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Managing the hidden cost of sick days

Do you know how much employee absences are costing you? In the U.S., the average employer cost for unplanned absences is $1,000 per employee each year. This is the second-highest benefit cost to employers after medical benefits.

Employers should be thinking about how to address unexpected absences, considering that American companies lose 2.8 million workdays a year from them. If workers don’t show up, you can’t meet your business objectives.

Costs can be controlled when companies are willing to take a comprehensive approach to tackling the various issues that contribute to unplanned absences. Employers will discover the most effective results when they consider how the design of various absence management programs may affect each other or unintentionally encourage more time away from work.

For example, does accrued sick and vacation time roll over each year in your organization? If it doesn’t, you could be inadvertently encouraging employees to take time off they may not feel the need to take. Do you case manage employees who are off on disability? Do you have transitional or modified programs to encourage injured workers to get back on the job as quickly as possible? Could enhanced safety training reduce injuries and absences?

As you can see, there are a number of areas that are interrelated and can contribute to unplanned absences. When employers begin to recognize the dependencies, they can find solutions that address more than the absence issue. Some companies find that implementing disease management programs not only assists in managing unplanned absences, but also controls medical claim costs. That’s because when someone with an asthma problem is able to manage the disease, he’s less likely to miss work for an expensive trip to the emergency room.

Sometimes, though, it takes more than the right absence programs; it also requires technology and an investment in administration, whether absence programs are managed in-house or outsourced.

Without the right reporting systems in place, it can be difficult for employers to even know the percentage of unplanned absences they may be facing. On the surface, it can appear that actively managing programs such as leaves and disabilities can be time-consuming, until you look at the cost of employees not showing up for work. Improving return-to-work cases can reduce disability costs by 10 percent to 15 percent and leave of absence lost-time costs by 3 percent to 5 percent.

Employers want to be careful, though, that they truly approach absence management solutions that target their unique issues and enhance coordination between programs that may already exist. They also want to make sure that if they choose to enhance, say, a paid time off program, they are also benchmarking their approach to industry standards to avoid incurring additional, unnecessary costs. And, finally, there are always the compliance issues to consider.

It may seem like a lot to take on, but the reality is that a lot of companies are not facing this issue head-on. The sooner you do, the sooner you will be ahead of your competition.

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Michelle Hicks, a senior professional in human resources, is a director in the communication practice of Buck Consultants, a Xerox company. 

About Michelle Hicks