Report summary: How Employers Manage Absence

Employee absence from work has received greater attention in recent years. This is due in part to increased emphasis on employers’ ‘duty of care’ towards their employees, concerns to maximise labour utilisation in competitive marketplaces and the minimisation of the costs and disruption caused by absence from work.

In the UK there are several sources of data on absence. The Labour Force Survey (LFS) publishes data on the percentage of employees absent from work due to illness or injury on at least one day in a reference week. Data from the winter 2000/2001 LFS showed this rate to be 3.8 per cent of working days lost. Other data are derived from surveys of employers. For example, the CBI conducts an annual survey of sickness absence patterns. Its 2001 survey showed that an average of 7.8 days (3.4 per cent) were lost per employee in 2000 (a similar figure to 1999). The 1998 Workplace Employee Relations Survey (WERS98) collected data from establishments which suggested that average daily absence rates for those with more than 25 employees stood at 4.1 per cent.

Of course, employee illness or injury are not the only causes of absence. Employees in the UK now have a variety of statutory rights to time off work. More recently acquired rights reflect both a shift in emphasis in EU and UK policy and a changing pattern of demand from employees themselves, and have been introduced to facilitate employees balance the demands of their work and their domestic responsibilities better. Employees can now legitimately be absent from work for a wide range of reasons, including: annual leave, maternity leave and ante-natal care, adoption leave, domestic emergencies, paternity leave, parental leave, career breaks, civic responsibilities and religious holidays. Policy makers are concerned to ensure that these provisions do not place unnecessary or disproportionate burdens on employers.

Aims of the study

The main aims of the study were:

to investigate how employers manage and cope with the consequences of different types of absence
to provide real life examples of how employers manage absence
to investigate the costs and benefits, including any administrative burden associated with implementing the legislation
to establish the context in which employers provide for the recording, monitoring and developing of active absence management practices.

Research approach

A case study approach was adopted. Since employers’ approaches to managing absence might be expected to vary according to their labour use requirements case studies were selected to provide examples where managing absence might be expected to be an issue. Therefore, the sample of organisations included the following features:

a high proportion of female employees
low skill substitution owing to size
low skill substitution owing to skill specialisation
low skill substitution due to high dependence on client relationships.

Interviews were conducted with human resource (HR) managers, line managers and, in some cases, employees. In addition, examples of written policies were collected and examined to provide a basis for documentary analysis.

Business and employment context

The fieldwork was conducted during 2001/2, a period of economic growth, low unemployment, widely reported skill shortages and general labour market buoyancy. Public sector organisations had clear goals relating to the delivery of public services that were set against a range of externally determined standards and benchmarks. Customer demand for these services was increasing faster than the resources available to deliver them. In our two public sector organisations, adequate staffing levels were critical to their ability to deliver the quality of service expected.

The nine private sector organisations had adopted business strategies compatible with the markets within which they were operating. These were varied and related to price competitiveness, fast turnaround and delivery times, the quality of the service offered, specialist expertise and knowledge, ‘value for money’ and cost reduction. In many smaller organisations there was no formalised HR strategy or infrastructure. However, their approach to employees was usually well articulated and understood. Organisations were seeking to fit their staffing needs to their business priorities, eg by adopting flexible working practices to fit with customer demands.

In the main, managing absence was not a major issue of concern. Other labour related issues were creating significantly greater pressures. The main concern was recruitment and retention, particularly the ability to attract suitably skilled employees at a time of buoyant labour market conditions which, in a number of instances, led to initiatives aimed at helping employees achieve an easier work-life balance.

The nature and extent of absence

Absence can be categorised in a number of ways. For the purposes of this study the key distinctions were between planned and unplanned and long- and short-term absence.

