Absence may make the heart grow fonder, but it causes employers angina. Companies are, of course, used to dealing with a certain amount of absence, both planned and unplanned…it is part of the cost of doing business. But the triple whammy of current economic pressures, leaner than ever staffs and unplanned absences, combined with planned absences, can cause a disproportionate impact on the total cost of labor.
In the just released 2009 Cybershift Trendline Survey of 1,200 American Payroll Association members, 76 percent of respondents estimated that up to 10 percent of their organizations’ absences were unauthorized. Add in the planned absences for vacations, the medical cost of absences and leaves due to illness and the cost of covering for those absences, e.g., overtime or use of temporary workers, and it adds up to real money. And we have not even estimated the impact on productivity or customer satisfaction.
Managing absence is a complex topic with many facets, some of which change depending on the characteristics of the industry and workforce, like one of those jigsaw puzzles with no clear, sharp edges. To isolate the puzzle patterns, the first step is to know the actual impact as soon as possible so issues can be addressed. The second is to apply absence and leave policies in a fair and consistent manner to balance employee care, regulatory compliance and the impact on productivity and cost. The third step is to proactively work to lower the total cost of absence.
As the Cybershift survey indicates, while many organizations are now using commercial time and attendance applications, others are still using older methods, including manual spreadsheets. Modern time and attendance systems are used to ensure correct and timely payroll. When a time reporting system is consistently used and time is properly coded, you also have a cornerstone piece of the absence management puzzle in place.
The second piece is leave administration. There are an increasing number of tools and services available in this newly hot area, but many are limited to automating the process and processing the transactions. Important support to be sure, as this is a compliance area that can lead to grievances, lawsuits, audit problems and fines. And with regulations changing and varying from state to state and country to country, strong tools and HRO provider expertise will help organizations meet compliance requirements.
As noted above, the third major piece of the puzzle is proactively managing the total cost of absence. That role today largely falls to the company’s own managers and HR team. I think there is an opportunity here that lends itself to the world of multi-process HRO. The right set of integrated services, analytics capabilities and subject matter expertise to manage the total cost of absence could represent a new service offering that directly impacts the bottom line – a new piece of the absence management puzzle well worth figuring out.
Linda Merritt, Research Director, HRO, NelsonHall
HRO Insights 
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