Data Collection is the Cornerstone

April 9, 2003

You can't manage absence without some idea of what's causing it, and you might be amazed at how much you already know.

Data collection is the cornerstone

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By Annmarie Geddes Lipold

You can't manage absence without some idea of what's causing it, and you might be amazed at how much you already know.

Most employers do not know why their employees are absent, which places them at a competitive disadvantage, says Thomas Parry, PhD, president of the San Francisco-based Integrated Benefits Institute—and research backs up his contention.

Two thirds of the 106 employers surveyed in 2000 by Watson Wyatt Worldwide said they did not know what their absence rate was or how it compared with companies in their own industry, according to Staying@Work: Improving Workforce Productivity Through Integrated Disability Management.

Employers might be surprised to discover just how much absence costs them. According to another survey, employers who could measure cost data across all benefit lines reported the direct cost of all time-off and disability benefits averaged 14.6 percent of payroll in 2000. In the report, Survey of Employers' Time-Off and Disability Programs, direct costs comprise benefit payments, salary continuance and outside administrative expenses for time-off and disability programs, including workers' compensation.

That 14.6 percent means $5,840 for an employee earning $40,000 annually, the survey said, considerably more than the $5,162 cost per employee for health care benefits. The survey, released last winter, was co-sponsored by the human resources consultants William M. Mercer Incorporated and the insurance services firm Marsh Inc.

The Mercer/Marsh survey found that the total direct cost of unscheduled absence and disability plans was 4.3 percent of payroll in 2000. The average salary continuance and short-term disability plan cost for 2000 was 1.2 percent of payroll, down from 1.8 percent in 1997, while the cost of long-term disability plans averaged 0.4 percent of payroll. The study cautioned that these unscheduled absence and disability cost figures are likely to be understated because many surveyed employers could not capture the costs of incidental absences or salary continuance plans.

Another survey calculated the direct dollars lost to absenteeism at $755 per employee per year in 2001, a 24 percent increase from $610 in 2000. The 2001 CCH Unscheduled Absence Survey, which only considers the dollars paid to employees for unscheduled absences, pegged the average amount companies spend on compensation for unscheduled absences at 1.7 percent of payroll.

Start with what you've got

To dig out the truth about employee absences, experts say employers have to make a concerted effort to track the information, starting with facts they might already have.

"A lot of employers do not have information about absences until there is a disability," notes Ken Theriault, vice president of consulting and account management for Ingenix Inc., a health information technology firm based in West Valley City, Utah. Nevertheless, they can often find some absence information on their payroll systems, says Veronica Hellwig, of Watson Wyatt Worldwide.

A lot of payroll systems collect overtime information, says Hellwig. If you review the unscheduled portion of it, chances are you'll find most of it was needed to cover someone who called in sick. Estimates can be based on that information. Some employers can also review the time and attendance modules within their HR information systems, she suggests, while others could use timekeeping systems to detect absences associated with workers' comp, sick time or unpaid leave.

Theriault admits it can be very difficult to capture the data because it is not being tracked, or it is on paper, or systems cannot communicate with one another. Still, he says, employers can take an incremental approach. "Start with what you have," he advises, and establish a baseline to understand current costs.

What information should employers collect? Theriault recommends employee identification number, department or work location, job category, length of employment, supervisor identification number, dates of absence, reason for absence and return-to-work status.

Data collection is also important for developing internal benchmarks, says Hellwig. For example, one of her clients reviewed absences by location and found 70 percent of all lost time at one facility was coming from a small group of employees.

The need for external benchmarks depends on corporate goals, says Hellwig: "If one of your requirements within your business is to have a cost factor the same as your competitors, then you need to do benchmarking." On the other hand, she adds, employers that just want to control costs as much as possible do not necessarily need to benchmark.

How elaborate should the data system be? According to Hellwig: "It depends on what you are going to use it for. If you want an entire database that includes all absence and medical information, you are building a significant data warehouse, but you will use it."

The vast majority of employers cannot justify a big database, Hellwig says, so "leverage what you have first."

 

A freelance writer based in Arlington, Va., Annmarie Geddes Lipold has been reporting on workers' compensation, disability and employee health issues for the past decade. She is a contributing editor to Business & Health.

Why Joe called in sick

Before employers can develop a program that addresses worker absence, they need to understand why their employees are out. A survey released last year by CCH Incorporated, a human resources and employment law information and services firm, revealed basic patterns.

The 2001 CCH Unscheduled Absence Survey, in its 11th year, queried 234 HR executives. The respondents said that 32 percent of unscheduled absences result from personal illness. Family-related issues were the next most cited reason, at 21 percent. Nineteen percent of absentees blamed stress, up from only 5 percent in the 2000 survey. Personal needs accounted for 11 percent, and another 14 percent of unscheduled absences can be viewed as self-justified entitlement, according to the managers surveyed. Employees with an "entitlement mentality" take unscheduled time off because they feel they deserve it, explains Nancy Kaylor, a human resources expert for CCH. The "line of demarcation" between work and personal time has faded, says Kaylor. Employees feel they need downtime.

Just how much unscheduled time do employees take off? Forty-four percent of employees take zero to two paid unscheduled absences a year; 41 percent use three to eight days; and about 16 percent take nine or more days, according to the survey.

And, yes, 43 percent of employers consider unscheduled absenteeism to be a serious problem for their organizations.

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Resource Links:

The Hartfordwww.thehartford.com

The Integrated Benefits Institutewww.ibiweb.org

The Washington Business Group on Healthwww.wbgh.org

 

Annmarie Geddes Lipold. Data Collection is the Cornerstone. Business and Health Time is Money: The Mechanics of Absence Management;21.