Unplanned absence included that attributed to the onset of illness (whether genuine or not), and time off to deal with family and domestic emergencies, an ill dependent, bereavement and urgent medical appointments. Most unplanned absence was short-term. Planned absence included annual leave, maternity, paternity and parental leave, religious holidays, career breaks, sabbaticals, time off for training and study, trade union duties, time off for civic duties and for involvement in various voluntary and community activities. Long-term sick leave and flexible working patterns (such as part-time working or job-sharing) can also be regarded as planned absence. Planned absence can be short- or long-term in nature.

Trends in absence within organisations were difficult to explore accurately, as very little information was systematically collected and recorded. Sick and maternity leave were usually recorded for pay reasons and to ensure compliance with statutory obligations. However, these data were rarely being used to actively measure and monitor absence. Nonetheless employers reported that sickness absence had generally declined, that employees in less rewarding jobs were more likely to have higher levels of unplanned sick leave and that sick leave was higher amongst young men (who were seen to have more negative attitudes to work).

More generally, employers reported that there was a slight upward trend in the amount of non-sickness absence though overall levels of take-up were relatively low. The take-up of parental leave was very limited and this was attributed to it being unpaid and relatively little known. Provision above the statutory minimum leave entitlements was generally restricted to select groups of employees, depending on such factors as grade and/or role, line manager’s discretion and their value to the organisation.

Managing absence

Policies relating to absence addressed two main issues:

parameter-setting for line managers and employees through defining what was allowable and under what conditions
the management of absence, in particular monitoring and minimising sick leave.

Employers in this study consistently reported that unplanned short-term sick leave was the most problematic to cope with on a day-to-day basis.

As a rule, the existence of formal policies to manage absence was a function of the size of the organisation. Informality of practice was found in all of the case studies, but the larger organisations also had policy documents to guide and regulate practice.

In smaller firms, practices to govern access to time off and to manage the consequences of absence had built up informally over time, often relying on the discretion of the owner or director. In practice, this meant that eligibility for time off for domestic reasons, for example, might not be consistent or transparent. In addition, practices adopted to cover absence tended to be more ad hoc than in larger organisations. There were a number of reasons for the use of formal policies to manage absence:

creating an environment of trust and reciprocity within an organisation
compliance with legislation and to ensure that employees were aware of their basic rights
to inform managers and employees what was acceptable and what was not
so practices could become more formalised and controllable
as part of promoting better work-life balance for employees
to aid recruitment and retention.

Line and project managers played a major role and had great autonomy in deciding whether and how to provide cover. As a result of this, it was difficult to discern clear patterns in the type of leave allowed because there was considerable variation amongst line managers in what they would allow, and among individual employees in what they felt able to ask for, especially where policies were not very specific. The confidence, attitudes and background of individual managers played a role. In organisations, where HR played a supportive role and flexibility was accepted, managers seemed much better able to cope with absence. The overall culture of an organisation was very important in managers’ abilities to cope with absences.

The decision making process in covering short-term and long-term unplanned and planned absences was similar, and most organisations adopted more than one arrangement to cover absence. The first general approach was to look internally, and only if there was no internal capacity, would people from outside be brought in. In deciding how to cover a particular absence, duration of the absence tended to be the most influential factor.

Unplanned absence

A number of contextual factors were identified as influencing decisions on whether cover was needed and the type of cover. These included:

the immediacy of the work to be covered and the nature of client relationships
how busy the team/department with the absence was at that particular time
how busy other teams/departments were
the overall level of absence
the degree to which there was skill flexibility between roles/jobs to be covered, or specialist skills were required.

A decision was taken as to whether cover is needed. If it was, it was always the preferred option to cover within a team or department. This might include asking colleagues to take on extra (unpaid) work on a temporary basis, paying overtime, or using internal ‘pools’ or ‘banks’ of staff. Some larger employers deliberately employed extra permanent staff to provide cover in business-critical areas. Once options to cover internally had been explored and exhausted, external cover was brought in.

Planned absence

Short-term planned absence was covered in similar ways to unplanned absence.

