Unscheduled Employee Absenteeism Hits Lowest Point in CCH Survey History

2003 CCH Unscheduled Absence Survey

Morale Matters: More Last-Minute No-Shows, Higher Costs, at Companies with Poor Morale

(RIVERWOODS, ILL., October 22, 2003) -- The rate of unscheduled absenteeism fell to an all-time low of 1.9 percent, according to the findings of the 13th annual CCH Unscheduled Absence Survey conducted by CCH INCORPORATED (CCH), while the average annual cost to employers of last-minute no shows dropped to $645 per employee. CCH is a leading provider of employment law information and software (hr.cch.com) and a Wolters Kluwer company.

According to the 2003 CCH Unscheduled Absence Survey, conducted by Harris Interactive, the absenteeism rate declined to 1.9 percent in 2003 from 2.1 percent in 2002 and the average annual per-employee cost of absenteeism dropped to $645 from an all-time high of $789 in 2002. The cost of employee no-shows can be more than a million dollars annually for large companies.

Most employees taking unscheduled time continue to do so for reasons other than actual illness. The CCH survey found that while Personal Illness is still the single most common reason for last-minute no-shows (36 percent), nearly two-thirds (64 percent) of unscheduled absences are due to Family Issues (22 percent), Personal Needs (18 percent), Entitlement Mentality (13 percent) and Stress (11 percent).

The current economy may be among the factors in the overall reduced rate and cost of absenteeism.

"Employees may be more fearful of taking off time given the tight job market," said CCH workplace analyst Lori Rosen, JD. "It’s also worth noting that costs are down significantly, which is in part a result of the fact that employers have been aggressive over the past year at finding different ways to control wages. For example, many employees who are now coming back into the workforce are doing so at a lower salary."

Even though fewer workers are calling in sick overall, those organizations reporting low employee morale struggle with higher unscheduled absenteeism rates and costs. The rate of unscheduled absenteeism is 17 percent higher among companies with Poor/Fair morale compared to those with Good/Very Good morale.

The CCH Unscheduled Absence Survey, conducted annually by CCH for the past 13 years, is the definitive survey on absenteeism in the workplace and the only one that measures costs associated with unscheduled absences.

Conducted for CCH by Harris Interactive, the worldwide market research and consulting leader, the survey reflects experiences of human resource executives in U.S. companies and organizations of all sizes and across various businesses and not-for-profit industry sectors. (See "About the Survey" at the end of this release.)

Results of the survey, which was conducted June 16, 2003 through July 9, 2003, appear in the October 22, 2003, issue of CCH Human Resources Management Ideas & Trends, a newsletter for HR professionals.

The Power of Positive Morale

As noted, the 2003 CCH Unscheduled Absence Survey found that employee morale can affect a company’s absenteeism rate. Organizations reporting Good/Very Good morale experienced a 1.8-percent rate of unscheduled absences while those reporting Poor/Fair morale had a rate of 2.1 percent. Twelve percent of respondents indicated morale at their company was Very Good, 44 percent identified it as Good, 34 percent as Fair and 10 percent reported Poor morale.

This low morale has a high price tag. Overall, the CCH survey found that employers set aside an average of 4.4 percent of their budgets for absenteeism. When morale is factored in, however, results vary significantly. Organizations with Poor/Fair morale set aside 5.3 percent of their budgets to cover the costs of absent workers compared to 3.7 percent in organizations with Good/Very Good morale.

Morale also influences the reasons people call in sick at the last minute. Organizations reporting Poor/Fair morale were more likely to experience unscheduled absenteeism due to Stress (14 percent) and Entitlement Mentality (16 percent) than organizations reporting morale as Good/Very Good (9 and 11 percent, respectively).

Workers at companies with low morale also are more likely to show up for work sick, according to the survey (see "Presenteeism" section of this release). Employers with low morale reported that 33 percent of unscheduled absences were due to Personal Illness, compared to 39 percent at companies with Good/Very Good morale.

The effects of low morale are reflected across the board in the CCH survey. For example, while only 20 percent of organizations reporting Good/Very Good morale believe that unscheduled absenteeism is a serious problem for them, 41 percent of organizations reporting low morale find it a serious issue.

Additionally, 34 percent of companies with Poor/Fair morale reported that their unscheduled absences increased over the past two years and 38 percent believed that unscheduled absences would increase in the future. Only 15 percent of companies with Good/Very Good morale reported increased absenteeism and only 14 percent believed their absences would rise in the future.

