Software and services reduce employee absence costs

4th April 2011

Absence management is one area of business where automation remains the exception not the norm, but there are lots of good reasons to rectify this situation, as FSN contributing editor, Lesley Meall discovers. 

There are some frightening statistics out there on the subject of sickness-related employee absences: their total direct and indirect cost averages 35 per cent of base payroll (a US survey of employer-sponsored health plans); around 160 million days each year are lost through sickness absence across the UK economy (the Confederation of British Industry); 90 per cent of workplace absence is attributed to colds and flu (BUPA) but at least half of all workplace absence has nothing to do with either (medical and health insurance broker IHC); less than half of businesses measure the annual cost of employee sickness absence (Chartered Institute of Personnel and Development); estimates for the annual costs to governments and employers, run into billions of pounds, schillings and yen. 

Why then, do businesses seem so sanguine about it? ‘The problem in many organisations is that absence is recorded haphazardly, or not at all,’ suggests Chris Berry, managing director of Computers In Personnel. There is a tendency to leave sickness-related absence-management to line managers, without giving them the training or the tools they require to properly handle it. Absence notification methods are often basic and record keeping is often done using paper, so as Berry observes, ‘data goes missing and it’s hard to see the overall picture’. Simon McPherson, EMEA director, Kronos Systems, agrees. ‘Pen and paper, or spreadsheet-based systems are too cumbersome,’ he says, as well as being more prone to human error than more specialist software and services. 

As CIP and Kronos are among those providing specialist software and services, this is a predictable perspective, but regardless of commercial self-interest, they may have a valid point. Not automating your absence management procedures could be a wasted opportunity. There are lots of scenarios where specialist software tools have shown themselves to be more efficient and effective than paper systems or spreadsheet-based processes, and there is no reason to suppose that absence management will be dramatically different. Myriad research and anecdotal evidence seems to indicate that automating some or all of your absence management processes can offer a broad range of potential benefits. 

These can include: a faster more efficient absence process (for employees, line managers and human resource staff), the ability to accurately monitor and measure the associated costs (good news for finance), better visibility of absence patterns, trends and costs, benchmarking figures for comparison between departments, or against other employers, higher levels of employee engagement, improved compliance with corporate policies and procedures on leave and sickness absence, and more. All of which can help to reduce absences, minimise the associated costs, and help organisations to improve the overall performance of their greatest asset: the workforce. 

‘By recording absence electronically and monitoring it centrally, organisations immediately gain better insight into what’s happening,’ says Berry. This could enable the business to spot extended absences (and deal with them) earlier than might otherwise be possible, make it easier to spot persistent abusers (such as the those with a tendency to be missing on Monday morning, Friday afternoon, during school holidays, or on days adjacent to Bank Holidays), or identify irregular patterns of absence in certain departments – such as a leap in absences by comparison with the previous year, or a much higher level of absence than comparable departments. By clarifying procedures and giving employees a very clear view of their attendance patterns, it may also have a positive impact on the behaviour of individual staff. 

Introducing an absence management system helped Royal Mail to reduce absence rates from 7 per cent to 5 per cent, saving the group an estimated £227m. Whilst Professional Polishing Services, a much smaller regional business, found that introducing a system to monitor and manage absenteeism cut absence rates by 50 per cent, and saved the company £15,000 during the first six months alone. The extent to which other organisations can benefit will be proportional – but the Chartered Institute of Personnel and Development (CIPD) estimates annual average sickness absence at 8.4 days for each staff member, so knocking 2 per cent off this (as Royal Mail did) can give any employer a ball park figure for their potential cost savings. 

Calculating a more meaningful return on investment (ROI) for absence management tools is not straightforward, for a variety of reasons. As Delia Goldring, visiting professor in human resource management at Middlesex University highlighted in a previous FSN article here, there is more to managing the problem of workplace absence than having the right software and systems in place. But introducing absence management procedures (if they are not already in place), systematising these with specialist software, recording absence electronically, centralising the associated data, and using workflow to automate some of the routine processes, at least gives you access to the tools and information required to manage the process more effectively.

 Software solutions

But when you are considering the various approaches to automation where do you begin? This depends on many factors, ranging from your size and type of organisation, through software and systems already in place, to the diverse cornucopia of options you’ll find sheltering under the umbrellas of ‘absence management’, time and attendance’, ‘talent management’ or ‘workforce management’. It also depends on your priorities. Some organisations will want to focus on enforcing absence management procedures, for some the focus may be on how well the absence management solution integrates with an existing ERP, HR, or payroll system, or how well it handles the complexity of operating in multiple jurisdictions.

 So it’s important to understand your business, and its processes, before you start considering the available systems. These range from dedicated absence management software applications, to absence management functionality that is included in or an optional add-on to a time and attendance system, other HR systems or services, or an ERP system. Some offerings are provided as traditional on-premise solutions, some are delivered using the Software as a Service (SaaS) model, and some offer a mixture or choice between the two; almost all now include some areas of functionality that can be accessed over the internet and/or an in-house intranet, using a browser; but the range of absence management functionality they provide varies widely.  

e-days for example is an online absence management and holiday planner. It provides self-service tools for managing holiday entitlements (within defined policies), plus numerous approval, analysis and planning features, and it can also streamline sickness management processes, and produce reports on absence levels and patterns. It includes a facility to calculate the Bradford Factor for each employee, to highlight those who take lots of individual sick days, which can be much more disruptive and costsly than sustained absences. 

Similarly tightly focussed systems include TeamSear (also available online as a SaaS solution), the Astro Suite, from Amano, which offers a broad range of workforce time and attendance tools, plus SMART, which combines time and attendance, with rostering software and tools for absence management. 

Kronos also specialises in workforce management solutions covering: time and attendance, scheduling, HR & payroll, recruitment (or hiring as they say in North America), labour analytics and absence management. But whilst Kronos Workforce Analytics provides you with some of the tools you might need to manage absence (visibility into causes of overtime, absenteeism, and low productivity), so does Kronos Workforce Absence Manager (automating and streamlining attendance and leave), and depending on what you want to achieve, and how, you may need to consider one or both. 

Computers In Personnel offers the Ciphr range of software and services for managing HR, payroll, and recruitment, including tools to help with absence management tools designed to help with absence management, its analysis, and the associated reporting. Some of this funtionality is included in the Ciphr Decisions HR data anysis tool, some is in Ciphr Workforce Management (which is based on Kronos software), and this can be supplemented with Ciphr Absence Manager, which offers intelligent voice-based absence capture. 

All of theses solutions and similar products (from specialists such as Carval, Ceridian, CWS Software, Midland HR, Mitrefinch, Vizual Management Solutions, and more) offer varying degrees of integration with other systems, such as HR, flexible benefits, payroll, and ERP systems, and it’s worth considering the implications of this whether you are planning a mix of on-demand solutions and/or on-premise solutions. It may pay to look at the absence management facilities built into the HR offering that’s available from the developer of your business and accounting software developer, or software that’s been developed specifically as an add-on for it. 

Organisation such as the Access Group and Sage, may be better known for the accounting systems their typically small and medium-sized bsuiness customers use, but they also provide integrated applications for HR. Access HR, for example, offers tools for recruitment and selection, learning and development, with self-service features for employees, plus workflow, document management and administrrative features for line managers and HR professionals. It also includes tools for analysing  absence management, and can produce a range of reports (including the Bradford Factor) that can be viewed via various dashboard charts.

So organisations that do want to manage down their absence levels and costs (and with so much to potentially gain, why wouldn’t you) have plenty of software, systems and services available to help them do it.