CCH® HR MANAGEMENT — 10/25/06

CCH Survey Finds Unscheduled Absenteeism Up in U.S. Workplaces

Reasons Other Than Illness Keep Employees Off the Job
Poor Morale Adds Up to Even More No-Shows
Employers Have Growing Concerns about Presenteeism

(RIVERWOODS, ILL., October 26, 2006) – With the rate of absenteeism on the rise, U.S. employers are losing ground when it comes to finding effective programs that keep healthy workers on the job, according to the 16th annual CCH Unscheduled Absence Survey by CCH, a leading provider of human resources and employment law information and services and a part of Wolters Kluwer Law & Business (hr.cch.com). The 2006 CCH survey found that the rate of unscheduled absenteeism climbed to its highest level since 1999, costing some large employers an estimated $850,000 per year in direct payroll costs, and even more when lost productivity, morale and temporary labor costs are considered.
What continues to be of most concern to employers is that almost two out of three employees who fail to show up for work aren’t physically ill, according to the CCH 2006 survey. The survey found that Personal Illness accounts for only 35 percent of unscheduled absences, while 65 percent of absences are due to other reasons, including Family Issues (24 percent), Personal Needs (18 percent), Stress (12 percent) and Entitlement Mentality (11 percent).
“Organizations are engaged in a tug of war for their employees’ time. With unscheduled absences trending upward, companies need to get a good understanding of why employees are calling in sick at the last minute, what impact this has on other employees who are expected to pick up the slack, as well as the impact it has on customers and anyone else relying on the absent worker,” said CCH Employment Law Analyst Pamela Wolf, JD. “Armed with this understanding, companies can most effectively assess both the hard and hidden costs of absenteeism and better identify what programs can be used to keep employees on the job.”
According to the 2006 CCH Unscheduled Absence Survey, conducted for CCH by Harris Interactive®, the absenteeism rate was 2.5 percent in 2006 up from 2.3 percent last year, and the highest since 1999, when the rate was 2.7 percent.
The CCH Unscheduled Absence Survey, conducted annually by CCH for the past 16 years, is the definitive survey on absenteeism in the workplace, measuring the rate, cost and reasons associated with unscheduled absence in the U.S.

Low Morale Leads to More Unscheduled Absences

The effect of morale continues to be reflected across the board in the 2006 CCH Unscheduled Absence Survey. The survey found that employee morale can affect a company’s absenteeism rate, with organizations with Good/Very Good morale experiencing a 2.2 percent rate of unscheduled absences while those reporting Poor/Fair morale had a rate of 2.9 percent.
Morale also influences the reasons people call in sick at the last minute, with 70 percent of unscheduled absences attributed to reasons other than Personal Illness for organizations with Poor/Fair morale, compared to 60 percent for those with Very Good/Good morale. In particular, 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 23 percent of organizations reporting Good/Very Good morale believe that unscheduled absenteeism is a serious problem for them, twice as many (46 percent) organizations reporting low morale find it to be a serious issue.
Additionally, nearly twice as many companies with Poor/Fair morale
(33 percent) reported an increase in unscheduled absences over the past two years while only 17 percent of those with Good/Very Good morale reported an increase. And, the outlook by organizations with low morale is equally bleak. Thirty-eight percent of employers in organizations with Poor/Fair morale believe unscheduled absences will increase in the next two years. Only 14 percent of employers in companies with Good/Very Good morale shared this concern.

Organizations Search for Solutions

Overall, companies are concerned about the impact of unscheduled absenteeism, with one-third reporting that it is a “serious problem,” and nearly all employers (92 percent) stating that they think the problem may stay the same or worsen in the next two years. As a result, it is not surprising to see an upward trend in the use of work-life and absence control programs. Survey results indicate, however, that companies remain challenged in making sure they have the most effective programs in place to meet employee needs. In some cases, the CCH survey found that the programs employers view as most effective in combating unscheduled absenteeism are not the programs that are most used.

