The Absentee Workforce And Its Effect On The Bottom Line
Tackle absence for bottom line growth says Neville Henderson, Senior Consultant at Pasfield Curran, the consulting arm of Crown Workforce Management.
Over the past few years employee absence has fallen to 5.9 days per employee or 2.6% of working time lost. The Chartered Institute of Personnel and Development (CIPD) latest survey shows that this is the lowest ever recorded. But this isn’t the whole picture, there is considerable variation across individual organisations with some still reporting considerably higher absence levels. Indeed, 15% of respondents report their employees had an average of ten or more days’ absence. Even more dramatically, 4% report average absence levels of more than 15 days.
Even considering these high end levels, about two weeks of unplanned absence per employee per year may not sound too bad. But translate these lost hours into production loss, and they could make the difference between making and losing money.
For a 1,000-staff manufacturing company, these levels of absenteeism could translate into an unproductive employment cost of up to a million pounds annually. This is before the impact on productivity is taken into account – at a time when efficiency and reducing the cost base are more critical than ever.
So managing absenteeism should be a top priority for any business. But in reality, few companies are tackling absence management effectively.
Of course, there are often wider legal and political sensitivities around the subject, particularly in unionized environments. However, when handled in the right way, managing absenteeism not only leads to improved productivity and profitability, but also to a fairer, happier and more motivated workplace.
Today, the most common tool for reporting on attendance and absenteeism is still the spreadsheet. But unless you employ only a handful of people, spreadsheets are a woefully inadequate way of recording staff time and activity, never mind analysing it in any meaningful way.
Furthermore, instead of creating efficiencies, such manual methods tie up valuable resources in time-consuming data entry and analysis.
Even when companies use some form of purpose-built time and attendance (T&A) system – perhaps as part of an Enterprise Resource Planning (ERP) solution – it is often only used for clocking in and out, which does not allow for any level of analysis.
Recent years have seen the introduction of comprehensive, automated workforce management which enable companies to apply a more holistic approach to managing staff. Such workforce management systems enable organisations to record much more detailed information about employees and their attendance. The accumulated data can be analysed systematically to identify absence patterns for individuals – like the football fan who is always ‘off sick’ after a big match – or even the entire workforce. Worrying absence patterns can then be flagged to managers automatically so that they can investigate further.
Beyond getting a handle on absenteeism, these data-mining capabilities can also help with decisions affecting the overall operation of the business.
Evidence shows that by implementing such systems, a company with 1,000 employees can save more than the possible £1 million losses caused by absence each year. Clearly, for larger organisations, the potential savings can be even greater. These efficiencies come from the ability to monitor and track employees’ working time and levels of absenteeism, as well as through reduced administration and improved work scheduling.
The ability to access real-time information about what work has been performed, who has performed it and how long it took, makes it easier to create effective schedules and rosters that maximize every employee’s available time.
Workforce data can also be fed back into the scheduling process to provide more accurate prediction of the time and resource needed to perform future tasks. The reduction in overtime payments and wastage can make a significant impact on the bottom line.
More than theory
One example was seen at a food company that has implemented automated workforce management a few years ago. The company calculated that it was losing 700 hours per week through unauthorised absence. With 700 staff, that equated to an average of one hour a week per employee.
Like many manufacturing companies they relied on a manual clock-card system at its three food production plants, which was ineffective at keeping track of overtime and unauthorized absence.
The company took the decision to take a more holistic approach to overall site control across the three plants and to managing its growing workforce.
As part of this, they implemented the Crown workforce management system. This system now provides the company with all the information it needs for effective people management, including controlling shifts and planning staffing levels to match production requirements.
The system paid for itself within six months of roll-out, boosted by administrative savings and a 40% reduction in unauthorized absences – representing a cost saving of more than £600,000.
If that doesn’t put the case for effective absentee management, I don’t know what does!