The Law and the Rights of the Employee

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Absenteeism and Labour Turnover
Lecture 6 (Week 7)
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Overview of Lecture

• Absenteeism and Labour Turnover.. The Facts!
• Absenteeism
• Costs
• Causes
• Strategies for reducing levels of absenteeism
• Labour Turnover
• Costs
• Causes
• Strategies for reducing labour turnover
• Summary

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Absenteeism and Labour Turnover.. The Facts!

• CIPD Absence Management Report (2005)
• Average level of sickness 3.5 or 8 working days
  per employee
• Highest levels of absence reported in NI (4.3)
• CIPD Recruitment, retention and turnover survey
  (2005)
• Turnover rate for the UK was 18.3 (2004 15.7,
  2003 16.1).
• Highest turnover levels are found in the private
  sector (22.9)
• Hotel, Catering and Leisure Industry reported the
  highest turnover rate 42.5
• (www.cipd.co.uk)

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Absenteeism
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Costs of Absenteeism

• The CBI (2006) puts the estimated cost of absence
  to employers at 13.2 billion per year (Robson,
  2006)
• Average cost of sickness absence per employee -
  598 (2005) (compared to 601 in 2004)
• (CIPD Absence Management Report, 2005)
• Costs include
• Overtime costs
• Temporary Staff
• Reduced Service quality
• Reduced productivity
• (Taylor, 2002)

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Causes of Absenteeism (1)

• Top five reasons for employee absence within
  organisations
• Manual workers
• Minor illness (colds, flu, stomach upsets)
• Back pain
• Musculo-skeletal injuries
• Home and family responsibilities
• Stress
• Non-manual workers
• Minor illness
• Stress
• Home and family responsibilities
• Recurring medical conditions
• Back pain
• (CIPD Absence Management Report, 2005)

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Causes of Absenteeism Alternative Viewpoint
(Taylor, 2002) (1)

• Employee Attitudes
• Studies have shown particular personality types
  are more prone to absence than others
• Research suggests proneness to absence declines
  as people age
• Research suggests attitudes and orientation to
  work are correlated with social class and family
  background
• Home Circumstances
• Taylor (2002) highlights family responsibilities
  are an important hidden cause of absence
• Includes transportation difficulties

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Causes of Absenteeism Alternative Viewpoint
(Taylor, 2002) (2)

• Economic Climate
• Studies have shown that at times of high
  unemployment, people tend to be more diligent in
  attending work
• Dissatisfaction with Work
• General boredom with the job
• Lack of responsibility and challenge
• Poor working conditions
• Work overload
• Poor relationships with colleagues
• Control Systems
• A means used by employees in resisting management
  control

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Reducing Absence Levels Punitive Approaches (1)

• Conduct Return to work interviews
• Review absence records when the number of days
  taken by an individual reaches a predetermined
  trigger-point
• Request all employees returning from a period of
  absence to complete a sickness form
• Reduce/Dock pay for days/hours not worked
• Adopt Longer term approaches when
• Selecting candidates for redundancy
• Deciding when/whether to promote someone
• Determining pay increases/increments
• Determining performance-related payments/bonuses

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Reducing Absence Levels Punitive Approaches (2)

• Arguments for Punitive Approaches
• Identifies any problems in the early stages
• Provides an opportunity to help employees
  experiencing difficulties
• They can form the start of a formal disciplinary
  procedure
• Criticisms of Punitive Approaches
• May have little effect in reducing absence levels
  in the long term
• Tends to result in a temporary reduction in
  absence
• Employees may produce medical notes to ensure
  absence was classified as authorised!
• (Taylor, 2002)

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Reducing Absence Levels Attendance Incentives
(1)

• Attendance bonuses
• Payment of additional cash to employees with
  perfect/near perfect attendance record
• Lotteries
• All employees with a perfect attendance record
  are entered into a prize draw
• Adjustments to profit-sharing
• Where a profit-related pay scheme is in use, the
  proportion of bonus allotted to individuals is
  increased for good attendance

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Reducing Absence Levels Attendance Incentives
(2)

• Well-pay plans
• No payments are made over and above SSP for days
  absent, but extra payments are made for months
  where attendance is good
• Group-based approaches
• Bonuses are paid to every member of the team
  provided absence levels on average reach set
  targets
• (Huczynski and Fitzpatrick, 1989) (cited by
  Taylor, 2002)

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Reducing Absence Levels Attendance Incentives
(3)

• Criticisms
• Involves rewarding employees for fulfilling a
  basic term of their contracts
• Effectively punishes people who are genuinely ill
• Apparently ineffective!
• (Taylor, 2002)
• According to CBI (1997) and IS (1997) attendance
  incentives are ranked the least effective
  approaches
• (cited by Taylor, 2002)

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Reducing Absence Levels Preventative Measures
(1)

• Involves tackling the root causes
• Aim is to assess what factors are motivating
  employees to stay away from work and strive to
  eliminate such / Examples
• Employee Attitudes
• Give consideration to absence records at the
  selection stage
• Use of personality questionnaires in selection
• Home Circumstances
• Give practical help to employees work from
  home, more flexible hours, unpaid leave, provide
  childcare facilities

