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Employers See Decline In Unscheduled Employee Absences, But Continued High Cost Of No-shows Still Plagues Employers

Rate Declines, But Costs Continue to Inch Upward

Most Employees Staying Home For Reasons Other Than Physical Illness

(RIVERWOODS, ILL., October 19, 2000) – Unscheduled employee absenteeism declined for the second consecutive year, reaching the lowest level in 10 years, but the high cost of worker no-shows continued to hit employers hard, according to the findings of the 2000 CCH Unscheduled Absence Survey conducted by CCH INCORPORATED (CCH), a leading provider of human resources and employment law information, with Harris Interactive.

While the downward trend is encouraging – the average rate dropped to 2.1 percent in 2000 from 2.7 percent in 1999 – the average per employee cost of absenteeism stubbornly stayed at slightly more than $600 per year, continuing to cost employers anywhere from $10,000 for very small organizations to over $3 million annually for large organizations.

Of ongoing concern to employers is the reason why employees call in sick at the last minute. Organizations cited "Personal Illness" as a reason for unscheduled absences less than half the time, meaning that most employees are missing work for reasons other than their own physical health. Only 19 percent of organizations believe that absence rates will improve further over the next two years, and respondents indicated that the time is right for employers to try new approaches to combat the costly problem of unscheduled absenteeism.

"While the continuing downward trend in unscheduled employee absenteeism is certainly good news for employers, it continues to be a problem that no organization can afford to ignore – either from a cost or productivity standpoint," said Nancy Kaylor, a workplace analyst for CCH’s Human Resources Group. "Facing the tightest labor market in almost 50 years, organizations are understaffed and already face a significant challenge running their businesses with many positions unfilled. When someone calls in ‘sick’ at the last minute, there’s no one on the bench to fill in for him or her. The work is simply not going to get done."

The good news, says Kaylor, is that through the effective use of absence control and work-life programs, companies can control unscheduled absences to maximize productivity and manage business costs.

The CCH Unscheduled Absence Survey, conducted annually by CCH for the past 10 years, is the definitive survey on absenteeism in the workplace and the only one that measures costs associated with unscheduled absences.

The 2000 CCH Unscheduled Absence Survey was conducted for CCH by Harris Interactive, the global leader in online market research. 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. (For more information, see "About the Survey" at the end of this release.) The survey results will appear in the November 1 issue of CCH Human Resources Management Ideas & Trends, a biweekly newsletter for HR professionals.

Detailed Findings

Although still hovering around a rate of 2 percent, the overall rate of unscheduled absenteeism is down from 2.7 percent in 1999 to 2.1 percent in 2000. The survey also found that how employees feel about the workplace, their position and their employer may affect whether or not they are likely to call in sick at the last minute. The average rate of absenteeism at companies with "good" to "very good" morale was 1.8 percent, while companies with "fair" to "poor" morale experienced a rate of 2.8 percent.

On average, those surveyed indicated that 41 percent of employees take zero to two paid unscheduled absences a year; 43 percent use three to eight days; and 13 percent take nine or more days.

As to why employees are not showing up for work, more often than not, calling in "sick" has less to do with one’s own physical health than personal issues.

While Personal Illness topped the list as the single most common reason for unscheduled absences at 40 percent, reasons other than illness accounted for 60 percent of the last-minute absences.

Family Issues was the next most cited reason, at 21 percent, with Personal Needs close behind at 20 percent. Together, the two reasons account for over 40 percent of no-shows. Respondents reported that 14 percent of unscheduled absences at their companies are as a result of employees’ Entitlement Mentality, with 5 percent of employees calling in sick to work because of Stress.

Employers Fail to Stem Rising Absenteeism Costs

When overall costs were analyzed, the 2000 CCH Unscheduled Absence Survey found that direct dollars lost to absenteeism on a per employee basis increased slightly from $602 per employee per year in 1999 to $610 in 2000. The survey found that the average amount companies spend for unscheduled absences on an annual basis accounts for approximately 1.3 percent of their payroll expenditures. In addition, employers reported that as a percentage of their company’s budget, an average of 2.6 percent is set aside to pay for absenteeism.

