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Absence management - the cost of sickness absence 05/10/2009

MidlandHR investigates absence ten years on and finds that all is not well...

Absence management - the cost of sickness absence

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  1. Absence management – ten years on
  2. Sick-leave work abuse
  3. Sickness absence monitoring
  4. Sickness absence - don't be in the dark
  5. HR distrust of line managers recording absence
  6. Measuring cost of absenteeism
  7. Real time access to monitoring systems

Absence management – ten years on

Absence management – ten years on, a survey commissioned by HR and Payroll software provider MidlandHR and people solutions provider FirstCare, polled 164 senior UK business people on how organisations manage absence.

Many of the questions in the new report were first asked in a MidlandHR survey back in 1998. Three striking Results were found:

  • The first was that nearly a quarter of those questioned see tracking sickness as unimportant.
  • The second was that one in three employees don’t bother to measure sickness costs at all.
  • While the final found that responsibility for sickness tracking is increasingly devolved to managers.

These three findings clearly have repercussions for the business community and, as such, are addressed in turn below:

Sick-leave work abuse

Half of the UK business leaders surveyed believe that lost working days due to sickness are not genuine, while some staff still see paid sick leave allowance as an extension of their annual holiday entitlement. In fact, some attitudes are marginally worse. Today, more than two-thirds of respondents (69%) say they think some people abuse sick leave – treating it as additional holiday – up by 1% compared with 68% ten years ago.

Even so, nearly a quarter of those questioned don’t seem particularly concerned because they see tracking absence as unimportant – a worrying trend compared to ten years ago when just 2% would have agreed. This could indicate that companies are merely playing lip service to absence monitoring.

Sickness absence monitoring

The public sector seems to see absence monitoring as less important than the private sector with 79% of the latter citing tracking sickness as quite or very important compared to 63% in the public sector.

Conversely, nine in ten (90%) agree it is in the best interests of staff that sickness is recorded (compared to 98% ten years ago) and 87% agree tracking sickness is important when evaluating workforce efficiency.

Only just over half have quite or very high confidence in the accuracy of their absence monitoring system with the public sector having less confidence than the private sector and large organisations less confidence than SMEs. Ten years ago 94% stated their sickness leave records were fairly or very accurate. However, in terms of monitoring sickness, an encouraging 30% monitor it all the time (compared to 21% ten years ago) and a further 43% monitor it either quite or very frequently.  

Sickness absence - don't be in the dark

Even though three-quarters of UK employers agree that the real cost of sickness should be assessed in terms of lost revenue, only one in ten organisations surveyed go beyond measuring just the wage bill for people who are absent. Surprisingly, one-third (33%) don’t even bother to assess sickness costs at all.

While the percentage of those who agree that the real impact of sickness should be measured by lost revenue has risen from 61% in 1998, to 76%, the number of organisations that practise what they preach has barely moved – up by just 3% to 10% in ten years.

In addition, only a small number are taking into account the indirect costs of absence. Despite the vast majority (95%) of respondents saying they maintain formal records of sick leave, only 16% track the effect of sickness on customers, while just over a quarter (29%) monitor the amount of time taken to manage the issues caused by and relating to sickness.

HR distrust of line managers recording absence

A third major finding of the research illustrates that HR doesn’t trust line managers to provide accurate information regarding absence. Nearly half of those questioned (48%) say they cannot rely on managers to provide accurate information. This is despite the fact that line managers are increasingly being handed the responsibility of recording sickness (56% either on their own or jointly with the personnel department).

Interestingly, the research also found that 80% of the respondents agreed that line managers would be more accurate at reporting sickness if they were provided with more accurate information about its impact on their department. This could indicate that it is access to accurate and timely sickness information that is at the route of the problem. Tellingly, only 20% of respondents indicated that line managers have access to real-time data.

When comparing the Results to the study 10 years ago, the findings are mirrored however their significance has increased; more individuals are now unlikely to trust line managers (48% compare to 33%), while more line managers are recording sickness (56% either on their own or jointly with the personnel department – up from 48% ten years ago). A greater number of respondents also agreed line managers would be more accurate at reporting sickness if they are provided with more accurate information (80% up from 74%).

Measuring cost of absenteeism

Clearly sickness is as much an issue now as it was ten years ago. This research highlights a need for organisations to get their houses in order and start to properly track and assess absence levels, so that they can accurately ascertain the impact sickness is really having on their business.

A big problem is that the majority of UK business leaders are still very much in the dark over the real cost to their organisations of absenteeism. In fact, the CBI this year estimated the average annual cost of sickness at £517 per employee, based on the numbers of days of sick leave. 

However, when indirect costs such as reduced client satisfaction and productivity losses were taken into account the CBI estimated that this rose by another £263 per employee to £780.  In the commercial sector, this has a huge impact on profitability and the bottom line, while in the public sector, it inflates the cost of delivering services.

Real time access to monitoring systems

Furthermore, if line managers are entrusted with the responsibility of monitoring absence, it is of paramount importance that they have real-time access to the monitoring systems so they can make informed decisions on how best to manage it.

This would provide them with accurate information as to the impact of absence within their teams and ultimately help businesses to properly assess the real impact of absence.
Lawrence Knowles, MidlandHR

Lawrence Knowles, MidlandHR