A Human Resource Management Approach to Absenteeism in the Workforce - Essay Example

A Human Resource Management Approach to Absenteeism in the Workforce Managing Absenteeism in the workforce is a major challenge for human resources Departments, in all businesses both large and small. Absenteeism robs business enterprises of productivity in many ways. There is the loss of actual productivity through the increased cost of replacement labour, there is decreased worker morale and there are a host of other problems that deserve further examination. This paper will review the different kinds of absenteeism in the workforce, the many types of costs associated with this problem and finally it will examine different ways to better manage the attendant problems. Absenteeism refers to a unscheduled time off by employees from their duties. This absenteeism can manifest in different ways. It can be in Terms of unscheduled sick time. It can be in delays in returning from holidays and it can very well be chronic tardiness. The motivations for absenteeism may be varied but within the context of the business model the outcome is always the same: it translates into to a loss of productivity. This is clear in the problems that British Airways faces: "British Airways also recently became extremely worried by absentee rates and their effect on its share price. Seventeen sick days per year is the average for a BA employee." (Hodgkinson, 2004.p.1) How best to measure the loss of productivity? The estimates of lost productivity vary from three to 5% at the lower end in some of the literature, all the whole way up to 9% in other sources.(Cross.2005. p.2) These are general estimates. The exact costs are very difficult to arrive at, but even from a subjective understanding the implication is clear since to operate in a competitive environment requires a high level of productivity and those companies that have a relative the disadvantage in terms of their productivity as a consequence of increased absenteeism see their profit margins suffer as a consequence This then is probably the best way to measure the impact of absenteeism of the workforce - in a direct business sense. Exploring the problem from a business point of view in terms of lost profits and decreased productivity is perhaps the most sensible approach since the practice of adopting unwieldy cost models to examine the problem is unreliable and not often broadly applicable. There has a been a traditional approach to dealing with cost; on further analysis this approach can be seen as direct and indirect costs, which David Cross reviews. Direct cost Cross suggests was classified as “sick pay, related insurance claim costs, treatment/rehabilitation, replacement labour, overtime, legal fees and third-party record services. Indirect cause on the other hand, he sees as lost productivity, impact on team morale, human resource time, management time and lost new business opportunities.”(Cross.2005. p.7) This traditional approach in many was an oversimplification of the problem with perhaps too great a focus on the cost of absenteeism being entirely borne by sick pay. While this would clearly be an easy measure of the cost, it is not by any means the the most accurate measure. This is seen in the case of the cost of rehabilitation of an unhealthy employee, in terms of occupational health. This clearly begs the question does this, in fact, translate into a cost of when perhaps it should really be discounted as a sensible investment given the liability costs of injuries in the work place and should be factored into the equation in that way A focus on the business cost of absenteeism should not disregard the risk associated with the problem as well. In today's litigious workplace climate employer's face the risk of potentially damaging lawsuits if they approach the issue in a callous way. The latest health and safety executive guidelines require employers to take a proactive role in monitoring the health of their employees. The increased responsibility translates into the increased cost of an increased risk for not doing so. Some have suggested that higher levels of of absenteeism in certain companies is also reflection of high liability since these company's face a greater chance of the litigation from an employer and employee relations point of view. The emphasis in human resource Management on the indirect cost of Absenteeism has been seen to be more problematic than the traditional view of the viewing cost entirely in terms of direct costs often in terms of sick pay but it is, in fact, a better approach since it more clearly relates to business objectives. Measuring the cost in terms of lost pay is not an accurate reflection of the actual cost of absenteeism. A better approach would be to improve absenteeism patterns in various ways, and then measure the increase in productivity that occurs. This approach will make more sense to the business administration that is in charge, to the CEOs, the top-level people who are interested in the overall performance of the business. Therefore the best approach is the most practical approach Which Cross has outlined as six ways to managing the problem of absenteeism in the workforce. The first of which is understanding of how big the problem is by having a record of the level of absenteeism in the firm. Having this record allows one to decide whether to act quickly and or in the long-term based on the potential level of risk present in the company,which is,in fact, the second point. A high level of absenteeism perhaps points to structural problems within the organization, which need to be addressed; recalling that a high level of absenteeism presents potential problems with litigation, so it would necessitate urgent action. Thirdly, Cross mentions how to translate absenteeism into financial terms or how it effects the productivity of the business. This entails, the business itself deciding what are the markers of productivity and what constitutes risk for its own Business model. Fourth, the business needs to have a firm idea of its own policies regarding absences and be able to make a refinement of those procedures if they are indeed needed. At this point it is important to address, the actual management of the problem by suggesting that the resources be allocated on a cost and risk benefit analysis in regard to specific issues involving absenteeism. That is, if a problem can be solved with improvements of investments in that area that would benefit the company then these should be implemented, as long as the risks do not outweigh the benefits. Finally as a last point, Cross suggests that metrics be created to measure the ongoing elements of the change that have been made up this point, in essence an ongoing coverage of absenteeism improvements and problems that can be addressed on an evolving basis. (Cross.2005.p.10) With this broad macro view of the overall problem and its management it now is important to address the micro management issues involved in dealing with absenteeism. There are a number of elements in the micro management of Absenteeism that can be explored and addressed. Addressing the design of regiment for sick payments can do much to to reduce the confusion that surrounds the administration of absenteeism and thus reduce the potential cost of litigation that could potentially occur. The different levels of absenteeism need to be addressed as well. A plan that offers a well spelled-out policy regarding long-term absenteeism offers protection from the greatest risk in terms of litigation, and