Work-life Programs

The 2006 CCH Unscheduled Absence Survey found that U.S. companies now offer an average of 11 work-life programs, up from nine in 2005 and eight in 2004.
Of the work-life programs offered by employers, the top five in use recognize that helping employees manage the many aspects of their busy lives is increasingly important. These programs are Employee Assistance Plans
(76 percent), Wellness Programs (67 percent), Leave for School Functions
(65 percent),Flu Shot Programs (64 percent) and Alternative Work Arrangements (63 percent).
As to the five work-life programs rated most effective, companies ranked Alternative Work Arrangements, Leave for School Functions, Compressed Work Week and Telecommuting as equally effective (each at 3.4 on a scale of 1-5, with 5 being most effective), with Emergency Child Care rounding out the top five (at 3.3).
“The fact that only two of the programs companies rated as most effective — Alternative Work Arrangements and Leave for School Functions — were on the top five most used list is a good indication that the time may be right for employers to step back and assess if they have the most effective programs in place,” said Wolf. “Only by doing this can companies ensure that their investments in providing these programs are achieving the desired business result.”
In general, the survey also found an upward trend across-the-board in the number of employers who make various work-life programs available to their employees.
“The trend upwards in programs that offer flexibility on how and when work gets done is an indication that more workplaces are trying to accommodate the needs of different employees, for example working parents with young children and baby boomers who, as they start reaching retirement age, may be interested in staying in the workforce, but also need or want additional flexibility to accommodate other interests,” said Wolf.
Recognition of employees’ struggles for caring for both children and parents is evident in the increased adoption of programs offering care support. Most significant, the number of employers offering Elder Care Services increased from 34 percent in 2005 to 42 percent in 2006, and the number of employers offering On-site Child Care increased from 33 percent to 42 percent while the number offering Emergency Child Care rose from 33 percent to 44 percent.
Also on the upswing were programs helping employees maintain physical and emotional well-being. In addition to Employee Assistance Programs, WellnessPrograms and Flu Shot Programs, this included Fitness Facilities (59 percent), On-site Health Services (48 percent) and Sabbaticals
(47 percent).
“For employees, it’s great news that companies are being more flexible and offering a wider array of services,” said Wolf. “But organizations must use due diligence to ensure they truly understand the needs of their workforce and are providing strong programs that effectively meet those needs. Otherwise, they may find themselves with programs that fail to help employees achieve the work-life balance they need, and therefore fail to show a return on investment.”

Effectiveness and Use of Work-life Programs

Work-life Program	Effectiveness Rating (1: Not Very Effective to 5: Very Effective)	Percent Use
Leave for School Functions	3.4	65%
Alternative Work Arrangements	3.4	63%
Telecommuting	3.4	59%
Compressed Work Week	3.4	58%
Emergency Child Care	3.3	44%
Employee Assistance Plans	3.1	76%
Flu Shot Programs	3.1	64%
On-site Child Care	3.1	42%
Wellness Programs	3.0	67%
Job Sharing	3.0	51%
Satellite Workplaces	3.0	49%
Fitness Facility	2.9	59%
On-site Health Services	2.9	48%
Sabbaticals	2.9	47%
Elder Care Services	2.7	42%

Absence Control Programs

Employers report they use an average of sixabsence control programs, unchanged from 2005. Disciplinary Action remains the single-most used absence control program, with virtually all (97 percent) surveyed organizations reporting its use. The other leading absence control programs in use are Yearly Review (82 percent), Verification of Illness (79 percent), Paid Leave Banks (70 percent) and Personal Recognition (68 percent).
The use of Paid Leave Banks (also known as Paid Time Off) rose three percentage points from 2005 to 2006, continuing its rise in use over the past several years. 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. Each of the other absence control programs saw a slight increase in adoption rates.
The survey found Paid Leave Banks also continued to be seen as the most effective absence control program, with a 3.7 rating. Other top programs included Buy Back (3.4), Disciplinary Action and Bonus (3.3).
Again, the survey found a lack of alignment between what employers are using and what they deem to be most effective. The survey found that the second most highly effective program, Buy Back, is the least used by companies, while the Bonus program, also found to be on the most effective list, comes in next-to-last place for programs being used.

Absence Control Program	Effectiveness Rating (1: Not Very Effective to 5: Very Effective)	Percent Use
Paid Leave Banks	3.7	70%
Buy Back	3.4	59%
Disciplinary Action	3.3	97%
Bonus	3.3	61%
Yearly Review	2.9	82%
Verification of Illness	2.9	79%
No Fault	2.8	67%
Personal Recognition	2.7	68%

“Organizations also need to be cautious that the programs they use to control absences do so without any unintended consequences,” said Wolf. “Disciplinary Action can be effective up to a point, but it can also encourage the wrong behavior if the result is that individuals who are ill come to work sick – a problem known as presenteeism.”
“Programs such as Paid Leave Banks, on the other hand, provide employees with more control over how they use their time, which in the long-run can help ensure they’re not calling in sick at the last minute when they’ve known for some time that they’ve had a commitment outside the office – whether it is to address personal needs or attend to a family issue,” Wolf added.  