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Reducing Absence Levels Preventative Measures
(2)

• Employee Dissatisfaction
• Job enrichment, work rotation, teamworking,
  employee participation, improving the work
  environment, better training in supervision,
  improved communication, improved developmental
  opportunities
• Taylor (2002)

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Reducing Absence Levels Preventative Measures
(3)

• Benefits of Preventative Measures
• Should improve attendance
• Should have a general effect on trust, commitment
  and morale
• Positive consequences for staff turnover,
  employee relations, employee development and
  ultimately, competitiveness
• (Taylor, 2002)

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Reducing Absence Levels Most Commonly used
methods

• Return to work interviews
• Disciplinary procedures for unacceptable absence
• Providing sickness absence information to line
  managers
• Trigger mechanisms to review attendance
• Leave for family circumstances
• Line managers taking primary responsibility for
  managing absence
• (CIPD Absence Management Report, 2005)

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Labour Turnover
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Costs of Labour Turnover

• According to Taylor (2002) costs can be
  categorised as follows
• Direct recruitment costs
• Recruitment administration
• Selection costs
• Development Costs
• Administration costs associated with resignations
• Administration costs associated with new starters
• Inefficiency in production or service provision
• Overtime and costs of hiring temporary workers

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Causes of Labour Turnover

• Change of career 46
• Promotion outside the organisation 45
• Level of pay 34
• Lack of development or career opportunities 30
• Redundancy 21
• Retirement 19
• Leaving to have/look after children 10
• Level of working hours 9
• Ill Health (Other than stress) 6
• Lack of support from line managers 8
• Level of workload 6
• Relocation 6
• Stress of job/role 6
• Leaving to look after family members 1
• Other 13
• CIPD Recruitment, Retention and Turnover Report,
  2005, p.30)

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Causes of Labour TurnoverAlternative Viewpoint

• People become dissatisfied with their jobs
• Bored with content
• Lack of promotion
• Poor relationship with supervisor
• Changes in working environment
• Job may fall short of expectations
• Better opportunities elsewhere
• (Taylor, 2002)

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Reducing Labour Turnover (1)

• Give prospective employees a realistic job
  preview at recruitment stage
• Reward Managers whose record at keeping people is
  good
• Maximise opportunities for employees to develop
  skills/career progression
• Give employees a voice
• Offer flexible working hours
• Avoid the development of a culture of
  presenteeism
• Provide as much job security as possible
• Avoid discriminating employees cause of
  voluntary resignation
• Defend organisation against penetration by
  headhunters
• (CIPD, 2006)

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Reducing Labour TurnoverAlternative Viewpoint

• Realistic job previews
• Job enrichment
• Workspace characteristics
• Induction practices
• Leader-member exchange
• Employee selection
• Reward Practices
• Demographic diversity
• Managing interrole conflict
• (Taylor, 2002)

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Case Study TGI Fridays

• Owned by Whitbread
• Sunday Times 100 Best Companies to Work for 2004
• Turnover reached 96 in 2000
• To address this issue
• Huge commitment to promoting internally
• Continuously Training for all staff
• All working shifts begin with a 15 min meeting
• System of skills recognition 40 different
  badges to be worn on uniform
• Recruitment of based on personality rather than
  technical skills
• Encourages people to have fun at work
• Reduced turnover to 53.4 and continuing to fall

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Case Study - Pret a Manger

• / Review Article..
• How can organisations such as Pret a Manger
  sustain their operations with such high staff
  turnover rates?
• Why do you think the recruitment procedure the
  company has adopted leads to fewer voluntary
  resignations?
• What further advantages does the company enjoy as
  a result of its approach to recruitment?

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Summary

• Absenteeism and Labour Turnover are significant
  costs to businesses
• Management need to identify the causes of both
  Absenteeism and Labour Turnover
• Organisations should introduce strategies to
  address both issues

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References

• Beaumont, D. (2005) Absence minded, People
  Management, Vol 11, No. 14, 14July, Pp36-38
• Edwards, C. (2004) Great returns, People
  Management, Vol. 10, No. 9, 6 May, pp35-36.
• Carrington, L (2002) At the Cutting Edge, People
  Management, 16 May, pp30-31
• CIPD (2006) Absence Management Factsheet
• CIPD (2006) Absence Management Report
• CIPD (2006) Employee Turnover and Retention
  Factsheet
• CIPD (2006) Recruitment Retention, and Turnover
  Report
• Mannion M. (2005) BA cuts absence by a third,
  People Management, 27 October, p2
• Robson F. (2006) How to manage absence
  effectively, People Management, 31 Aug 2006, p44
• Taylor, S (2002) People Resourcing, 3rd edition,
  London, CIPD
• www.acas.org.uk
• www.cbi.org.uk
• www.cipd.co.uk/surveys

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Revision Questions

• Outline the causes of absenteeism
• Discuss the strategies which may be employed to
  reduce absence levels
• Outline the causes of labour turnover
• Discuss the strategies which may be employed to
  reduce labour turnover/retain employees