Controlling the cost of absenteeism

THE Government is no longer prepared to subsidise the £13b lost annually by British industry through absenteeism.

The implications to industry of this and other changes brought by the Statutory Sick Pay (SSP) Act, coming into force on 6 April, have been well publicised.

The most significant change made by the Act is the abolition of the current 80% rebate most employers receive for paying SSP on behalf of the state (although special help for small employers will be retained and enhanced).

The cost to employers of the abolition of recovery of SSP is expected to be about £695m in 1994-5, rising to £720m in 1995-6 and £750m in 1996-7, according to the Statutory Sick Pay Bill, brought before the Commons on 16 December 1993.

The Government maintains that this cost will be offset by a reduction in employers' National Insurance contributions. However, significant compliance costs remain which will offset these NIC rate reductions.

The question is, how can UK hotels and caterers minimise the impact of this Government initiative?

Curbing absenteeism holds the key, which can be done by introducing effective absence control programmes. The Confederation of Business Industry and the Industrial Society quote a national average of 3.5-4% absenteeism - the equivalent of eight days per employee per year.

No employer can afford to ignore absenteeism, especially as the wage bill is the largest cost to a hotel proprietor.

Before taking action, employers need to assess the cost of absenteeism. For example, a hotel chain with 500 employees and a typical absentee rate of 5%, will suffer 5,800 days of absence per year.

Assuming an average weekly wage of £250, the problem costs the chain £290,000 on a pay bill of £6.5m. Add to this hidden costs such as employing temporary staff or overtime payments to fellow workers, and the already significant cost will rise further. It escalates even more if the cost of inefficiency and disrupted service are brought into the equation.

Currently the likely amount of SSP reclaimable, due to the fact that most absenteeism is short term, is about 25%, or £72,000. After 6 April, the employer will have to shoulder this cost.

There are always people who are genuinely ill, but statistics show that 60% of all sickness absence is for periods of less than three days; and of this, almost half is for periods of just one day.

It is among this 60% that organisations find the small but costly proportion who are regularly absent, and it is here that they need to take action.

It is important to remember, when developing an absence control programme, that responsibility lies with both personnel and line management.

Accurate information is vital. It is a well-publicised fact that hotels using computerised systems for monitoring absence have typically up to 20% lower sickness absence levels than those keeping manual records.

All staff should have their own absence record, showing how often they have been off sick, when and for how many days they were ill on each occasion, enabling management to identify any pattern of absence.

The most prevalent patterns of absence include Mondays and/or Fridays, and days that mark the begin-ning or end of a new shift pattern.

Communication is another critical element of the programme. A documented attendance policy should be provided to all staff. Employees need to be told why attendance levels must be raised, and why effective control is necessary.

It is important that staff realise that lower levels of absenteeism mean improved competitiveness, reduced cost and greater efficiency, which in turn mean more job security and an improved chance of wage increases.

All staff should have the benefit of a return-to-work interview with line management to review and discuss recurring problems. Most importantly, though, managers need to identify reasons why staff are absent from work.

Statistics show that poor motivation and family responsibilities are important factors in absenteeism throughout the hotel industry. One answer to these problems is improving the working environment by introducing more flexible working patterns.

Flexibility can take a number of forms - the most popular including flexitime, part-time working and job sharing.

But flexibility has its own problems. The complicated nature of flexible working patterns makes it more difficult to keep track of staff absences.

While the introduction of such patterns will undoubtedly reduce a hotel's rate of absenteeism, there will always be staff ready to abuse the system.

If computerised systems are strongly recommended to monitor "normal" working patterns, I would suggest that they are invaluable in monitoring flexible working patterns. o

lBlick has been an independent voice in the time and attendance industry since 1922, and is involved in research into absenteeism.