While respondents were asked only for information about the direct payroll costs for their organizations’ absent employees, other costs associated with unscheduled absenteeism also can greatly affect an organization’s bottom line. These costs include overtime pay for other employees, hiring temporary employees to cover for absent workers and low morale.

Lost productivity also is a key issue, especially for organizations whose employee resources are already over-extended.

"Employers can only do so much to control the effects of the current labor shortage," said Kaylor. "As many organizations will attest, they simply cannot find people to hire for the open positions they have. But, companies can keep productivity levels high and improve earnings by more effectively managing the workforce they have. By implementing appropriate absence control and work-life programs, organizations can help employees balance the demands of their work and personal lives."

Organizations Challenged to Align Program Effectiveness and Use

To better understand how companies can reduce unscheduled absences, the 2000 CCH Unscheduled Absence Survey also asked employers about their experiences with work-life and absence control programs. In many cases, the survey found that programs perceived to be effective by companies are not the ones most used.

"It’s clear that many factors contribute to unscheduled absences and there is no single policy that is going to solve that problem for every company," said Kaylor. "The challenge for organizations is to balance performance goals with what is important for workers and implement the right mix of effective work-life and absence control practices that meet both those needs."

Work-life Programs

On a scale of one to five (with five being most effective), the work-life programs ranked highest by human resource professionals for reducing unscheduled absences were Flexible Scheduling (3.8) and Compressed Work Week (3.8). Leave for School Functions and On-site Health Services tied for the next most effective programs (3.6), with Job Sharing and Telecommuting following closely (3.5). Employee Assistance Programs, Work-life Seminars and Wellness Programs each received an effectiveness rating of 3.0, while Child Care Referral Programs received a rating of 2.8.

On average, employers reported that they have 3.4 work-life programs in place. The survey also found, in general, that the organizations with "good" to "very good" morale tended to offer a greater number of work-life programs (3.6) than those who assessed their organization’s morale to be "fair" to "poor" (3.1).

As for what organizations put into practice, nearly three-quarters (73 percent) of the organizations surveyed say they offer an Employee Assistance Program.

Among the six top-rated programs for effectiveness, only Flexible Scheduling also is used by a majority of respondents. Two-thirds (66 percent) of the companies surveyed use Flexible Scheduling. However, another of the leading work-life programs seen to reduce unplanned time off, Compressed Work Week, was offered by only 28 percent of responding organizations.

Over 40 percent of the companies surveyed have Wellness Programs in place (41 percent), even though the effectiveness of the programs overall was only seen as average.

Other work-life programs in use by U.S. employers are Job Sharing (25 percent), Leave for School Functions (24 percent), On-site Health Services (23 percent) and Telecommuting (20 percent), Work-life Seminars (15 percent) and Child Care Referral Programs (14 percent).

Paid Leave Banks (also known as Paid Time Off Programs) continue to be seen by HR professionals as the most effective absence control program (3.9). Paid Leave Banks provide employees with a bank of hours to be used for various purposes instead of traditional separate accounts for sick, vacation and personal time.

No-Fault Systems, which limit the number of unscheduled absences allowed, regardless of circumstances, and take specific disciplinary actions if that number is exceeded, are seen as the next most effective program, with a rating of 3.7.

Employers found Disciplinary Action to be the next most effective program, (3.5), with Buy Back programs close behind (3.4). Under a Buy Back program employees are compensated for the allotted time off that they do not use.

Employers gave the Yearly Review process a 3.2 effectiveness rating, with Personal Recognition and Bonus programs tied at 3.1.

Although Paid Leave Banks were rated the most effective absence control program by survey respondents, under a quarter (21 percent) of the organizations have put them into place. Disciplinary Action ranks as the most-used program by employers when addressing absence problems, with 88 percent of the survey respondents reporting use. Over half of the respondents (58 percent) use the Yearly Review process to deal with absenteeism. Thirty-three percent of the organizations surveyed use Personal Recognition programs to combat costly absenteeism. Other programs in place include No Fault (31 percent), Bonus (21 percent) and Buy Back (17 percent).

