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Is Absenteeism Hurting Your Bottom Line?

December 26, 2008 By: CartPro Category: Business Tips, Safety and Ergonomics

The nation’s 300 largest employers reported in a 2007 survey by research firm CCH Inc. that absenteeism costs their businesses more than a quarter million dollars annually in direct payroll costs. Add in lost revenue from lower productivity and unscheduled absences can have a significant negative impact on a business’ bottom line. In these recessionary times, absenteeism can make already slim profits disappear.

Only a third of all work absences are due to illness, said Susan Frear, director of education for the Dallas office of the Society for Human Resource Management. “The rest of the absences are related to having to be someplace else or they just don’t feel like coming in. So a lot has to do with the culture of the place.”

Changes in management style or corporate procedures can make a significant difference in absenteeism rates. “Take a hard look at the climate,” suggests Barb Ashbaugh, owner of Ashbaugh’s Trade Secret, a performance management company. Authoritarian managers “who make employees feel it’s their way or the highway” cause higher levels of absenteeism, Ashbaugh noted. Companies that count “occurrences” instead of individual days absent encourage employees to sneak in a couple of extra days off, warned Nancy Glube, an Atlanta human resources executive.

Retail giant J.C. Penney Co. is trying a new approach that shows promise for both large and small businesses. With 1,500 workers calling in “sick” and another 1,200 out on disability each day, Penney executives were concerned about the impact of growing absenteeism rates on the company’s profit margin. This fall they began project PowerLine. When an employee is absent for 3 days, the PowerLine team swings into action. They communicate with the employee to determine the nature of the absence and whether the employee qualifies for health insurance, workers’ compensation or short-term disability benefits. The team notifies store and department managers and¬†insurance carriers and sends the employee the appropriate forms to complete. Daily absenteeism rates have dropped dramatically.

What has made the PowerLine program so successful in such a short time is the constant follow-up that continues until the employee returns to work. “I’ve found that when someone goes out on disability, that person undergoes a significant event in their life,” said Penney’s benefit manager Jim Cuva, “and if no one checks on them to see how they’re doing, they could stay out longer than necessary.” The PowerLine program is Penney’s way of “letting them know we care.”

Employees who know they’re valued work harder, are more productive and are absent less frequently. Making the effort to create a positive work environment can positively impact your bottom line. On Monday, we’ll talk about how implementing ergonomic practices in your workplace can improve worker morale, decrease worker injury¬†and boost your bottom line.

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