Absenteeism Costs Companies More Than Ever

(RIVERWOODS, ILL., October 16, 2002) – Unscheduled absenteeism remains a dilemma for employers who are now paying more than ever for the costly problem of employee no-shows, according to the findings of the 2002 CCH Unscheduled Absence Survey conducted by CCH INCORPORATED (CCH), a leading provider of human resources and employment law information (hr.cch.com). And, more often than not, employees are using that "sick" time to tend to things other than a nagging headcold, the 12^th annual CCH survey found.

According to the latest CCH survey, conducted by Harris Interactive^®, the average per-employee cost of absenteeism climbed to an all-time high of $789 per year in 2002, up from $755 in 2001, while the absenteeism rate declined slightly to 2.1 percent from 2.2 percent in 2001.

The trend of most employees calling in "sick" for reasons other than physical illness continues.

The survey found that while Personal Illness was the single most common reason for last-minute no-shows (33 percent), reasons other than illness account for two-thirds (67 percent) of unscheduled absences, with nearly twice as many employees taking time off for Personal Needs (21 percent) in 2002 than last year.

Of significant concern to employers is how to address the non-health-related reasons that can keep workers off the job and cost large companies millions of dollars each year.

"No-shows take their toll both in direct wage dollars and lost productivity," according to CCH workplace analyst Lori Rosen, JD. "Employers ignoring these costs are missing the chance to control expenses, something most employers need to do given the current economy."

With 83 percent of companies surveyed believing that unscheduled absenteeism is likely to stay the same or get worse in the next two years, Rosen recommended that employers take preventative action to curb the problem through the effective use of absence control and work-life programs that maximize productivity and control costs.

"The cost of complacency is substantial," warned Rosen. "Employers have been clinging to traditional sick leave policies and disciplinary action for years. But the status quo is costing them more each year. They need to create policies and programs that accommodate the changing requirements of today’s workforce."

The CCH Unscheduled Absence Survey, conducted annually by CCH for the past 12 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 HR 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 25, 2002 through July 16, 2002, appear in the October 16, 2002, issue of CCH Human Resources Management Ideas & Trends, a newsletter for HR professionals.

The 2002 CCH Unscheduled Absence Survey found that direct dollars lost to unscheduled absenteeism on a per-employee basis have reached a record high of an average of $789 per employee on an annual basis, costing small companies as much as $60,000 a year, while the largest employers ante up more than $3.6 million.

This $789 per-employee cost represents an increase of nearly 5 percent over 2001 costs, and 29 percent since 2000. Specifically, costs rose from $610 in 2000 to $755 in 2001 before reaching this year’s high.

Employers also are setting more aside to pay for that unproductive time. Respondents reported that an average of 5.1 percent of their company’s budget is set aside to pay for unscheduled absenteeism, up from 4.2 percent in the 2001 survey.

Additionally, the survey found that the average amount organizations spend for unscheduled absences on an annual basis accounts for approximately 2.3 percent of their payroll expenditure, up from 1.7 percent in 2001.

Based on survey data, employers may be getting comfortable with a certain level of last-minute absences, as evidenced by relatively stable unscheduled absenteeism rates over the past three years of 2.1 percent in 2002, 2.2 percent in 2001 and 2.1 percent in 2000.

"If employers are only watching the rate, they are missing the fact that this problem is costing their company more than ever before," noted Rosen. "While recent absenteeism rates are fairly level, the cost of no-shows has climbed steadily in the past few years. With an aging, more experienced workforce, that trend is likely to continue."

Rosen points out that respondents were asked only for information about the direct payroll costs for absent employees. The associated costs of overtime pay for other employees, hiring temporary employees to cover for absent workers, lost productivity and low morale drain even more dollars from an organization.

According to the findings of the most recent CCH survey, the reason most employees call in sick at the last minute has more to do with a personal issue than physical illness. While Personal Illness was the leading single reason for unscheduled absences (33 percent), two out of three absences were for other reasons.

An increasing number of employees missed work at the last minute because of Family Issues (24 percent) and Personal Needs (21 percent) – with Personal Needs keeping people at home nearly twice as often in 2002 as in 2001, when it was 11 percent. Stress accounted for 12 percent of employee absences, and Entitlement Mentality 10 percent in 2002.

