With corporate health insurance costs rising, a recent healthcare forum addressed the issue of corporate absenteeism that is costing UK businesses £11.6bn a year, and came up with a strategy for tackling it. Alex Alway reports
Corporate absenteeism is at an all time high and costs British businesses £11.6bn each year in direct and indirect costs. But despite the significant cost, the problem remains unmonitored by more than 60% of UK organisations, and taking ‘sickies' or ‘duvet days' has become acceptable practice in the workplace. On average, each ‘sick' employees costs each business about £500 per year.With the escalating cost of corporate health insurance used to mitigate absence costs, tackling absenteeism is vital.Three leading organisations recently demonstrated differing approaches to tackling the problem. British Airways implemented incentives to reward employees for taking no more than 16 days' sick leave over a two-year period. Royal Mail launched a prize draw to win cars and holiday vouchers as long as employees are not off sick before 31 January 2005. And Tesco announced that it would not pay employees' salary for the first three days of absence.The methods demonstrate contrasting approaches: BA and Royal Mail are offering incentives to employees for not taking sick days, while Tesco is using the threat of negative consequences for absenteeism. But which is the best way to tackle the problem? The Jelf Forum is a think-tank established by Jelf Group comprising leading figures in industry, government, trade bodies and the healthcare industry. The forum recently debated the incentives versus consequences approach to absenteeism. They unanimously agreed that the threat of negative consequences has a far greater impact on combating absenteeism than incentives. The forum's thinking was that if an employee is offered £1,000 for no more than 16 days' sick leave, it leaves the employer open to employees viewing sick leave as additional to their holiday entitlement. Thus the £1,000 soon becomes an integral part of an employee's benefits package.
Negative consequencesA further problem is that incentives may also result in those who are genuinely off with long-term illnesses returning to work too early, which could result in recurrent bouts of absence and thus a far greater detrimental effect on the business.Consequences, on that other hand, hit hard and immediately: an employee off today won't get paid. The stick is mightier than the carrot in managing absenteeism.The forum concluded that a more holistic approach to employee healthcare is required to achieve the key goal of managing absenteeism and getting employees back to work as quickly as possible. it‘ Alex Alway is chief executive of Jelf Group
The cost of sickness absenceAcross the country 176 million working days were lost in 2003 as a direct result of absence.More than three quarters of companies suspect employees of taking unwarranted long weekends by calling in sick on Fridays and Mondays.A total of 25 million days were lost last year through non-genuine sickness absences at an estimated cost of £1.75bn.Combine the aforementioned costs with escalating health insurance premiums used to mitigate absence and the total cost of employee absence is estimated to be as much as 15% of payroll.
What you can do to manage sickness absenceConduct an audit. Understand the costs of absence - most people don't. Manage the audit. Ensure that the audit is positioned correctly in the organisation - if you suddenly announce that you will be investigating absenteeism, you may cause more problems than the ones you are trying to solve.Review employment contracts and current policies. Check the legalities, review the terms included in staff contracts and review processes and policies you have in place.Utilise insurer resources. Use what is available - some employers' liability insurers offer rehabilitation support.Set trigger points. Establish trigger points so that undesirable absence can be highlighted and proactively managed by occupational health.Analyse the costs. Know what impacts your business and what you need to measure.Set benchmarks. Set your own benchmarks and measure against these - each company has its unique culture and organisational structure, so don't benchmark against competitors or sectors.Consider external help. Minimise the ‘blaggers' - an employee who has to report absenteeism to an external medical expert is less likely to ‘pull a sickie' and a medical expert can allocate the right resource to get an absent employee back to work as quickly as possible. Use emerging products. Investigate what is on offer - outsourced nursing support and data management services are just two examples of products and services on the corporate healthcare market.Implement penalties. Make employees aware that the cost to the business of their absenteeism is a cost to them.
