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Leslie Bonacum
847-267-7153
mediahelp@cch.com
Neil Allen
847-267-2179
neil.allen@wolterskluwer.com

It’s Still A Costly Struggle, But After All-time High In 1998, Employers See Small Decline In Unscheduled Employee Absenteeism

  • Continuing Trend, Workplace Stress Kept Employees Home More
  • Organizations Lose Millions of Dollars Annually
  • Absenteeism by Health Care Workers, Those in Mid-Size Companies Soared

(RIVERWOODS, ILL., September 21, 1999) – Unscheduled worker absenteeism remains a dilemma for U.S. employers, but some organizations appeared to have made at least some inroads against the costly problem, according to the 1999 CCH Unscheduled Absence Survey by CCH INCORPORATED (CCH), a leading provider of human resources and employment law information. In 1999, companies averaged a 7-percent decline in unscheduled absenteeism, a small step forward against 1998’s all-time high. Industry sector and company size, however, appeared to influence greatly whether employees were on the job or not. Of particular concern, absenteeism caused by worker stress has tripled since 1995, according to the survey. And many human resources managers, who said absenteeism cost them millions in 1999, reported they see little relief in sight.

The 1999 CCH Unscheduled Absence Survey, conducted annually by CCH, is the most definitive survey on absenteeism in the workplace and the only one that measures costs associated with unscheduled absences. The survey will be released Sept. 22, 1999, in the newsletter CCH Human Resources Management Ideas & Trends.

"The small decline in the overall cost and rate of absenteeism, after last year’s considerable increase, provides relief for some organizations," said Nancy Kaylor, a human resources analyst for CCH’s Health and Human Resources Group. "However, because many sectors when examined by size or industry actually show significant increases in absenteeism, it’s apparent that combating unscheduled absenteeism is an ongoing struggle."

Brief Overview

The 1999 CCH Unscheduled Absence Survey reflects experiences of human resources executives in U.S. companies and organizations of all sizes and across various businesses and not-for-profit industry sectors. (For more information, see "About the Survey" at the end of this release.)

The 1999 survey found the overall rate of unscheduled absenteeism decreased by 7 percent from 1998 while the dollars lost to absenteeism decreased 20 percent. Yet, when compared to a large 25-percent increase in absenteeism the previous year, the results indicate a persistent problem – one that costs employers an average of $602 per employee, per year.

According to the CCH survey, company size also played a factor in the rate of unscheduled absenteeism. Mid-size companies (those with 1,000 to 2,499 people and 2,500 to 4,999 people) – which employ approximately 11 million Americans – struggled with increasing absenteeism. Small businesses, on the other hand, showed a significant drop in unscheduled absences, while absenteeism in the largest organizations remained unchanged.

Some industry sectors showed dramatic or continuing problems. Three of the eight sectors in the CCH survey reported increases in unplanned absences, with absenteeism rates skyrocketing within Health Care to an all-time high. Other sectors reporting increases in absenteeism this year were Government and Universities. Reporting record-low rates for their sectors were Finance/Banking and Manufacturing. The Service and Utilities sectors also reported decreases, while Retail/Wholesale’s absenteeism rate remained stable.

As to why employees aren’t showing up for work, Personal Illness and Family Issues were the most-cited reasons for last-minute absences, but Stress and Entitlement Mentality as reasons reached all-time highs for the second straight year.

However, while employers acknowledged that paid time off (PTO) programs – rather than a specific allotted number of "sick days" – and work-life programs both had a positive effect on reducing last-minute no-shows by employees, these programs were not widely instituted, according to CCH.

Details: Absenteeism Varies by Company Size and Industry

The overall mean average unscheduled absenteeism rate in 1999 was 2.70 percent, compared to 2.90 percent in 1998, indicating a 7-percent decrease in unplanned absences. However, based on industry sector and size of company, absenteeism varied significantly.

With a 121-percent jump in absenteeism to a mean rate of 3.97 percent, Health Care absenteeism rates, which reached an all-time high for this sector, were the highest of all industries surveyed. Other sectors reporting increases in absenteeism this year were Universities, with a 6-percent increase from last year to a mean rate of 3.59 percent; and Government, with a 15-percent increase to a mean rate of 3.52 percent.