also the greatest cost in terms of lost productivity. Keeping employees is an important aspect of Human Resource management techniques as seen here, “ It is clear that many employers in Europe have taken steps to expand the degree of information given to the workforce irrespective of legal requirements [Brewster et al. 1994]. This reflects a central theme of standard concepts of HRM - the requirement to generate significant workforce commitment “ (Brewster, 1995.p.45) A lengthy absenteeism is, more often than not ,supported by a good deal of validation either in terms of medical support or other issues so it does require a careful planning approach in terms of policy. More sporadic pattern of absenteeism are best dealt with with different incentive and disincentive programs. Incentive programs have been shown to work : "firms with participation schemes had significantly lower average absenteeism and quit rates than firms without such schemes" (Wilson & Peel, 1991, p. 454) Prominent in the implementation of incentive programs that are offered are those that have good attendance and punctuality rewards since chronic tardiness is often an overlooked part of absenteeism, but it nevertheless figures in decreased productivity due to decreased worker time. This can be in the form of salary bonuses, common shares, or other perks, such as promotion to position of the higher responsibility. The offering of shares, in particular has shown success in many companies in the Uk: “One company which introduced a share scheme in 1997 reports that: 'already we are seeing higher staff retention rates among the 50 per cent of staff who have taken up the scheme' (reported in the Guardian, 4 November 1998:16). “ (Hyman, 2000, p. 188) Punitive measures in the form of disincentives for engaging in absenteeism are many, but they should be conducted with a certain measure of control considering the possibility of litigation and lost employee morale. There should be an understanding that the punishments that are administered are understood to be deserved and measured throughout the worker pool. A good example of a measured approach is emphasizing that scheduled bonuses will decrease if there is the increased level of absenteeism. There should be a clearly outlined procedure for discipline in regards to violation of attendance policy. This is to ensure that punitive measures are seen to be a valid to inevitably to protect against the risk off litigation. Another way to gain a further measure of control is to conduct back to work interviews after lengthy periods of absence. Undoubtedly there is perhaps some element of stigma associated with these interviews which forms a preventative component of the practice and also in offering some protection from potential litigation.. Another micromanagement approach using human resource techniques is minimizing absenteeism by preventing potential health problems. This can take the form in a number of ways. Many companies have as a part of their hiring policy certain health requirements .This again is treading a fine line between potential litigation and minimizing the financial cost to the enterprise. This policy could be furthered without the fear of legal backlash when conducting a health interview for people that have been away for lengthy periods due to poor health or other reasons. In this regard, the requirement is seen as non intrusive given the absence from work, therefore minimizing the potential risk of litigation. Perhaps the most user-friendly approach is that of businesses being involved in the rehabilitation of a long absent employees. As already mentioned, this may seem like an unnecessary cost, but it is in fact,a necessary investment. When dealing with personnel It shows a certain level of commitment by the industry toward its employees thus boosting morale. It also demonstrates understanding that absenteeism for health reasons is unavoidable. The ideal for the company health policy, is one which shows concern to the employee, but also seeks to ensure return to work within a minimum time frames. The health framework referred to has been a tertiary care health-care initiative,that is offering recovery from a problem after it has occurred. This is a costly approach. Better results can be achieved by using another approach, one that is a widely touted by health-care experts, that is a preventative approach. This can take place in a variety of ways. "high incidence of illness absenteeism and occupational injuries can be regarded as an indicator of a poor work environment." (Ibarra & Crawford, 2002, p. 137) An ergonomic work environment to be created reducing the potential for repetitive strain injuries. It is now part of industry standard to have a well-positioned desk with an ergonomically positioned computer and associated hardware. Many companies are getting actively involved in improving the health of their employees by having in -house gyms and health programs. This is becoming a recommendation nowadays: “Firms are told by consultants that there are simple ways to deal with absenteeism. The healthcare consultancy IHC recently produced a report which recommended that firms hire an in-house GP and masseurs and things like that. “ (Hodgkinson, 2004. p. 2) There can be programs that teach stress reduction through yoga or other meditative techniques. These practices may have an initial outlay of cost but they offer many advantages in improved heath and morale and foster company loyalty which are all important in reducing absenteeism. An increasing trend in all business is the practice of outsourcing of I.T problems to specialized companies. The same model can be used for the management of absenteeism by outsourcing the problems to smaller companies. There are problems and there are benefits with this paradigm. The problems are the inevitable alienation that the employee feels from being administered by an outside organization. This can be countered somewhat if the outsourced company is made familiar with the culture of the umbrella company. The benefits are clear. There is a specific team of individuals of trained to seek out the best solutions to managing the outsourced problems. Of course there is a cost associated with this approach. Large companies operating on economies of scale and achieve great savings using this approach, by not tying up their network organization with administration of this problem. Small companies, however, with much smaller operating budgets are perhaps not be able to to economically use this option. But nevertheless even with smaller companies the duties of dealing with Absenteeism can be given to a specialized group of individuals working within that enterprise. Larger companies that do have economies of scale can use this approach as a benefit though data base management software and specialised personnel employees,and also with a staff of health care professionals that can assist in the preventative rehabilitation and the ongoing maintenance of health program within the company organization. Therefore the best outsourced companies dealing with large companies problems are multidisciplinary companies that have a staff of specialists in statistics and data analysis as well as dealing with personal problems in health care issues in a wide array ways that is at the same time is integrated to one function. The problems of Absenteeism are a reality in today's business culture. There are risks and benefits associated with the many ways to approach the problem. 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