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The business impact of absenteeism

Posted by: ADP on 23 September 2015 in Human Capital Management, Innovation & Technology

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I’ve always looked forward to Autumn. Temperatures are still warm and the evenings are still long. Of course, staying focused on work when a gorgeous day is calling can be tough. It is also a significant business challenge to our clients as they experience instances of planned and unplanned absences from those making the most of the good weather, while it lasts.

With the right communications, tools, and processes, many organisations are finding that they can identify and address the root causes of unplanned absences, respond to absenteeism in a more timely manner, and make better decisions to ensure business continuity and control unnecessary costs.

It’s important to consider the impact of absences and strategize about how to make them a business priority. Absence affects labour costs, overtime, productivity, and employee satisfaction. For instance, according to SHRM’s Total Financial Impact of Employee Absences report:

  • About 80% of organisations use overtime as a way to provide coverage for at least some absences. The total cost of that overtime is 2% of payroll.

  • Average productivity loss due to replacement workers, an indirect cost of absence, is 31.1%.

  • Managers spend an average of 4.2 hours per week (a tenth of their work week) dealing with absences. That’s equivalent to 210 hours per year per manager.

If absenteeism is a challenge for your business, here are three ways to help you manage it:

Establish Programmes That Encourage Attendance. Consider creating more flexible schedules that take into account employee preferences, allowing them to meet personal commitments without sacrificing productivity. Ask for employee input to understand the organisation’s needs and clearly communicate policies around flexi-time will help drive buy-in and adoption.

According to the Working Mother Research Institute in the US, all companies that made their Best Companies for Hourly Workers list – including Best Buy®, Marriott®, Mercy Health System® and GM®, among other large businesses – offer flexi-time to some employees, and 68% of eligible workers use it. In fact, many employers are finding that, by adopting flexible working, they are boosting employee engagement and attracting top talent.

Consider Going Mobile. Using mobile devices for tracking time allows employees to communicate unanticipated events, such as a child’s sickness or family emergency, in a more convenient and timely manner. This can help relieve the stress of lengthier, manual notification processes for the employee and enable managers to find suitable replacements more efficiently.

These mobile solutions allow ongoing adjustments even while supervisors and workers are off-site. The availability of an open shift can be broadcast quickly via text, email or phone. You can even prioritize the recipients based on specified criteria to allow available, qualified employees to volunteer to pick up extra hours if they desire. This way, the real-time information of a pending absence can be dealt with in an equally real-time fashion through effective communication across the organisation.

Keep Accurate Records. Collecting and maintaining accurate records of time and attendance can help organisations anticipate when absenteeism may peak. Various reporting tools that analyze this data can help managers pinpoint specific issues for individual manager or teams that experience higher incidences of unplanned absences.

Informed organisations can then address the underlying causes, such as employee engagement and satisfaction, or prepare for cyclical trends that are anticipated to occur again. Organisations that harness this information by automating leave and absence management have 33% less unplanned overtime and achieve a 19% reduction in payroll by reducing overtime hours.*

The bottom line: There are many ways an organisation can benefit by engaging employees in the process, while providing managers with better insight and oversight into absences.

What has your experience been? Do you have a tip to share on how to manage absenteeism?

*Sources: Aberdeen Group, “Productivity: Managing and Measuring a Workforce,” January 2015; Aberdeen Group, “Improving Productivity and Reducing Labour Costs through Automated Absence Management,” December 2012.

Read the original blog post here.

Dave Imbrogno

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TAGS: employee satisfaction overtime attendance management Time management

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