"This should be a real wake-up call for employers who think employee morale doesn’t matter or can easily be addressed," said Rosen. "Morale does matter and poor morale can have a very evident impact on the bottom line."

Programs That Keep People Showing Up for Work

In past years, employers have introduced greater flexibility into the workplace with an array of work-life programs — employer-sponsored benefit programs or initiatives to help employees balance the dual demands of their professional and personal lives. The CCH survey shows that companies continue to use a combination of work-life and absence control programs to manage unscheduled absenteeism.

This year’s results indicate, however, that employers’ commitment to work-life programs may be tapering off just as companies are starting to see the long-term payoff in reduced absenteeism and associated costs.

"The economy is a likely factor in this year’s further decrease in the absenteeism, rate," said Rosen. "However, given that this is the fourth year the rate has been hovering around 2 percent, it also may be that employers are now realizing results from the absence control and work-life programs they put in place in the past few years."

Noting the decline in use of work-life programs overall, Rosen cautioned that, "Policies that address employees’ needs can benefit employers in the long run by raising morale and decreasing unscheduled absences. To cut back on those initiatives may backfire and place employers at risk once the economy rebounds."

Work-life Programs

According to the CCH survey, organizations now use an average of 7.0 work-life programs, down from 7.3 in 2002. Of particular note, is the decline in the number of employers offering programs that provide employees with greater flexibility.

Of the programs ranking highest in curbing unscheduled absences, four of them ― Alternative Work Arrangements, Compressed Work Week, Job Sharing and Telecommuting ― provide employees with greater control over when and where they work. While Alternative Work Arrangements showed a 6-percent increase in use over 2002, the other programs experienced declines in use by organizations: Compressed Work Week, down 18 percent; Job Sharing, down 19 percent; and Telecommuting, down 4 percent.

"Layoffs have resulted in fewer employees on the job and, in many cases, more available office space at employers’ main sites. As a result, employers may be more demanding about having employees on-site during business hours," said Rosen. "This, combined with the decrease in use of programs that help people balance their professional and personal lives, may put greater strains on employees and, ultimately, morale — both of which we know will translate to higher absenteeism and higher costs."

The most popular work-life programs used by the majority of respondents are Employee Assistance Plans (67 percent), Alternative Work Arrangements (56 percent), Leave for School Functions (56 percent) and Wellness Programs (51 percent). Rounding out the top five was Telecommuting (45 percent).

On a scale of 1 to 5 (with 5 being most effective), the work-life programs ranked highest for reducing unscheduled absences are Alternative Work Arrangements, also known as flexible scheduling (3.5), Leave for School Functions (3.5) and Compressed Work Week (3.4). Job Sharing came in next at 3.2 and On-site Child Care and Telecommuting tied at 3.1.

Notably, organizations reporting Good/Very Good morale rated the overall effectiveness of all policies and programs 31 percent higher, at 3.4, than did their counterparts with Poor/Fair morale, at 2.6.

Effectiveness and Use of Work-life Programs

Work-life Program

Effectiveness Rating
(1:Not Very Effective to 5:Very Effective)

Percent Use

Alternative Work Arrangements

3.5

56%

Leave for School Functions

3.5

56%

Compressed Work Week

3.4

40%

Job Sharing

3.2

30%

On-site Child Care

3.1

21%

Telecommuting

3.1

45%

Employee Assistance Plans

3.0

67%

On-site Health Services

2.8

28%

Wellness Programs

2.8

51%

Fitness Facility

2.8

43%

 

Absence Control Programs

While respondents reported a decline in the use of work-life programs, they have increased the use of absence control programs, now using 5.6 such programs, up from 5.2 last year. Disciplinary Action remains the single-most used absence control program, in place at 96 percent of organizations.

The other leading absence control programs in use are Yearly Review (84 percent), Verification of Illness (75 percent), No Fault (62 percent) and Paid Leave Banks (59 percent).

Paid Leave Banks (also known as Paid Time Off) continue to be the most effective absence control program, earning a rating of 3.6 on a scale of 1 to 5. Paid Leave Banks provide employees with a bank of hours to be used for various purposes instead of traditional separate leave programs for sick, vacation and personal time, and are used more often in larger organizations.

Employers gave Disciplinary Action and Buy Back programs effectiveness ratings of 3.3 each, followed by Bonus programs, with a rating of 3.1. Under a Buy Back program, the employer "buys back" in cash or vacation time all or some of the employee’s unused sick time. While Disciplinary Action is almost unanimously used, fewer than one-half of companies (48 percent) report using Buy Back programs.