Presenteeism: Sick Employees Can Weaken the Bottom Line

The problem of presenteeism – when employees come to work even though they are ill and pose problems of contagion and lower productivity – is an area of growing concern for organizations. More than half (56 percent) of employers surveyed reported that presenteeism is a problem in their organizations, up from 48 percent last year and 39 percent the year prior.
Here again, morale makes a difference. Despite higher rates of unscheduled absenteeism overall, companies with low morale also have more ill workers showing up for work. In fact, 63 percent of organizations with Poor/Fair morale reported presenteeism is a problem, while 50 percent of organizations reporting Good/Very Good morale see it as an issue.
“Presenteeism can take a very real hit on the bottom line, although it is often unrecognized. After all, the employee is at work. But if he doesn’t feel well, he is not going to be as productive and the quality of work will suffer,” said CCH Employment Law Analyst Brett Gorovsky, JD. “Meanwhile, he may be spreading illnesses to other employees further adding to the problem. So the indirect costs are high while often not captured.”
With flu season looming, employers should consider what they can do to combat sick workers on the job. The 2006 CCH survey asked employers what they are doing to reduce presenteeism. Sixty-two percent of the organizations reported they send sick employees home, while 46 percent educate employees on the importance of staying home when sick and 36 percent try to foster a culture that discourages employees from coming to work sick.
There is also a concern, however, that some traditional absence control and sick day policies may inadvertently encourage employee presenteeism.
Organizations that adhere to traditional sick day policies, and take disciplinary action to enforce them, may be making it difficult for employees to do the right thing. If, for example, an organization allows each employee five sick days a year, and takes disciplinary action on the sixth absence, an employee who has been wiped out with the flu for several days early in the year may choose to come to work ill rather than risk the discipline.
Some employees can offset the risk of a poor health year if their employer allows them to carry over the sick days that they didn’t use in healthier years. Only 44 percent of organizations surveyed by CCH, however, allow employees to carry over sick time from one year to the next – a decline from 51 percent in 2000. Meanwhile, the number of companies allowing employees to donate unused earned days to a leave bank for employees suffering from catastrophic illness, while still low, is on the rise with 29 percent of organizations allowing this compared to just 23 percent a year ago.
Having a Paid Leave Bank program is an effective way employers can help manage the problem of presenteeism. With PTO, the employee has more discretion as to how to use an entire bank of days, so if she’s sick, she can take a day from the bank and stay home, without the fear of being reprimanded or running out of sick days.  

About the Survey

The 2006 CCH Unscheduled Absence Survey covering 326 human resource executives in U.S. companies and organizations of all sizes and across major industry segments in 47 states was conducted online by Harris Interactive® , a leading global market research and consulting firm, from June 28 through July 17, 2006. The survey reflects experiences of randomly polled organizations with an estimated total of nearly five 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 and by size based on U.S. census company size data. In theory, with probability samples of this size, one can say with 95 percent certainty that the overall results have a sampling error of +/-5.5 percentage points. Sampling error for the various sub-sample results is higher and varies. 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. 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, low morale and lost productivity add to the considerable financial impact on an organization.  

To Obtain a Copy of the Survey

To order the CCH Human Resources Management Ideas & Trends newsletter containing the 2006 CCH Unscheduled Absence Survey, call 1-888-CCH-REPS and ask for offer number 0-5855-301 or buy from the CCH online store. Price is $39.95 plus tax, shipping and handling.  

About Harris Interactive

Harris Interactive is the 12 th largest and fastest-growing market research firm in the world. The company provides research-driven insights and strategic advice to help its clients make more confident decisions which lead to measurable and enduring improvements in performance. Harris Interactive is widely known for The Harris Poll, one of the longest running, independent opinion polls and for pioneering online market research methods. The company has built what could conceivably be the world’s largest panel of survey respondents, the Harris Poll Online. Harris Interactive serves clients worldwide through its United States, Europe and Asia offices, its wholly-owned subsidiary Novatris in France and through a global network of independent market research firms. The service bureau, HISB, provides its market research industry clients with mixed-mode data collection, panel development services as well as syndicated and tracking research consultation. More information about Harris Interactive may be obtained at www.harrisinteractive.com .

About Wolters Kluwer Law & Business

Wolters Kluwer Law & Business is a leading provider of research products and software solutions in key specialty areas for legal and business professionals, as well as casebooks and study aids for law students. Its major product lines include Aspen Publishers, CCH, Kluwer Law International and Loislaw. Its markets include law firms, law schools, corporate counsel and professionals requiring legal and compliance information. Wolters Kluwer Law & Business, a unit of Wolters Kluwer, is based in New York City and Riverwoods, Ill. The Law & Business human resources site is hr.cch.com.
Wolters Kluwer is a leading global information services and publishing company. The company provides products and services for professionals in the health, tax, accounting, corporate, financial services, legal and regulatory, and education sectors. Wolters Kluwer has annual revenues (2005) of €3.4 billion, employs approximately 18,400 people worldwide and maintains operations across Europe, North America, and Asia Pacific. Wolters Kluwer is headquartered in Amsterdam, the Netherlands. Its shares are quoted on the Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. For more information, visit www.wolterskluwer.com.