Absence statistics over the last few years have seen a general downward trend; however it is clear that the cost of employee non-attendance to UK businesses remains high. Dr Peter Mills Glasslyn Health Solutions

With the economy in the doldrums now could be the ideal opportunity to radically rethink how absence from work is managed. Hardly a year goes by without new, and even more shocking, statistics concerning the cost of absenteeism to UK businesses. The most recent CBI survey from 2010 has quantified this as being in the region if £17bn, a record high and an increase of 12 percent from the survey of two years ago. To put this in context this is the amount of money that the NHS is being asked to save over the coming 4 years.

As is usual, absenteeism in the public sector is considerably higher than private sector, with an average excess of 2.5 days a year. It is also probably no surprise that larger employers have higher rates of absenteeism than smaller ones, with a noticeable jump in average absence days for organisations of 200 employees and above. Looking at just the headlines from the CBI survey data one would think the UK was in the grip of an absenteeism “epidemic”, but the stats do warrant closer scrutiny. Ninety-five percent of all absence episodes in the private sector were classified as “short-term”, in other words relatively short periods of time away from work (10 or less days at a time), which in turn accounted for eighty-percent of all working time lost due to absenteeism.

Data from the Office of National Statistics, taken from the Labour Force Survey, shows that the vast majority of the working population actually take no sickness absence days in a given year. During 2008 only 2.5 percent of employees took any time off during the year. The ONS data also points towards certain groups being at higher risk of absence than others. Women, customer service occupations and younger employees are all more likely to take unscheduled absence. Far from being an epidemic it appears that there are in fact only a relatively few individuals who are driving the costs of absenteeism for UK businesses. Couple this with the fact that the majority of businesses put in place absence schemes that provide significant additional benefits in terms of sickness pay, over and above the statutory sick pay requirements, and it is easy to see how organisations can “leak” productive days like a sieve.

Undoubtedly more proactive absence management policies over the last few years have helped curb some of the excessive absenteeism seen in the past. The CBI report that more than 95 percent of organisations surveyed have a clear, action oriented absence management policy with distinct triggers for intervention. These triggers usually involve setting a limit to the number of consecutive days off work or the number of absence episodes (usually 10 days and 3 episodes respectively) before the absence management process is invoked. This being the case it is likely that a threshold has been reached, with little or no further reductions achievable. This therefore begs the question whether business as a whole should address the problem in a different way?

The majority of organisations in America amalgamate employee sickness absence entitlement with their annual holiday days into what is commonly known as paid time off, or PTO for short. The concept is quite straight forward; the employee has a set number of days in any given year that they can be absent from work, it does not matter whether they are sick or whether they are taking holiday, they all come out of the same pool. Any further time off over and above an individual’s PTO allowance is simply unpaid leave. This may seem quite harsh although in fact the reality is actually not so stark. Most employers back this sort of scheme up with disability insurance, which kicks in after a certain number of consecutive days of absence. Depending on the scope of the disability insurance the policy can pay up to 70 percent of the employee’s salary for up to two years, or if the individual has a long-term disability policy, until retirement. Employers also have disability insurance polices that cover them in terms of employing additional personnel should an individual be off work for a protracted period of time.

In practical terms, using average per head absenteeism figures from the CBI survey, a company that employs 500 people should expect to average 5.8 days per employee of unscheduled absence in a year. If the American PTO model were employed and each employee were given 4 additional days on top of their existing holiday entitlement, and no further sickness allowance, this could save the organisation 900 days, or the equivalent of four full-time staff, per annum. Not only does this approach allow employers to have clear visibility in terms of the direct costs of absenteeism for their workforce, but it also takes away the “entitlement” perception that employees in some sectors have fostered regarding paid sick leave. It is feasible to see how this model could be supported with disability insurance options offered to employees as part of their flexible benefits package. Individuals could weigh up what sort of cover they feel hey need and even purchase additional cover as appropriate.

So what do the HR community think about this way of managing absence? Karrin Nicol, a seasoned HR professional and talent consultant who has worked in the UK, US and Asia supports the combined PTO way of managing absence. She says, “This is a much more constructive approach and means people managers manage performance instead of absenteeism”. Carol Bahl, head of HR at RedBrick Health in Minneapolis agrees and adds, “We made the shift to the PTO model because it is easier to manage, and it also keeps things honest by removing the tendency for individuals to call in sick because they still had unused sick leave days”. The PTO approach to absenteeism makes collecting robust absence data difficult, however it does free up HR professionals to do actively manage the talent of the workforce, which can’t be a bad thing.