legal holidays, jury duty, personal time and bereavement leave, were not included. Costs to companies only reflect the direct payroll costs for absent employees; the associated costs of overtime pay for other employees, hiring temporary employees to cover for absent workers and lost productivity add to the considerable financial impact of low morale to an organization.
To Obtain a Copy of the Survey
To order the CCH Human Resources Management Ideas & Trends newsletter containing the 2005 CCH Unscheduled Absence Survey, call 800-449-9525 and ask for offer number 04509301 or visit our Online Store. Price is $38.95 plus tax, shipping and handling.
About Harris Interactive ®
Harris Interactive Inc. (www.harrisinteractive.com) is the 13 th largest and fastest-growing market research firm in the world, perhaps best known for The Harris Poll ® and for pioneering and engineering Internet-based research methods. The Rochester, New York–based global research company blends premier strategic consulting with innovative and efficient methods of investigation, analysis and application, conducting proprietary and public research globally to help clients achieve clear, material and enduring results.
Blending science and art, Harris Interactive combines its intellectual capital and one of the world’s largest online panels of respondents, with premier Internet survey technology and sophisticated research methods to market leadership through its US, Europe (www.harrisinteractive.com/europe) and Asia offices, its wholly owned subsidiary, Novatris in Paris (www.novatris.com), and through an independent global network of affiliate market research companies.EOE M/F/D/V
About CCH INCORPORATED
CCH INCORPORATED is a leading provider of employment law and human resources information for attorneys and human resource professionals. The CCH Human Resources web site is hr.cch.com. Headquartered in Riverwoods, Ill., CCH was founded in 1913 and has served more than four generations of business professionals and their clients. CCH is a Wolters Kluwer company (www.wolterskluwer.com) and part of the Wolters Kluwer Legal unit.
Wolters Kluwer is a leading multinational publisher and information services company. Wolters Kluwer has annual revenues (2004) of €3.3 billion, employs approximately 18,400 people worldwide and maintains operations across Europe, North America and Asia Pacific. Wolters Kluwer is headquartered in Amsterdam, the Netherlands. Its depositary receipts of shares are quoted on the Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices.
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