Two industries also reported record-low rates of absenteeism: Finance/Banking, where absenteeism dropped 44 percent to a mean rate of 1.42 percent, and Manufacturing, where absenteeism shrank 41 percent to a mean rate of 1.39 percent. The Manufacturing industry had the lowest mean rate of absenteeism among all sectors surveyed. Other sectors reporting decreases in unscheduled absences included Utilities, with a 37-percent decrease to a mean absenteeism rate of 2.16 percent, and Service, with a 15-percent decrease to a mean rate of 2.38 percent. With a mean rate of 2.73 percent, Retail/Wholesale reported no substantial change in unscheduled absenteeism.

Unscheduled absenteeism also varied based on company size.

Mid-size companies, those with 1,000 to 2,499 employees, reported that unscheduled absences skyrocketed 51 percent, reaching a record-high mean rate of 3.98 percent for 1999. This was the highest recorded mean rate of absenteeism for any size company since CCH first began conducting the survey in 1991. In addition, those employing 2,500 to 4,999 employees also saw a 12-percent increase in absenteeism.

However, small businesses have reversed the trend. Those employing fewer than 100 employees saw a 76-percent decrease in absenteeism this year, down to a mean rate of just 0.77 percent. These entrepreneurs had the lowest rate of absenteeism compared to all other size organizations.

Change in Unscheduled Absenteeism Rates Since 1998

Company Size

Percent Change

99 or fewer employees

-76%

100-249 employees

14%

250-499 employees

-19%

500-999 employees

-17%

1,000-2,499 employees

51%

2,500-4,999 employees

12%

5,000-9,999 employees

-16%

10,000 or more employees

0%

Employers Hit Hard by Dollars Lost to Absenteeism

When overall costs were analyzed, the survey found that while costs have come down, unscheduled absenteeism is still expensive, costing large companies more than $3.4 million a year.

Cost by Company Size

Company Size

1999 Total Annual Cost

99 or fewer employees

$13,423

100-249 employees

$72,611

250-499 employees

$125,962

500-999 employees

$442,434

1,000-2,499 employees

$961,155

2,500-4,999 employees

$2,474,337

5,000-9,999 employees

$3,423,704

In addition, indirect costs – not included in the survey estimate – can greatly increase costs to the employer. Overtime pay for other employees or hiring a temporary employee to cover for the absent worker, as well as indirect costs associated with a decline in morale and lower productivity among workers who are expected to cover for an absent employee should be calculated and addressed by employers.

The high averaged cost of unscheduled absenteeism decreased by 20 percent, from as high as $757 per employee annually in 1998, to as high as $602 in 1999.

Reporting the greatest decrease in 1999 were small businesses. Those with fewer than 100 employees – the country’s largest employer group with 33 million people – experienced a steep decline in average cost per employee, from as high as $1,044 in 1998 to $537 in 1999. Organizations with 100 to 249 employees and those with 500 to 999 employees were the only categories reporting increases in costs for absenteeism over 1998, according to CCH.

Change in Unscheduled Absenteeism Costs Since 1998

Company Size

Percent Change

99 or fewer employees

-49%

100-249 employees

27%

250-499 employees

-40%

500-999 employees

3%

1,000-2,499 employees

-26%

2,500-4,999 employees

-8%

5,000-9,999 employees

-14%

"While dollars lost declined in 1999, many companies looking for ways to improve earnings by controlling costs shouldn’t ignore the impact of unscheduled absences on their bottom line and on productivity," said Kaylor. "With the appropriate programs in place, businesses could significantly reduce the rate of absenteeism further, improve the work environment and see substantial savings."

Not Physically Sick, Just Had Enough

The 1999 CCH Unscheduled Absence Survey also reviewed the reasons employees called in sick at the last minute – and increasingly it’s Stress and Entitlement Mentality that cause employees not to show up for work.

Personal Illness and Family Issues were the two leading reasons for unscheduled absences, each accounting for 21 percent of unscheduled absences, followed by Personal Needs at 20 percent.

