Absence management: Introduction

Section 1 of the Personnel Today Management Resources one stop guide to absence management, presents an overview of why managing absence should matter to employers. Other sections.

The effective management of absence and attendance is becoming an increasingly important issue for UK employers. In the private sector, there is growing recognition of the real impact of absenteeism on business performance and profitability. In the public sector, where absence levels have traditionally been higher, many organisations are now taking active steps to improve absence management to help reduce public spending.

How much does absence cost?

The costs of absence are significant, although they are often difficult to quantify precisely. However, as an illustration of the potential impact on employment costs, the 2004 survey by the Confederation of British Industry (CBI) reported that the number of working days lost in the UK during 2003 was 176 million, representing a total cost in lost productivity of some £11.6bn.

This figure represented an increase of around 6% on the previous year - the first such increase in five years. The survey estimated that the average cost of absence in the private sector was £450 per employee, while in the public sector, the average cost was £566, reflecting the higher average levels of absence per employee.

The CBI also pointed out that the total cost of public sector absence was in the order of £4bn. If public sector absence was reduced to the same level as that in the private sector, the saving to the UK taxpayer would be around £1bn. With these kinds of figures in mind, it is not surprising that the government has recently launched a major initiative to improve the management of absence across the public sector, or that major employers, such as Tesco and British Airways, have made high-profile statements about the need to reduce absence levels.

There is little doubt that effective absence management can have a substantial impact on bottom line organisational performance. Indeed, it is likely that the figures in the example right are understated, as they do not take account of the indirect effects of high absence levels - for example, the costs of hiring temporary replacement staff or the impact on quality or customer service. Although available data on the indirect costs of absence is relatively limited, evidence from the CBI and other surveys indicates that it may be three or four times' higher than the direct costs alone.

At the same time, absence from work is a sensitive and often problematic issue. As the foreword to the government's recent paper, Managing Sickness Absence in the Public Sector indicates, "the right to absence when sick is a central part of the 'contract' between employer and employee".

Equally, employers have obligations, both legal and moral, to ensure that employees are treated fairly, and that the nature or level of employees' work does not itself contribute to potential sickness. At a more pragmatic level, if employees feel obliged to struggle into work when genuinely ill, they risk worsening their condition or infecting others. Neither of these outcomes is desirable to the employer.

In addressing absence issues, therefore, employers often feel they are stepping into a practical, ethical and legal minefield, with no clear consensus on the nature or level of the problem or about how it should be addressed.

It is notable that while the CBI reports that employers believe unjustified absence accounts for some 15% of days lost, the TUC has actively challenged what it describes as the myth of 'sicknote Britain'. The TUC argues that UK employees take less time off than their European counterparts, and points to perceived failings on the part of employers, particularly in dealing with long-term sickness absence.

These different perspectives indicate that, at national level, there is no simple or one-dimensional response to the issue of absence. With individual organisations, the position is often equally problematic.

What is the problem?

Employers are frequently uncertain whether they have an absence 'problem' or whether their current levels of absence are 'acceptable'. They may have no precise idea of what impact absence is having on their business - the Chartered Institute for Personnel and Development (CIPD) reports that, among employers surveyed for its 2004 study of employee absence, only 46% monitor the cost of absence. They may have only limited understanding of the causes and dynamics of absence in the organisation. They may be tempted to adopt punitive approaches to absence management - for example, restricting the provision of occupational sick pay - but will be aware of their legal and ethical obligations, as well the potential impact on employee relations.

These difficulties become even more pronounced at the workplace level. Managers are often unsure whether individual absence is legitimate, and are commonly reluctant to investigate further into areas of potential personal sensitivity. Where absence appears to be justified, managers may be uncomfortable in taking action, even where the non-attendance is causing significant operational or performance difficulties. At the opposite extreme, it is common for over-zealous managers to make unwarranted assumptions about the legitimacy of absence, with the result being they end up unfairly victimising employees with genuine problems, medical or otherwise.

More generally, research into the nature and causes of employee absence indicates that, in practice, such absence is likely to reflect a diverse mix of individual and organisational factors.

It may, for example, be necessary to take account of organisational factors such as culture, management style, job design, pay levels or location - all of which may influence employees' willingness to attend work.

If an employee feels otherwise under-valued, badly treated or poorly motivated, or simply has a difficult journey to work, then a minor illness may feel sufficient justification for staying at home. On the other hand, an employee who has a generally positive view of their working conditions is far more likely to attend work despite feeling some physical discomfort.

Therefore, if we are to address absence effectively, it is essential that we have a full understanding of the organisational and personal factors that contribute to it. There is no one-size-fits-all solution that can be applied to reduce absence levels across all organisations. Indeed, an inappropriate approach to absence management can easily prove counter-productive.

If there are severe problems with, say, organisational culture or management style, then a punitive or disciplinary approach is likely to demotivate staff further and so worsen the problem. Conversely, if existing rules or procedures are not being effectively enforced, then a supportive approach to absence - such as the payment of attendance bonuses - may be perceived simply to legitimise current poor practice.

In short, in addressing the issue of absence, employers need to adopt an approach that is rigorous, fair and based on a full understanding of the issues and circumstances involved.

Against this background, the purpose of this guide is to provide employers with a step-by-step approach to understanding and addressing their absence issues, in a way that appropriately balances the interests of individual employees against the needs of the business or operation.

On this basis, employers will be able to develop absence policies and practices appropriate to the distinct needs and characteristics of their organisation.

Case study example: Can absence management improve profits?

Yes. One medium-sized manufacturing company calculated that every 1% of absence cost the company around £100,000 a year on the bottom line. A targeted reduction in absence levels, achieved at minimal cost through the improvement of absence procedures, from nearly 10% to around 6% produced a substantial improvement in profitability - a return unmatched by any other form of investment in the business