Longer-term planned absence might be covered (usually in the following order) by:

some reallocation of work within a team or department
moving someone else within the company, perhaps as a development opportunity - these migh be temporary promotions or secondments
bringing in a temp
employing a replacement on a fixed-term contract.

Bringing in cover from outside was usually confined to support, rather than operational or strategic roles. The specialist skills and knowledge needed in the latter positions were rarely readily available, although external consultants were sometimes used.

The cumulative impact of absence

It was very difficult to identify a point at which the level of absence became a particular problem for employers. There were a range of intervening factors, for example, the immediacy of the work, relationships with clients and customers, how busy a department or company was, the attitudes of managers, and the overall culture of the organisation. Some senior managers expressed concerns about potential increases in the take-up of planned leave and options to work flexibly. They anticipated there being a critical mass of employees who were not available during normal working hours. However, there was no evidence that this had yet occurred. Indeed, the dominant picture was one where employers found planned absence considerably more manageable.

Costs and benefits

The costs of absence

Only two organisations were able to attribute any kind of financial cost to absence or provide the data needed to calculate the cost. In neither case were these data comprehensive. There were a number of reasons for this, including:

Availability of data – data on the amount of absence is often not collated centrally or, for certain types of absence is not collected at all. Furthermore, the information needed to calculate costs is often held by different parts of an organisation and is difficult to co-ordinate.
Willingness to provide data – several employers were unwilling to provide cost data due to the amount of time and effort required, the sensitive nature of these data, the need to make assumptions and estimates, and there being insufficient benefit in making the effort (there are other more urgent priorities).

The following costs arising from employee absence were identified:

Direct financial costs, for example, the salary and other benefits paid to an employee who is absent, overtime payments, the costs of hiring temporary cover.
Indirect costs, for example, the time taken for a replacement to learn the new role and become productive; diminished services and product quality; loss of business and reputation arising from absence. When the need arose, managers were seen to put significant effort into ensuring that these costs were only incurred as a last resort.
Indirect cost on management time: including monitoring, consulting HR and occupational health specialists, dealing with the individual involved, developing strategies, arranging for cover, training and providing support to staff providing cover. Overall, it was unplanned leave and some types of long-term sick leave that had the greatest impact.
Indirect cost on HR time: HR managers generally saw managing absence and enabling employees to work productively, flexibly and healthily as an integral part of their role. The most costly type of absence in terms of HR time was sick leave and all the organisations were proactively managing sick leave, in particular aiming to minimise the amount taken.
The negative impact of absence on employee motivation, especially if it was not properly managed, for example, where insufficient cover was provided or some employees were seen to be abusing the system.

The benefits of absence

Employers generally found it difficult to identify benefits of absence. Nevertheless a number of positive aspects emerged:

Providing opportunities for planned absence sent positive messages to employees since they felt valued and prepared to reciprocate in terms of loyalty and putting in extra effort when needed. Allowing employees time off to deal with emergencies was said to improve productivity since employees spent less time at work worrying about problems and trying to sort things out.
Providing development opportunities for other employees allowing them to show their abilities in more senior positions. This was particularly associated with providing cover for long-term, often planned, absence.
Requiring employers’ managers to rethink their labour resourcing requirements and the organisation and allocation of work. Where this happened, it often led to wider, sometimes unanticipated benefits to the business.

Conclusions

This study draws the following conclusions:

Employers were generally unconcerned about most types of absence. They had other more pressing human resource priorities. Most effort was put into managing and minimising the amount of absence due to illness, or absence attributed to this.
It was the unpredictability of some absence that caused the greatest problem.
The ease and effectiveness with which absence was managed varied between employers. Some had ad hoc and somewhat reactive approaches, others had well established practices which allowed them to respond to most incidences of absence.
Those who managed absence well were also more likely to have a climate of trust and mutuality, a positive outlook amongst line managers and high levels of internal skill substitution.
Higher take-up of the new leave entitlements is an unlikely prospect for a number of employers. Where take-up does increase, it seems likely that absence which is planned and predictable will be the least problematic to manage.