The tricks to reducing absenteeism and increasing productivity in your workplace may not be as obvious as you think.
A recent study by Ernst & Young revealed that Australian employers lose approximately $41 billion in wages each year as a result of unproductive employees. Interestingly, the study showed a link between lack of productivity and the amount of sick leave a person takes, meaning the more a person wasted time at work, the more sick leave they were likely to take.
It seems unlikely that being a time-waster makes you more susceptible to illness, so the inference must be that some employees abuse the sick leave system. Managers around the country are unlikely to see this as a revolutionary discovery. They face the problem every day: whether on factory floors or in offices, some staff seem to think that it is acceptable to be paid to take days off without legitimate reason.
The problem is not unique to Australia, but it is notably bad here. This was emphasised by the reaction of the managing director of Toyota Australia when he expressed surprise at the level of absenteeism at his factory in Victoria the day after Australia Day. The willingness to take the day off with a self-induced sore head does not seem to be common in Japan and, if you think about it, really undermines many of the Australian qualities that the same people were celebrating the day before.
It is not only big business that experiences this problem. Our clients, who are largely SME, call us with questions related to absenteeism more than any other workplace relations issue. So, how is it best managed?
What the Ernst & Young study shows is that absenteeism and productivity are inextricably linked. It follows that by increasing productivity, you should be able to reduce absenteeism in your workplace. But, there is a chicken and egg situation here, as more effective management of absenteeism will also help to increase productivity. Plainly, the less days off your staff take, the more productive they should be.
Achieving the nirvana of a productive, absence-free workforce is not easy. It takes time to develop a culture where the interests of the employees and the employer align, so that everyone is working together to a common goal. Below are some suggestions to take your business in the right direction:
Incentivising less days off
It is a common error to think that incentivising staff is all about paying them more. In fact, there are simpler ways to achieve greater productivity and reduce absenteeism without shrinking the bottom line. The study found that unproductive workers characteristically take fewer breaks during the day. As such, and perhaps counter-intuitively, encouraging breaks during the day can enhance productivity. There is therefore method to the apparent madness of companies like Google in introducing pingpong tables, bean bags and sleep pods in the workplace.
These sorts of practices won’t work for all businesses, but encouraging breaks is likely to help workers focus their attention whilst on the job and will assist in other ways as well. For example, breaks give workers the chance to socialise, which should help the development of team spirit.
The study also found a negative correlation between the amount of time staff took to travel to work and their productivity. There are a couple of obvious things that can be done to protect against this. First, try to recruit staff who live within a reasonable distance of work (although you need to be careful not to stumble into discriminatory practices by doing this. It may be, for example, that certain racial groups are excluded from employment by such a policy if they are less likely to live within your notional catchment area). Secondly, consider flexible working practices where possible. If staff can travel at times that reduce the pain of the commute or can work from home on certain days, then this could enhance productivity.
Make them take leave
A culture of not taking leave may seem admirable, but in line with the study findings, it is likely to be to the detriment of productivity in the long run. Failing to take leave may also add to genuine absences for reasons such as stress. Employees need rest and employers should encourage them to use their annual leave for this reason. This can be done by having a clear annual leave policy in place as part of an employee handbook. This should explain the procedure for applying leave and the entitlement of each staff member. Expressing the right to cash out leave should typically be avoided as this supports a culture of working at the expense of time off.
The employee handbook should also have a clear policy relating to personal/carer’s leave. Employees have a statutory entitlement to such leave but policies can be put in place that overlay this entitlement and reduce the chance of it being abused. For example, the policy might state that a doctor’s certificate is required for any personal leave. Given the willingness of some doctors to provide certificates without much of a critical eye, this will not remove unwarranted absences, but it will present an extra hurdle for anyone trying to abuse the system. Nominating a contact person to notify in the event of absences will also help. If employees are required to let a supervisor know if they are ill, they might be less likely to take unjustified leave.
Management training is also crucial to reducing absenteeism. Managers need to be able to identify their obligations, including positive obligations under disability discrimination legislation, so as to improve working culture and reduce the chance of a disgruntled employee making a claim. For example, an employee who is persistently absent on grounds that they feel too tired to come into work may be viewed cynically by a manager. But, if the manager then tries to dismiss them, the employer could find itself subject to a claim in Fair Work Australia. It may also be that the employee is protected under disability discrimination legislation, meaning that positive steps should have been taken to help reduce the employee’s absences. A manager that is aware of these issues will reduce the potential exposure of the employer to expensive claims and is likely to create a happier workforce.
These steps can be implemented by your HR team or, if you do not have internal expertise in this space, with the benefit of outsourced assistance. Either way, this is something all employers should be working hard to get right. The sums are fairly simple. The cost of absence to a business with 20 staff if each earns an average wage and takes all of their sick leave entitlement is almost $60,000 per annum, the equivalent of paying someone an annual income to do nothing. This cost can sky rocket if management are not aware of their obligations and the employer is sued for some reason. In the current climate, this is an additional exposure that all businesses are better off without.