Sick of absenteeism? Get rid of sick days

HR can reduce the costly effects of absenteeism if it revamps the organization's approach to time off. Here's how several companies restructured their sick-day plans and saw absences plummet. One even made it a game.

When it comes to your company's sick leave policy, keeping people honest can tax even the most experienced HR professional. Like it or not, most employees--even loyal veterans--consider sick leave theirs to take, no matter the condition of their health.

Unlike vacation and other scheduled time off, sick leave is among the hardest worker benefit to manage because it is, by definition, unanticipated. When a worker calls in sick right before a shift, his absence has a domino effect on everyone else's workload. Providing inducements that discourage employees from drawing on their accrued sick days at the first sneeze, and even making perfect attendance into a game, can help dramatically reduce all the bidden costs associated with your company's sick leave liability.

Consider these examples. The Lahey Clinic, a major health care center and teaching hospital in Burlington, Massachusetts, recently switched from a traditionally defined benefits system that considered sick time and vacation and holidays separate days off, to an earned time" program. At the Clean Air Agency, a state-funded, quasi-public environmental program in Seattle, professional staff members can take longer vacations by using their sick time conservatively.

And at Electric Boat, a major old economy defense contractor in Groton, Connecticut, a sick time lottery contest was introduced in 1994. Since its debut, the average number of sick days among salaried employees has dropped from 7.2 per year to 4.3, a 38 percent decrease.

Statistically, time away from work due to short-term illnesses takes a major toll on the nation's economy. In 1996, the latest year federal statistics are available, the country lost 3.6 million work days due to acute illness-everything from headaches and toothaches to pneumonia and the flu, the National Center for Health Statistics reports.

Cynthia Keaveney, a senior vice president and national practice leader with Aon Consulting in Ann Arbor, Michigan, says organizations of all sizes "often don't know what absenteeism is costing them. And if they do recognize they have a problem, they have a hard time computing the cost." Frequently this lack of accountability is because different departments are responsible for keeping track of the different types of time away from work, she says.

"Typically long-and short-term disability is handled by HR but worker's comp and return-to-work is in the realm of risk management," she adds. "Family medical leave, which is a growing concern for many organizations, is typically handled by the legal department."

As companies throughout the country struggle to maintain productivity in a slow economy, leave time programs that help control unplanned events like sickness, as well as planned absences such as vacation and holidays, are receiving renewed attention. At the same time, the demand from employees for more flexible leave time programs is growing dramatically.

Instead of traditional "designated benefits" programs which define sick time, holidays, and vacation time as separate times away from work, employers and their employees are favoring "paid time-off plans," or PTOs, systems which combine all time off into a pool employees can use as they wish.

The 2001 Survey of Employee Benefits, conducted by the Society for Human Resource Management, reports that 62 percent of the employers questioned now offer some form of PTOs. That's almost twice as many as in 1997.

Rolling sick time into "earned time" off

At the Lahey Clinic, Joan Robbio, the director of human resources, says the organization "found that a traditional program really encourages employees to abuse the system, to take sick time when they aren't really sick." Earned time includes fixed calendar holidays like Thanksgiving and the Fourth of July as well as paid vacations and unscheduled events like illness. "We want to treat our employees like the adults they are," she says. "Earned time is theirs to manage as they see fit."

The Lahey program is open to all full time employees and those part time workers on the schedule for at least 20 hours a week. It has been designed in exacting detail because it must work across a multi-skilled workforce in a business that operates all day, every day Eligible employees earn a specific number of earned time days per year depending on their scheduled hours of work, years of service, and position grade level. There are two types of absences for which an employee can draw from their earned time bank: scheduled and unscheduled time away from work. Absences due to military service, jury duty, or a death in the family are handled on a department-to-department basis, Robbio says.

Unscheduled use of earned time includes illnesses of less than five consecutive days or unanticipated emergencies. Scheduled earned time off like vacations must be approved by the employee's supervisor, Robbio continues. Workers are expected to use at least 20 days per calendar year for illness, holidays, or vacations but they can bank up to 1.5 times their annual calendar year accrual to a maximum of 520 hours.

In certain circumstances, earned time can even be sold back to the Lahey Clinic for cash." This is a real benefit for people where money is more important than the time off," Robbio says. From the institution's perspective, the key to a successful earned time program is the educational component. "We stress that managers have a responsibility to make sure everyone on their staff understands the program and that the time-off is properly accounted for. We stress that staff members have the responsibility to manage their earned time prudently and give their managers as much advance notice as possible so that the department can continue functioning efficiently."

