Let’s Take a Look at Absence Costs
Written by Geoff Newman on 7/5/2010
As the new coalition government addresses the deficit, the impact of public sector sickness absence is likely to be raised, and force organisations to deal with absences.
The extent of this challenge has been illustrated by IRS research into absence costs, which showed that absence costs in the public sector last year were on average £685/head compared to £455/head in private sector services. It also revealed that absence took up 3.8% of working time last year for public sector employers, compared to 2.6% in the private sector.
These findings have supported the research of the Chartered Institute of Personnel Development (CIPD) on the widening gap between the public and private sector’s number of absent days per employee. This, it is said, reflects inefficient performance management, aided most likely by the fact that public sector employees are part of large organisations that aren’t able to focus on individual performance as effectively.
The public sector, however, does have the defense that many of its roles include difficult, public-facing, and sometimes dangerous jobs like nursing, policing and teaching that induce high levels of stress. Further defenses are that, since the private sector is not under external inspection, there may be under-reporting of absence. Moreover, the public sector has a tendency to pay occupational sick pay while the private sector only pays statutory sick pay, which may discourage absences.
Alternatively, some people claim that presenteeism is a greater problem than absenteeism, with more staff likely to work when ill and incapable in the public sector than in the private sector. The recession is also considered to be an encourager of this, with more employees potentially feeling the need to demonstrate their reliability to their companies. In turn the recession could have the reverse effect, however, augmenting levels of stress and so increasing the number of absences.
How To Manage Absence
The best approach, according to Shoesmith, for reducing absenteeism and monitoring presenteeism is a clear performance management approach, health awareness programmes and good employee engagement programmes.
The Real Cost of Absence
Less than 37% of employers surveyed by the IRS were able to offer figures on the cost of absence in their organisation.
Many of those that were able to admitted that they don’t consider many of the direct or indirect effects on productivity caused by sickness absence.
91.4% of those who gave absence costs based them only on the wages of the absent individuals, so they did not include the fees of the temporary staff required to cover for the absent staff, nor the overtime costs for other staff covering for their colleagues. Even fewer included indirect costs such as missed business opportunities or reduced customer service.
Overall, the CIPD claimed that absence costs the UK £17.3 billion. The IRS suggests the true figure is higher, if employers considered the other factors induced by absence.
How the Private Sector Deals with Absence
One seemingly successful approach, pioneered by Tesco in 2004, made the first three days of unplanned absence in a three month period unpaid, unless “fair and reasonable situations [had] occurred to prevent attendance” and the employee had communicated this properly. For more than five days of unplanned absence then the employee was invited to meet with Human Resources to discuss the problem and be offered support. All employees underwent a ‘return-to-work’ interview with their manager and were advised about their responsibilities, and the departmental manager was prepared for any personal issues that may have arisen for the employee.