Employee absences are costing your business more than twice as much as health care, two recent surveys reveal.
Add productivity lost to “presenteeism”—i.e., the state of an employee who shows up for work too sick to focus on the job—and that cost soars to three to four times higher than medical and pharmacy costs.
Cutting even a fraction of those absences can have a potent impact on your organization’s bottom line—an attractive possibility in a tight economy when employers need workers to be as productive as possible.
Example: MGM Mirage lost the equivalent of eight full days of work every year to and presenteeism. That’s equal to $76 million in revenue or share value of 84 cents. HR took those numbers to senior and got the OK to boost wellness and productivity expenses, even in a slow economy.
“They had no other way of increasing their revenue by $76 million in the short term except by decreasing lost time,” says Bill Molmen, general counsel for the Integrated Benefits Institute (IBI).
An IBI study, The Business Response of Employers to Absence, reveals that employers with paid-time-off (PTO) programs that don’t distinguish between scheduled and unscheduled leave or between sick days and vacation days are missing out on an opportunity to reduce health care costs and improve productivity.
“If they’re focused only on health care and health care costs, they’re really missing some of the biggest bottom-line drivers from health-related conditions,” says Molmen.
Most organizations with PTO programs use them to ease their administrative burden, but they overlook the link between health, absenteeism and productivity, Molmen says.
He notes that most employers don’t ask employees why they are taking leave, so employers don’t know if a common chronic condition afflicts employees who could benefit from better care, participation in a or education—resulting in fewer unscheduled absences.
Employers that do track the reasons employees are absent, Molmen says, are more likely to start workplace programs to address those problems.
He points to conditions such as sleep disorders, depression and fatigue—which he says contribute to a high percentage of absenteeism and presenteeism—that can be treated once they have been identified.
Molmen advises HR to keep track of the reasons why employees take leave. His advice:
- Protect employees’ privacy by working with a third party to collect data on use of PTO. If you gather the data internally, put up firewalls so information about medical conditions doesn’t wind up in personnel files or leak into conversations.
- Work with aggregate information rather than details about individuals. Knowing that 20% of the workforce suffers from fatigue, stress or back pain, for instance, is enough to start a program to address that problem.
- Look into using “soft report” surveys that ask employees to anonymously reveal the reasons for their PTO use and their level of presenteeism. Such tools may be subjective, but they’re reliably accurate.
- Use an inexpensive modeling tool based on national data to get a health and productivity “snapshot” of your organization based on what’s typical for a business like yours. Your snapshot will reveal how much time your organization is losing to absenteeism and presenteeism.
“Don’t throw up your hands and say, ‘We don’t know,’” Molmen advises. “Go out and get a notion, and then make a sound business decision” about how to manage unscheduled absences.
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