That means that if a worker is out every Monday, he or she will face some questions from the boss, Robbio says.

Generally speaking, the system is so popular that staff members are careful not to ask more of managers than is reasonable because they don't want to lose the benefit, she adds. "We know it's working because we have fewer people calling in sick at the last minute. Beyond the benefit to the worker in controlling their work lives a little more, it represents a major cost savings to the institution because replacement workers are so expensive in the health care environment. We're also avoiding the morale problems that were created when managers were forced to ask their employees to work overtime at the last minute. As far as we are concerned, the traditional sick time system was a lose-lose proposition for everyone."

Using sick time as morale builder

For many companies, the desire to allow workers to gain some control over their work-life by using sick time as a fringe benefit is an obvious plus. "We felt we wanted to reward workers who make an effort to get their jobs done day in and day out no matter what is happening in their private lives," says Mary Anne Erickson, director of human resources at the Clean Air Agency. "Professional staffers can take longer vacations by using their sick time conservatively.

"We never believed this program would actually reduce the amount of time people took off. We saw it mostly as a worker benefit." Instead of 10 days of sick time and 10 days of vacation, the eligible managers in her agency now receive 18 "time off benefit" days to be used at their own discretion.

To come up with a fair number of base days for its consolidated time-off plan, Erickson says her agency looked at the average use of sick and vacation time for her industry. The benefit days accrue at the rate of one and a half days per month of employment, she says. The agency benefits most at the time of scheduling. Employees are asked to plan all their time-off days well in advance, except in the case of acute illness.

Erickson says she's not yet sure about the program's popularity. "It's great for people who never took much sick time because they can now put that time towards a longer vacation," she says. "It's a reward. It feels like they are getting extra vacation." The problem is for those who have relied heavily on sick time in the past. The new consolidated system means employees can potentially lose a portion of vacation time because of illness, she notes.

Making good attendance into a game

When Greg Angelini's kids take out the controllers for their prized video game unit, they have their father and his perfect attendance at work to thank. Angelini, a software engineering manager at Electric Boat Company, won $1,000 in his company's sick time lottery just in time for Christmas in 2001. With that unexpected bonus he was able to pay top price for the hottest toy of the year.

"I'm not a gambler but it sure was nice to get that check right before Christmas," says Angelini, who has worked for the defense contractor for 17 years. "And it was just as nice that the powers that be noticed that I've had perfect attendance, the fourth year in a row."

Electric Boat's sick time lottery is as remarkable for its simplicity to manage as for its popularity among employees, company officials say. The workforce incentive contest rewards workers who use less than average amounts of their sick time. But instead of handing out modest bonuses to every eligible employee, the company holds a bonus check lottery game with the lucky winners walking away with $500 to $2,500 each.

"We were aware of many companies which pay out cash to reward workers for holding their sick leave down," says Dan Clancy, the human resources manager credited with coming up with the contest idea. "I hit on the lottery because we wanted the awards to be substantial enough to hold people's interest. A game seems to make it all the more fun."

Robert Nardone, vice president for human resources, says that last year a full 1,400 workers out of an eligible pool of just over 3,900 used no sick time. In the 2001 lottery held last December, Electric Boat, which employs 9,850 unionized and salaried workers, awarded $150,000 to 195 people on its professional staff, in four separate bonus check raffles. Salaried workers become eligible for the lottery program if they use one percent or less of their accrued sick time, Nardone says.

Out of a pool of nearly 933 eligible workers, or 25 percent of those eligible who used no sick time in the past two years, 20 $2,500 prizes were awarded through the lottery. Those who had used no sick time in the last year competed for 75 $1,000 prizes and 50 $500 prizes. Prime parking spaces were handed out to another 25 and everyone eligible for the lottery received a $25 gift certificate to the company store.

Executives at Electric Boat turned to the human resources department for help in controlling the cost of sick time eight years ago when the company was facing a major restructuring.

Electric Boat, a division of the General Dynamics Corp., builds nuclear-powered submarines primarily for the U.S. Navy. The company engineered the first practical, underwater naval warship and since the early 1900's has dominated the international submarine market.

As a profitable and stable defense contractor, Electric Boat has always been a desirable place to work, Nardone says. But with the end of the Cold War in the early 1990s and a presidential administration focusing its attention on a rocket-based defense system, the company was forced to tighten its belt. The task of downsizing its workforce and decreasing its payroll was made more difficult because the average age of its workers was well over 40, Nardone says. "People land a job at Electric Boat and expect to stay for their entire careers. Workers who have been here 10, 15, and 20 years had a substantial amount of sick time coming to them, up to 130 days in some cases."

