ABSENTEEISM

Absenteeism occurs when an employee of a company does not come to work due to scheduled
time off, illness, injury, or any other reason. The cost of absenteeism to business, usually
expressed in terms of lost productivity, is difficult to determine. Studies from government
sources such as the U.S. Bureau of the Census and U.S. Bureau of Labor Statistics put the direct
losses at more than $40 billion a year; the Social Security Administration determined that, in one
year, workers missed more than half a billion days. Various private studies and polls studying
particular elements of absenteeism sometimes put the figure much higher. One recent Gallup poll
did not put a price tag on the sniffles and swollen eyes, but claimed that more than 3 million
workdays per year are lost when working people stay home because their allergies are acting up.
The Massachusetts Institute of Technology released a study in 1994 claiming that clinical
depression alone resulted in more than 213 million lost workdays, costing $24 billion.

There is little written history of absenteeism in business literature, probably because until the
20th century businesses had a simple rule, "No work: no pay." The practice of offering paid "sick
days" did not become widespread until labor unions forced companies into contracts allowing
employees to take time off for illness or vacation. While practices vary among companies and
union contracts, an average of four to ten sick days per year is standard.

Although companies were originally unwilling to offer paid leave to workers, they have come to
realize that humane absence-management policies are cost-effective. In fact, it is estimated that
companies with effective employee absence strategies reduce their overall payroll costs by 10
percent. Furthermore, a 1995 study discovered a correlation between absenteeism and employee
turnover. Companies with high rates of absenteeism were found to be more likely to have their
employees leave for jobs with other firms. In light of such findings, employers have recognized
that a generous absence policy can be profitable and contribute to employee satisfaction and
stability.

CASE STUDY
The problem of absenteeism is addressed directly by some companies, and some handle the
situation better than others. One recent study involved a television manufacturer that operated
with a lean staff. Every nonsalaried employee scheduled to work was required to be on the floor,
or a substitute had to be found. The union negotiated with the company to reduce the number of
annual excused absences allowable from 24 days to 18, but allowed some vacation days to be
applied toward other forms of absence. Employees with more than 18 absences could be
terminated. The company thought that this reduction in absences before termination would show
how serious it was about keeping employees on the line, and reduce absenteeism.

After the new contract went into effect there was a 45 percent decline in the number of
unexcused absences and a 22 percent drop in excused absences, which was in keeping with
corporate intentions. The use of vacation time to compensate for absences jumped 81 percent,
however, leaving a net increase of 12 percent in work hours lost to absenteeism. In-creased use
of vacation time, which could be taken without advance notice, also caused greater disruption
than the use of excused absences, which had to be scheduled in advance with supervisors.

In the next round of labor negotiations, the company secured the elimination of the vacation-day
substitution practice. It also told employees desiring to move into different jobs that they must
have had a good attendance record the previous year. As an additional incentive, the company
also offered a perfect attendance bonus of $200. In the first year of the new arrangement, 127
employees qualified for the bonus; during the previous year only 27 employees had perfect
attendance records. The experience of this company shows the importance of understanding
absenteeism and the potential abuses of absence-management policies.

PAID TIME OFF SYSTEM

Some companies have approached similar problems by eliminating sick leave altogether. Instead
of vacation time and sick leave, the companies have developed "paid-leave banks." In one study
of 464 hospitals using seven different methods of controlling absenteeism, only the paid leave
bank consistently showed a positive effect in controlling absenteeism. This method of absence
management is known as the "paid time off system.

Often, companies have halved the amount of time previously set aside for sick leave and added
those days to the "bank." At the start of the year employees understand they have a certain
number of paid days off work that can be taken for any reason of their choosing. No sick days
are allotted. If an employee is legitimately ill and cannot return to work after using all the days in
his or her "bank," short term disability payments start. One company using such a policy found
its employees' reporting of illness absences dropped by more than 30 percent in one year.

CHRONIC ABSENTEEISM
Human resources managers also grapple with problems posed by workers who are chronically
absent. The legal right of employers to discipline employees who are chronically absent is firmly
established; employers must first, however, make such employees aware of the problem and give
them a chance to improve. Some companies have implemented a surprisingly simple solution to
the problem of chronic absenteeism: they have the worst offenders counsel each other. In one
research study patterned after drug and alcohol abuse programs, a company paired valued
employees who had absence problems with each other. If one felt like skipping work, he or she
was encouraged to call the buddy to talk it out.

During the study, the employees' absence rates dropped by nearly 50 percent. Once they stopped
participating in this absence-intervention program, their absence levels increased, but they
remained lower than they had been before peer counseling. Employees who participated in the
study found that they could talk freely with each other about the reasons behind their absences.
The buddy would help talk through the problem, and encourage the wavering employee to return
to work. Absence-intervention programs have also revealed that absentee workers have little idea
how much time they were really missing from work. They knew they were taking "too much"
time, but until the buddy started tracking it for them, they were unaware of how their absence
was affecting the company.

Similarly, companies are increasingly aware that, by understanding the causes of absenteeism,
the phenomenon can be reduced to its lowest possible level. Recent research has indicated that
rates of absenteeism can be predicted by analyzing an employee's job satisfaction, job
involvement, and work stress. Additionally, a worker's family status is a key predictor of
absenteeism. Employees with children, particularly single parents, are far more likely to be
absent than those without children. As such, future absence-management policies will most
likely include the concept of paid time off coupled with improved family health, child
care/elder care, and other programs designed to improve the quality of employees' lives and
relieve some of their family and other nonwork responsibilities.