Managing sickness absence is key to a productive workforce, and yet many companies neglect their monitoring strategies. Nick Martinuale looks at how they can improve
For many employers, sickness and absence can be a serious issue. Not only can this remove valued staff from the workplace, it can also incur significant costs in the form of sick pay, hiring replacements and reduced productivity. “The risk is of the economic wastage that comes from absence, and for absence to develop into long-term sickness,” says John Ritchie, chief executive, Ellipse.
Much of how well organisations handle this risk comes down to their ability to record and monitor the issue.
“If you survey employers that insure their long-term sick pay promise, you’ll see a very strong correlation between the cost of their cover and the strength of their basic absence recording process,” says Ritchie.
“If you can’t see people who have one or two days off maybe 10 or 12 times a year, you won’t see anxiety, depression or substance issues. If you can see the pattern, then you can pick those people up early.”
One of the main rationales for effectively monitoring absence levels is to identify those who may be taking time off with symptoms which could, if left untreated, end up in a much longer period of leave.
“It is widely accepted that for certain conditions, such as mental health, early engagement is key,” points out Matthew Lawrence, head of health and risk at Aon Employee Benefits. “The other factor to bear in mind is that if the employer can demonstrate that it has robust processes and procedures in place then it enables us to have more meaningful negotiations with the markets around insurance costs.”
The problem, though, is that most employers do not do a particularly good job of tracking absence.
“Anecdotally almost every employer under-records it,” says Joy Reymond, head of vocational rehabilitation services at Unum. “We often find a spike in numbers once we engage with an employer in the early stages of absence, and that isn’t because they suddenly have staff getting sick. It’s because we’re looking for it. Underreporting and under- recognising is a significant problem for UK businesses.”
Ritchie takes this further. “The traditional methods of absence management recording don’t work,” he says. “They’re way too reliant on line managers. Some are great at it; some will do anything to avoid a return-to-work interview.
“The key question for employers is: ‘Where are my people, and how are they?’ If you don’t know where they are, you’re really going to struggle to know how they are.”
Putting policies in place
At a basic level, much of this comes down to having effective policies in place and making sure these are adhered to, says Paul Avis, marketing director at Canada Life Group Insurance.
“Most companies are not tough enough in making sure absence notifications are done correctly,” he says. “Texting a mate or leaving a voicemail message on a phone that people know will not be answered should not be acceptable.
“People should actually speak to someone to notify an absence and employers should provide a telephone questionnaire, which captures exactly why the employee is absent and when they’re going to return to work.
“Every single absence return should be accompanied by a return-to-work interview to check the person is fit and able to be at work, but also to check against what was said on the telephone.”
Where absence is genuine, having such records can help to trigger further interventions at particular points to ensure people are able to come back to work as quickly as possible, he adds, including alerting group risk insurers.
Workforce management software can also help with both recording absence and helping to identify patterns that may otherwise not be picked up, such as regular trends in an individual absentee’s record, or broader company-wide issues around particular conditions, such as stress.
“Whoever is recording absence statistics for the business should also be providing management information and analysis,” advises Pauline Iles, senior risk benefits consultant at Quantum Advisory.
“These should include identification of common patterns – like Fridays and Mondays – and common reasons. Understanding the information will allow the employer to make better choices.”
The longer-term value
This kind of information can also help organisations to plan accordingly.
“For example, during the winter when more staff are vulnerable to catching a cold or flu, they could have staff on call to work during certain times or make managers aware of the impact this can have on workload,” says Brenda Morris, general manager at Kronos UK.
Effective processes can make a significant difference in the longer term. “A system is fundamentally a flag, so to truly manage group risk it needs to be integrated with a health professional-led, early-intervention service, where rehabilitation is carried out to return staff to work, preventing short-term absences from turning into long-term payable risk,” says Andrew Woolnough, value proposition director at Willis Employee Benefits.
In some cases such follow-up activities have reduced both the number and duration of cases from conditions related to mental health, musculoskeletal and chronic disease by as much as 38%, he claims. “This can be attributed to improved management information, leading to increased visibility of absence, permitting earlier and more consistent rehabilitation,” he adds.
Help from the industry
Group risk providers are also starting to help employers record absence rates better, as a prelude to accessing some of the rehabilitation services that can prevent those with the early onset of conditions having to take off more significant amounts of time.
“We built in an absence management service as part of our group income protection product,” says Ritchie. “But we found that because it was focused on sickness absence only about 60% of employers engaged with it.
“So we think the key is to make absence management recording a part of general time management, alongside holiday booking, study leave and doctor or dentist appointments.”
Indeed, insurers are becoming increasingly frustrated at the apparent inability of employers to monitor absence effectively. “It’s disappointing that when an insurance company like ourselves offers a free vocational rehabilitation service for two to four weeks’ continuous absence, not every employer takes advantage of it,” says Avis.
“Whether that is because the adviser isn’t telling the employer, or the employer doesn’t have the systems to make sure that every single absence has that referral, is a subject of much debate.”
The result, though, is that staff are not getting early access to measures such as employee assistance programmes, rehabilitation or second medical opinion services, he says.
Eventually, it’s likely that those employers that are unable to tackle this will face higher premiums, suggests Ritchie.
“We tend to price schemes based on their experience in terms of the number of claims relative to the life years exposed,” he says. “But there will be a point in the not-too-distant future where one of the key pricing variables is the actual absence management process in place. The market’s not quite there yet, but that’s where it will go.”
Group risk will be a topic THIS WEEK at Reward Live - see the panel debate at 15.25 on Wednesday. For the full programme, please CLICK HERE.