Where Does the Time Go?

Overall, the survey found that employees are granted 8.8 sick days per year, and, on average, use 4.7 days. As to where the unused time goes, 51 percent of employers allow employees to carry over unused sick days from one year to another.

The number of employers that allow employees to donate unused earned days to a leave bank for colleagues suffering from catastrophic illnesses appears to be dwindling. Only 17 percent of the employers have such a program in place, down from 31 percent in 1999.

Looking Ahead, Most Organizations See No Improvement

Of the organizations surveyed, 41 percent consider unscheduled absenteeism to be a serious problem for them. And, while absenteeism declined overall in 2000, less than one-fifth (19 percent) of respondents believe there will be further improvement in the future. Most organizations surveyed (61 percent) believe there will be no improvement in the near future, while 20 percent believe the rate is likely to rise.

With so many organizations concerned about the cost and productivity effects of absenteeism, and most believing there will be no short-term improvement, Kaylor says the time has come for organizations to take action.

"Clearly, the survey findings say to employers: There’s ‘good news’ and there’s ‘bad news’ here," said Kaylor. "The bad news is that the rate continues to hover at 2 percent, meaning that much needed human resources are not on the job. The good news is that there’s an opportunity for employers to make further inroads against unscheduled absenteeism.

"With 60 percent of the no-shows due to reasons that can be managed through effective work-life and absence control programs, organizations have within their reach the tools to fix this problem," said Kaylor. "The key is understanding your employees and the issues they face, and implementing programs and policies that are consistent with and responsive to their needs."

About the Survey

The 2000 CCH Unscheduled Absence Survey, now in its 10th year, surveyed 150 human resource executives in U.S. companies and organizations of all sizes and across major industry segments in 41 states and the District of Columbia. The survey reflects experiences of randomly polled organizations with an estimated total of 899,425 employees. Mean absence rates were calculated by dividing total paid-sick hours by total paid-productive hours. Scheduled absences, such as vacation, legal holidays, jury duty, personal time and bereavement leave were not included.

CCH Human Resources Management Ideas & Trends newsletter sponsored the survey, which was conducted by Harris Interactive.

To Obtain a Copy of the Survey

Copies of the CCH Human Resources Management Ideas & Trends newsletter containing the complete 2000 CCH Unscheduled Absence Survey are available by calling 800-449-9525, and asking for offer number 06280001. Price is $29.95, plus tax, shipping and handling.

About Harris Interactive

Harris Interactive (Nasdaq: HPOL), the global leader in market research, uses Internet-based and traditional methodologies to provide its clients with information about the views, experiences, behaviors and attitudes of people worldwide. Known for its Harris Poll, Harris Interactive has over 40 years experience in providing its clients with market research and polling services including custom, multi-client and service bureau research, as well as customer relationship management services.

Through its US and Global Network offices, Harris Interactive conducts research in over 80 different countries in more than 30 different languages. Harris Interactive uses its proprietary technology to survey its database of more than 7 million online panelists. For more information about Harris Interactive, please visit its Web site at http://www.harrisinteractive.com.

About CCH INCORPORATED

CCH INCORPORATED, Riverwoods, Ill., is a leading provider of employment, tax and business law information, software and e-learning for human resource, accounting, legal, securities, health care, banking and small business professionals. The company’s Human Resources Group is among the nation’s most noted authoritative sources of employment law, including information on benefits, compensation, worker safety and human resources management. Its publications and services for human resource professionals include Human Resources Management, Pension Plan Guide, Benefits Guide, Payroll Management Guide and Shared Learning™ interactive training. CCH is a wholly owned subsidiary of Wolters Kluwer U.S. The CCH web site can be accessed at www.cch.com. The CCH Human Resources site can be accessed at http://hr.cch.com.

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• Charts and graphs depicting the full range of survey data.
• This release and related information are posted in the CCH Press Center: www.cch.com.