Contact Information

2004 CCH Unscheduled Absence Survey

Unscheduled Employee Absenteeism Rises to Five-Year High

Low Morale Continues to Take Toll in Higher Costs, Rates of Absence

Four Generations Now on the Job: Curbing Future Absenteeism May Require New Look at Workforce Demographics

(RIVERWOODS, ILL., October 7, 2004) – The rate of unscheduled absenteeism has climbed to a five-year high of 2.4 percent, according to the findings of the 14th annual CCH Unscheduled Absence Survey by CCH INCORPORATED (CCH), with last-minute no-shows costing organizations an average of $610 per employee. CCH is a leading provider of employment law information and software (hr.cch.com) and a Wolters Kluwer company. Most employees who fail to show up for work, however, aren’t physically ill, according to the survey. In fact, only 38 percent of unscheduled absences are due to Personal Illness, while 62 percent are for other reasons, including Family Issues (23 percent), Personal Needs (18 percent), Stress (11 percent) and Entitlement Mentality (10 percent).

According to the 2004 CCH Unscheduled Absence Survey, conducted for CCH by Harris Interactive®, the absenteeism rate rose to 2.4 percent in 2004 up from 1.9 percent in 2003, while the average annual per-employee cost of absenteeism declined slightly to $610, from $645 in 2003. The annual cost of employee no-shows can range from an estimated $60,000 for small employers to over a million dollars annually for large companies.

 “The tight economy seems to have helped companies in holding the per-employee cost of absenteeism steady, but with the rate of unscheduled absences increasing, the overall out-of-pocket cost to employers rises accordingly,” said Lori Rosen, J.D., CCH workplace analyst, and author of HR Networking: Work-Life Benefits.  “This trend makes it all the more important to closely examine why employees aren’t showing up for work and what work-life and absence control programs can be used to help stem the tide.”

One trend that also may be influencing the higher rate of unscheduled absences is the fact that the number of employers allowing employees to carry over sick time from one year to the next is trending downward and has dropped from more than one-half of companies (51 percent) in 2000 to 37 percent in 2004.  As a result, employees may be saying, “I’d rather use it than lose it,” noted Rosen.

Companies with low morale saw significantly higher rates and costs of unscheduled absences.  In fact, rates of unscheduled absenteeism are more than one-third (35 percent) higher among companies with Poor/Fair morale (2.9 percent) than those with Good/Very Good morale (1.9 percent).

The survey also found that organizations increased the number of work-life programs offered, after two years of pulling back on such benefits. Surprisingly, however, about one fourth (23 percent) of those surveyed expect demographic changes in their workforce will affect the work-life programs offered by their company.

“We know with certainty today that morale has an impact on unscheduled absence rates and the associated costs to employers.  Now, with a workforce that for the first time includes four generations of employees – all at different life stages with different needs for balancing their work and personal lives – it is concerning that little attention is being given to the intergenerational issues in planning, developing and revising work-life programs.  This short-sightedness could have long-term ramifications, not just on the costs and rates of absenteeism, but on many other issues around recruitment, retention and morale,” said Theresa Houck, a CCH work-life benefits analyst. The CCH Unscheduled Absence Survey, conducted annually by CCH for the past 14 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 appear in the October 6, 2004, issue of CCH Human Resources Management Ideas & Trends, a newsletter for HR professionals.

Morale Continues to Make a Difference

The effects of morale are reflected across the board in the CCH survey. As noted, the 2004 CCH Unscheduled Absence Survey found that employee morale can affect a company’s absenteeism rate. Organizations reporting Good/Very Good morale experienced a 1.9-percent rate of unscheduled absences while those reporting Poor/Fair morale had a rate of 2.9 percent. Similar to last year, 60 percent of respondents indicated morale at their company as Good/Very Good while 40 percent rated morale as Poor/Fair.