Where the front office saw a huge liability in the amount of sick time it might have to cover, the human resources department recognized an opportunity. "Even as we were downsizing we were still in a hiring mode for specialized workers and we knew we had to shed a traditional benefits program and move to a more flexible system, particularly if we wanted to continue to attract younger engineers," Nardone says. "They look for companies that allow them to manage their work time."

Nardone says the sick time lottery is matched with a liberal flex-time system that allows workers to make up loss work time whatever the reason. If Angelini needs to go to the doctor or leave work early to attend a child's sports event, he adjusts his working day to come in a few hours early or leave a few hours late, depending on the needs of his work group.

"Or say I was sick on Monday, I can make the time up later in the week," Angelini says. The group of 55 workers Angelini manages reduced its use of sick time by 37.6 percent since 1997 by allowing workers to make up unplanned time away from work." Although we are proud that 41 percent of our people have perfect attendance (now), we make it clear we don't want people coming to work sick." Nardone adds. "Together the sick time lottery and flex-time system help the employee take responsibility for getting their work done."

For more info on: Absenteeism Get eight ideas for reducing absenteeism at workforce.com/02/09/feature 5

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Employee absenteeism is a persistent and profit-draining issue. Findings in a recent Productive Workforce survey indicate that the annual cost of absenteeism to employers in the United States is from $30 to $50 billion. Survey participants reported that the top three causes of absenteeism were personal responsibilities, health problems, and inappropriate use of personal leave.

Productive Workforce lists the following best practices for addressing absenteeism:

* Work to get employee and employer buy-in.

* Design flexible work arrangements and/or arrangements for telecommuting.

* Implement improved technology systems so appropriate data can be captured.

* Create programs enabling employees to manage their health and the health of their dependents.

* Administer ergonomic and/or safety programs.

* Promote awareness about importance of absenteeism programs.

* Work with unions to develop mutually beneficial policies and programs.

* Provide adequate, timely data, and effective reporting.

* Publish consistent policies.

* Increase supervisor involvement in return-to-work issues.

Programs that slash costs and build morale.

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Before you throw out your current sick leave system, you must take your company's temperature, says Cory Sherman, an expert on absentee reduction programs at Buck Consultants Inc. in Atlanta.

"In my experience sick-time abuse can be reduced only through a careful analysis of its root causes because high levels of sick time are often a symptom of other problems," she says. "A programmatic change, no matter how well intended or how popular, isn't going to change a systemic or behavioral problem. That's why companies have such a tough time getting it right."

As an example, Sherman cites a major hotel management company that was experiencing extremely high absentee rates at one of the outlets in its chain. Was it possible the workers at one particular unit just got sicker more often? Or, was something else going on?

"The first thing we advised the company to do was to switch managers with another unit that had low absenteeism rates," Sherman says. "It didn't take long for the workers in Hotel A to get sick and for the workers in Hotel B to make a marvelous recovery. The problem wasn't the company's sick leave policy but rather a bad individual manager."

For companies that get serious about sick time abuse, they can expect to see about a four percent reduction in payroll costs, says Cynthia Keaveney, a time-away-from-work expert at Aon Consulting in Ann Arbor, Michigan. Keaveney agrees with Sherman that it takes planning and good communications to be successful.

Their collective advice:

* First, look at ail the areas of the time away from work benefits your company offers. Assess what each category is costing. Include sick time, vacation time, family medical leave, short- and long-term disability costs in your calculations.

* If sick time abuse seems high, diagnosis the problem. Consider whether it's the symptom of a behavioral issue such as a bad manager, or a problem with the sick time program itself.

* Traditional sick leave, which employees accrue as an "unearned benefit," is a concept your company may not want to sacrifice. Even if you know this benefit is being abused by a few employees, sick leave as a defined benefits plan may be worth keeping. It works as an important safety net that can inspire loyalty among others over the long run.

* What you do in one division may not work in another setting.

* If you decide to change programs, figure out exactly what message you want to send to employees. Some may object to making a serious benefit into a game, for example.

* Paid time off plans such as the one implemented at the Lahey Clinic inspire honesty on a day-to-day basis but can punish workers who really do get sick. That has been the experience at Seattle's Clean Air Agency. Consider such hybrid approaches as allowing the banking of some unused sick time from year-to-year, or matching it with a short-term disability program.

* Communicate your intentions to your staff. It is often not what the company does but how a new plan is presented that is behind a successful change.

Caroline Louis Cole is a freelance writer based in Lawrence, Massachusetts. E-mail editors@workforce.com to comment.

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