However, both Stress and Entitlement Mentality as reasons for unscheduled absenteeism reached all-time highs for the second consecutive year, each now accounting for 19 percent of all unscheduled absences. Conversely, Personal Illness, which had accounted for 45 percent of all unscheduled absences in 1995, (the first year that CCH began tracking reasons for unscheduled absences), decreased to a record low in 1999 of just 21 percent. Family Issues also showed a decline from last year when it had accounted for 26 percent of absences, while Personal Needs remained unchanged at 20 percent of all unscheduled absences.

Of particular concern, according to Kaylor, is the Stress category, which has more than tripled since 1995 when it accounted for just 6 percent of unscheduled absences.

"In addition to increased absenteeism, stress manifests in a number of ways that are unhealthy and unproductive for the individual, the organization and other employees. The challenge for employers is finding a solution for combating stress. The company itself may be causing or compounding employee stress, for example, by asking fewer workers to do more, having ineffective work processes or inadequately trained supervisors," said Kaylor. "While companies are continuing to make some progress with family-friendly policies, it’s apparent that more attention will have to be given to programs that help address employee stress."

Family-Friendly Policies Inch Forward

To better understand how companies can reduce their unscheduled absences, the 1999 CCH Unscheduled Absence Survey also asked employers about their experiences with work-life programs. Survey results indicated these programs could help reduce unplanned absences among workers. However, the organizations didn’t necessarily offer these programs to their workers.

On a scale of one to five (with five being most effective), the work-life programs ranked highest by human resources professionals for reducing unscheduled absences were Child Care Referral (3.64), Leave for School Functions (3.59) and Flexible Scheduling (3.54).

As for what companies practice, more than one-half (58 percent) indicated their companies offer Flexible Scheduling. This continues to increase from the 1997 CCH survey, when less than one-quarter offered Flexible Scheduling. However, among the two other leading work-life programs seen to reduce unplanned time off, Leave for School Functions was offered by only 26 percent of responding organizations and Child Care Referral was offered by far fewer, just 16 percent.

Strong Work Ethic Reducing Absences; Effectiveness of Fear Dwindling

Companies reporting a decrease in unscheduled absenteeism attributed the decline most often to a Strong Work Ethic (17 percent), followed by Loyalty to Supervisor (16 percent) and Fear of Punishment (16 percent). While the percent of organizations indicating Strong Work Ethic and Loyalty to Supervisor as effective in reducing absenteeism remained unchanged from last year’s survey, Fear of Punishment as a reason declined this year, indicating that it may not be an effective combatant for absenteeism.

Counterbalancing this decline was an increase in Effective Absence Control programs as a reason for lower absenteeism. Fifteen percent of organizations that reported declining absenteeism in 1999 attributed it to Effective Absence Control programs, up from just 9 percent in 1997.

"With stress, personal needs, family matters and other issues confronting employees, fear of punishment by their company may be the least of an employee’s concerns, and may not be an effective strategy for employers in a particularly tight job market," said Kaylor. "Building a culture that allows employees to balance work-life issues and backing that with effective programs is likely to have a greater impact."

Absence Control Programs Effective, But Most Organizations Don’t Offer

Paid Time Off (PTO) continued to increase its lead as the most effective absence control program, according to the 1999 CCH Unscheduled Absence Survey. In 1998, four out of eight company-size categories saw PTO programs as most effective. In 1999, PTO programs were seen as most effective in controlling unscheduled absenteeism in six out of eight of company size categories. Only those with 2,500 to 4,999 employees and those with 10,000 or more employees saw Buy Back programs as most effective.

PTO programs provide employees with a bank of hours to be used for various purposes instead of traditional separate accounts for sick, vacation and personal time. Buy Back programs provide employees with compensation for not using all their allotted time off.

In addition, PTO programs were perceived as the most effective absence control program by four out of eight industry categories: Manufacturing, Finance/Banking, Government and Service.

However, as for what they practice, only 27 percent of organizations reported they have implemented a PTO program, slightly up from last year’s 25 percent. Rather, the single most used absence control program remained Disciplinary Action, used by 77 percent of organizations, according to the CCH survey.