"Employers need to weigh the pros and cons of various absence programs and determine the combination that works best for them," said Rosen. "Paid Leave Banks are popular among both employees and employers because they offer employees more flexibility in how they use their time off. Rather than calling in ‘sick’ to use a designated sick day for some other personal reason, employees can generally give advance notice of an absence. It’s a win-win situation."

Again, organizations with Good/Very Good morale rated the overall effectiveness of absence control policies and programs 31 percent higher, at 3.4, than did their counterparts with Poor/Fair morale, at 2.6.

Effectiveness and Use of Absence Control Programs

Absence Control Program

Effectiveness Rating
(1:Not Very Effective to 5:Very Effective)

Percent Use

Paid Leave Bank

3.6

59%

Disciplinary Action

3.3

96%

Buy Back

3.3

48%

Bonus

3.1

52%

No Fault

3.0

62%

Verification of Illness

2.9

75%

Yearly Review

2.9

84%

Personal Recognition

2.5

62%

 

Where Does the Time Go?

This year’s survey found that full-time employees were offered the same number of sick days as in 2002, but took fewer of them. On average, companies granted 7.6 sick days to employees in 2003 and employees used 5.6 days, down from 6.2 days taken in 2002. This year, an average of 48 percent of employees took zero to two paid unscheduled absence days, 40 percent used three to eight days and 12 percent took nine or more days.

Presenteeism: When Not Calling in Sick Becomes a Problem

Presenteeism is a new term used by human resource professionals to describe circumstances in which employees come to work even though they are ill, posing potential problems of contagion and lower productivity. This year, for the first time, respondents to the CCH survey were asked whether presenteeism is a problem in their organizations and nearly half (44 percent) said yes.

The study again found morale had an impact: Despite higher rates of unscheduled absenteeism overall, companies with low morale have more ill workers showing up for work. In fact, 52 percent of organizations with Poor/Fair morale reported presenteesim was a problem, while just 38 percent of organizations reporting Good/Very Good morale saw presenteeism as an issue.

"With fewer people doing the work, employers need greater productivity from each person. Employees may feel pressured not to take time off or, on their own, may simply feel they’re too busy to miss work, even if they’re legitimately sick," said Rosen.

"But when employees go to work sick, they risk infecting their co-workers and they’re also probably not going to be very effective. Presenteeism is emerging as a new issue that employers need to learn how to manage."

About the Survey

The 2003 CCH Unscheduled Absence Survey covering 436 human resource executives in U.S. companies and organizations of all sizes and across major industry segments in 47 states and the District of Columbia was conducted online by Harris Interactive from June 16, 2003 through July 9, 2003. The survey reflects experiences of randomly polled organizations with an estimated total of nearly two million employees. The CCH Human Resources Management Ideas & Trends newsletter sponsored the survey. The data were weighted to reflect industry distribution as represented in the Society for Human Resource Management.

Mean absence rates were calculated by dividing total paid-unscheduled absence hours by total paid-productive hours. Scheduled absences, such as vacation, legal holidays, jury duty, personal time and bereavement leave were not included. These costs to companies only reflect the direct payroll costs for absent employees; the associated costs of overtime pay for other employees, hiring temporary employees to cover for absent workers and lost productivity add to the considerable financial impact of low morale to an organization.

To Obtain a Copy of the Survey

To order the CCH Human Resources Management Ideas & Trends newsletter containing the 2003 CCH Unscheduled Absence Survey, call 800-449-9525 and ask for offer number 06280001. Price is $34.95 plus tax, shipping and handling.

About Harris Interactive

Harris Interactive (www.harrisinteractive.com) is a worldwide market research and consulting firm best known for The Harris Poll, and for pioneering the Internet method to conduct scientifically accurate market research. Headquartered in Rochester, New York, U.S.A., Harris Interactive combines proprietary methodologies and technology with expertise in predictive, custom and strategic research. The Company conducts international research through wholly owned subsidiaries—London-based HI Europe (www.hieurope.com) and Tokyo-based Harris Interactive Japan—as well as through the Harris Interactive Global Network of local market- and opinion-research firms, and various U.S. offices. EOE M/F/D/V

About CCH INCORPORATED

CCH INCORPORATED, Riverwoods, Ill., is a leading provider of employment law and human resources information and software for HR professionals. The CCH Human Resources Group is among the nation’s most authoritative sources of employment law and human resources information. CCH is a Wolters Kluwer company. The CCH web site can be accessed at cch.com. The CCH Human Resources Group site can be accessed at hr.cch.com.

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