This low morale has a high price tag. Overall, the CCH survey found that employers set aside an average of 4.7 percent of their budgets for absenteeism. When morale is factored in, however, organizations with Poor/Fair morale set aside 4.9 percent of their budgets to cover the costs of absent workers compared to just 4.0 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 (15 percent) than organizations reporting morale as Good/Very Good (10 percent). Also, while only 17 percent of organizations reporting Good/Very Good morale believe that unscheduled absenteeism is a serious problem for them, 43 percent of organizations reporting low morale find it a serious issue.

Additionally, more than one-third (37 percent) of companies with Poor/Fair morale reported an increase in unscheduled absences over the past two years while only 15 percent of companies with Good/Very Good morale reported an increase.

“It’s clear that unhealthy work environments breed undesirable work practices.  Employers need to understand the bottom-line impact morale has and make the investment needed to get at the root causes of their morale issues.  This often means taking an honest look at their management and corporate programs and policies, as well as making the effort required to really understand their workforce,” said Rosen.

Impact of Work-life Programs

According to the CCH survey, organizations now use an average of 8 work-life programs, up from 7 in 2003. The increase in work-life programs is across the board. Notable are the overall increases in programs that offer employee flexibility and those related to health and fitness, as well as the increase in eldercare programs.

Of the programs ranking highest in curbing unscheduled absences, the top four ―Alternative Work Arrangement, Leave for School Functions, Telecommuting and Compressed Work Week ―provide employees with greater control over when and where they work. Each of these programs showed an increase in use from 2003.

“Assuming that companies are putting the right programs in place for their workforce, it generally takes time for the adoption of work-life programs to have an impact on absenteeism rates,” said Rosen. “But the increase in flexible work arrangements should be good news to many employees not only in better managing their time but also boosting their morale as these programs send the underlying message that the employer trusts the worker to get the job done.”

The number of employers offering Eldercare programs also has significantly increased, from 20 percent in 2003 to 32 percent in 2004.  AARP and the National Alliance for Caregiving estimate that of the more than 44 million caregivers providing unpaid care to another adult and of those that work, an estimated 59 percent either work or have worked while providing care and over 60 percent have had to make adjustments in their work life or quit their jobs.

According to the CCH survey, the increased adoption of Eldercare programs now puts it on par with both Emergency Child-Care (offered by 31 percent of organizations) and On-Site Childcare (offered by 29 percent).

However, when asked if demographic changes in the workforce would affect their work-life programs, three-in-four companies (77 percent) believed it would not.

 “The fact that more companies are offering eldercare programs is good news for the millions of employees who are caring for an aging spouse, parent or other relative.  However, if companies are not looking at the life stages of employees when evaluating their work-life programs, they will inevitably neglect one or more segment of their workforce.  They may find older employers, more accustomed to traditional work hours and environments, resent younger employees who value workplace flexibility, or that childless employees resent that so many benefits seem geared toward working parents,” said Houck.  “While companies tend to be hesitant to change their programs because it can be costly, it’s short-sighted to stay with the status quo as there are also many costs associated with inaction.”

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 (3.4); Leave for School Functions, Telecommuting, Compressed Work Week and On-site Child Care (each at 3.2); and Wellness Programs and Emergency Child Care, each at 3.0.

Effectiveness and Use of Work-life Programs

Absence Control Programs Effective to a Point

While respondents reported an increase in the use of work-life programs, they have decreased the use of absence control programs, now using 5.0 such programs, down from 5.6 last year.

Disciplinary Action remains the single-most used absence control program, with 91 percent of surveyed organizations reporting use. The other leading absence control programs in use are Yearly Review (79 percent), Verification of Illness (76 percent), Paid Leave Banks (63 percent) and both No Fault and Personal Recognition, each used by 59 percent of organizations.