While employers can’t plan for every event that may affect their employees, they can implement programs that are flexible enough to address the real reasons why people don’t show up for work. And, increasingly, employers appear to be willing to help employees by introducing more flexibility into the workplace with a broader array of work-life programs.

According to the findings of the CCH survey, organizations now use an average of 7.3 work-life programs, up from 6.7 in 2001 and 3.4 in 2000.

In terms of the most used work-life programs, those used by the majority of respondents were Employee Assistance Plans (68 percent), Wellness Programs (54 percent), Alternative Work Arrangements (53 percent) and Leave for School Functions (52 percent). Rounding out the top five was Compressed Work Week, used by 49 percent of respondents.

Employee Assistance Plans in recent years have expanded in scope beyond personal crisis assistance to help employees with such issues as child and elder care.

Increasingly popular Wellness Programs help keep workers healthy and on the job with such things as health screenings, flu shots, health education, ergonomics training and more – all especially important as the workforce ages.

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 Alternative Work Arrangements, also known as flexible scheduling, (3.6) and Compressed Work Week (3.5). Leave for School Functions and On-Site Child Care were both rated 3.3 for effectiveness, while Employee Assistance Plans and Telecommuting tied with effectiveness ratings of 3.2.

The survey found that organizations continue to rank Paid Leave Banks (also known as paid time off) as the most effective absence control program, with an overall rating of 3.6. 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.

Employers gave Disciplinary Action and Buy Back programs effectiveness ratings of 3.4 each and Bonus program received a rating of 3.2. Under a Buy Back program, the employer "buys back" in cash or vacation time all or some of the employee’s unused sick time.

Most employers reported using multiple programs (on average 5.2) to help control absenteeism, with the most common being Disciplinary Action, in use at 93 percent of organizations.

Yearly Review and Verification of Illness were the next two most common programs, in use at 81 percent and 71 percent of organizations, respectively. Paid Leave Banks were in place at 59 percent of the organizations participating in the survey, as were Personal Recognition programs.

"If an employee’s only option for being absent is taking a sick or vacation day, the employee cannot schedule an absence for a medical appointment or to close on a new home purchase," noted Rosen. "When time off is flexible enough to allow employees to miss work for personal business, then those days or hours off can be scheduled and the employer can be prepared to cover the employee’s duties while he or she is away."

Overall, the survey found that full-time employees currently are granted 7.6 sick days per year and, on average, use 6.2 days. An average of 42 percent of employees take zero to two paid unscheduled absence days a year, 43 percent use three to eight days and 15 percent take nine or more days.

For most companies, the effects of September 11 did not seem to contribute to a change in unscheduled absenteeism rates, with only 14 percent of respondents indicating that their organization experienced an increase in worker no-shows since then.

As to where the unused time goes, 43 percent of employers that grant sick days allow employees to carry over unused sick days from one year to another, while 25 percent of employers allow employees to donate unused earned days to a leave bank for colleagues suffering from catastrophic illnesses.

About the Survey

The 2002 CCH Unscheduled Absence Survey, now in its 12th year, surveyed 333 human resource executives in U.S. companies and organizations of all sizes and across major industry segments in 43 states and the District of Columbia. 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, which was conducted online by Harris Interactive from June 25 to July 16, 2002. The data was 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.

To order the CCH Human Resources Management Ideas & Trends newsletter containing the 2002 CCH Unscheduled Absence Survey, call 800-449-9525 and ask for offer number 0628001. Price is $29.95, 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 its network of local market and opinion research firms, and various U.S. offices. EOE M/F/D/V

CCH INCORPORATED, Riverwoods, Ill., is a leading provider of employment law and human resources information and e-learning for HR professionals. The CCH Human Resources Group is among the nation’s most authoritative sources of employment law, including information on HR management, benefits, compensation and worker safety. CCH is a wholly owned subsidiary of Wolters Kluwer North America. The CCH web site can be accessed at cch.com. The CCH Human Resources Group site can be accessed at hr.cch.com.

nb-02-113

EDITOR'S NOTE: For more information, contact Sheri Cardo at 800-727-1133, ext. 1334 or Leslie Bonacum at 847-267-7153. Available to members of the press: 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/absenteeism. Also available to members of the press upon request, the new CCH book HR How-to: Work-Life Benefits.