"Traditional sick-leave plans do not address the real issues that are driving employee absenteeism," said Kaylor. "If employers are going to effectively address unscheduled absences, they need to turn knowledge into action, developing time-off programs that truly fit with today’s work-life demands. There’s little value in outdated plans that cost organizations more, are not flexible enough for today's workplace and fail to meet even the basic needs of workers."

Many Employers Fear Increased Absenteeism in the Next Century

While absenteeism declined overall in 1999, nearly one-half of the organizations surveyed remained concerned about the future. Perhaps influenced by a low unemployment rate and high competition for employees in all business sectors, 48 percent of human resources professionals expected unscheduled absenteeism to increase over the next two years.

Looking at the respondents across industry categories, the majority of sectors expected unscheduled absenteeism to increase or remain unchanged. Concern was particularly high in Retail/Wholesale where nearly two out of three companies (63 percent) expected more workers to call in sick.

Among the other industries expecting absenteeism to increase or remain the same were: 55 percent of Service, 53 percent of Finance/Banking, 52 percent of Manufacturing, 50 percent of Government and – particularly noteworthy because of already record-high absenteeism rates – 50 percent of Health Care organizations. The Utilities sector was the most optimistic, with only 14 percent of companies in this sector expecting an increased rate of absenteeism in the next two years, while 42 percent of the Universities anticipated an increase.

A varying degree of concern about future increases in absenteeism also was apparent in companies of all sizes. Those registering the highest level of concern were respondents from organizations employing 1,000 to 2,499 workers and those with 5,000 to 9,999 employees, where 66 percent and 57 percent, respectively, expected increases in absenteeism over the next two years. This is of particular concern for those with 1,000 to 2,499 workers, as they already saw absenteeism rates jump 51 percent this year.

"With so many organizations concerned about increased absenteeism, it’s apparent that companies have to become committed to tackling the problem if they’re ever going to gain a significant and sustainable reduction in the costs and rates of unscheduled absenteeism," said Kaylor.

About the Survey

The 1999 CCH Unscheduled Absence Survey, now in its ninth year, surveyed 305 human resources executives in U.S. companies and organizations of all sizes and across major industry segments. The 1999 survey reflects experiences of randomly polled organizations with an estimated total of 793,844 employees.

The organizations surveyed included employers in 46 states, the District of Columbia and Puerto Rico. Eight business segments are represented including: Manufacturing, Finance/Banking, Health Care, Retail/Wholesale, Service, Utilities, Universities and Government.

Mean absence rates were calculated by dividing total paid-sick hours by total paid-productive hours. Scheduled absences, such as vacation, legal holidays, jury duty, personal time and bereavement leave were not included.

CCH Human Resources Management Ideas & Trends newsletter sponsored the survey, which was conducted by Michael Markowich, Ph.D., a member of the CCH Human Resources Management Advisory Board.

To Obtain a Copy of the Survey

Copies of CCH Human Resources Management Ideas & Trends newsletter containing the complete 1999 CCH Unscheduled Absence Survey are available by calling 800-449-9525, and asking for offer number 06280001. Price is $29.95, plus tax, shipping and handling.

About CCH INCORPORATED

CCH INCORPORATED, Riverwoods, Ill., is a leading provider of tax and business law information and software for human resources, accounting, legal, securities, health care, banking and small business professionals. The company’s Health and Human Resources Group is among the nation’s most noted authoritative sources of employment law, including information on benefits, compensation, worker safety and human resources management. Its publications and software for human resources professionals include Human Resources Management, Pension Plan Guide, Benefits Guide and Payroll Management Guide. CCH is a wholly owned subsidiary of Wolters Kluwer U.S. The CCH web site can be accessed at www.cch.com.

-- ### --

EDITOR'S NOTE: For more information about the survey, contact: Leslie Bonacum at 847-267-7153 or Mary Dale Walters at 847-267-2038. Available to members of the press:

  • Charts and graphs depicting the full range of survey data
  • Historical survey data
  • Case histories
  • This release and related information are posted in the CCH Press Center: www.cch.com.

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