The use of Paid Leave Banks (also known as Paid Time Off) continued to climb in popularity from 59 percent in 2003 to 63 percent this year.  Paid Leave Banks along with Disciplinary Action were rated as the most effective absence control programs, each earning a rating of 3.5 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.  Disciplinary Action, as the name implies, penalizes employees for being absent.

Employers gave Buy Back programs an effectiveness rating of 3.3, followed by Bonus programs, with 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. While Disciplinary Action is the most used program, Buy Back programs are the least used, with 48 percent of employers reporting use.

Notably, organizations with Good/Very Good morale rated the overall effectiveness of both their absence control policies and work-life programs 42 percent higher, at 3.8, than did their counterparts with Poor/Fair morale, at 2.2.

Effectiveness and Use of Absence Control Programs

Employers Offering Fewer Sick Days

This year’s survey found that full-time employees were offered less sick time on average last year, but continued to use about the same amount of sick time as in the year before.  On average, companies granted 6.9 sick days to employees in the past year, down from 7.6 days in 2003, and employees used 5.8 days compared to 5.6 in last year’s survey.

Presenteeism: Calling in Sick vs. Coming to Work Sick

Presenteeism – a situation where employees come to work even though they are ill and pose potential problems of contagion and lower productivity – continues to be an emerging area of concern. Similar to last year, the first time when employers were asked about this issue, 39 percent of respondents indicated that presenteeism is a problem in their organizations.

Morale again 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 31 percent of organizations reporting Good/Very Good morale saw presenteeism as an issue.

“Obviously employers want their employees on the job and using as few sick days as possible.  But a sick employee may not be doing their employer or co-workers a favor if their illness jeopardizes the health or productivity of their colleagues,” said Rosen.

About the Survey

The 2004 CCH Unscheduled Absence Survey covering 305 human resource executives in U.S. companies and organizations of all sizes and across major industry segments in 45 states and the District of Columbia was conducted online by Harris Interactive from June 30, 2004, through July 23, 2004. The survey reflects experiences of randomly polled organizations with an estimated total of more than one 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. In theory, with probability samples of this size, one can say with 95 percent certainty that the results have a sampling error of +/-6 percentage points. This online sample was not a probability sample.

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 2004 CCH Unscheduled Absence Survey, call 800-449-9525 and ask for offer number 04509301. Price is $34.95 plus tax, shipping and handling.

About Harris Interactive^®

Harris Interactive (www.harrisinteractive.com) is a global research firm that blends premier strategic consulting with innovative and efficient methods of investigation, analysis and application. Well known for The Harris Poll^® and for pioneering Internet-based research methods, Rochester, New York-based Harris Interactive conducts proprietary and public research to help its clients around the world achieve clear, material and enduring results.

Harris Interactive combines its intellectual capital, databases and technology to advance market leadership through its U.S. offices and wholly owned subsidiaries: London-based HI Europe (www.hieurope.com), Paris-based Novatris (www.novatris.com), Tokyo-based Harris Interactive Japan, recently acquired U.S.-based WirthlinWorldwide (www.wirthlinworldwide.com) and through a global network of affiliate firms.

About CCH INCORPORATED

CCH INCORPORATED is a leading provider of employment law and human resources information for attorneys and human resource professionals. The CCH Human Resources web site is hr.cch.com. Headquartered in Riverwoods, Ill., CCH was founded in 1913 and has served more than four generations of business professionals and their clients. CCH is a Wolters Kluwer company (www.wolterskluwer.com) and part of the Wolters Kluwer Legal Unit.

Wolters Kluwer is a leading multinational publisher and information services company. The company’s core markets are spread across the health, tax, accounting, corporate, financial services, legal and regulatory, and education sectors. Wolters Kluwer has annual revenues (2003) of €3.4 billion, employs approximately 18,750 people worldwide and maintains operations across Europe, North America and Asia Pacific. Wolters Kluwer is headquartered in Amsterdam, the Netherlands. Its depositary receipts of shares are quoted on the Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices.

-- ### --

nb-04-78