Bosses worried sick about absence

Oct 03 2005 by Nic Paton Print This Article

Employers worry about the cost of health-related absence from the workplace, but are unprepared to tackle the root causes in a joined-up, proactive manner, a survey has suggested.

The poll of 94 firms by Canadian HR consultancy Watson Wyatt Worldwide found most firms recognised the impact of absence on workplace productivity and their bottom line.

Yet most still failed to track the costs and causes of disability claims and were unprepared to tackle the issue head-on.

"The good news is that employers are more aware of the importance of the alignment between organisational health and workforce health," said Joseph Ricciuti, national director of the consultancy's group benefit and health care practice.

"However, the bad news is that relatively few employers have plans to measure absences or address the underlying problems related to productivity," he added.

Rising mental health claims, primarily related to stress, depression and anxiety disorders, were the top health and productivity-related concern for organisations, listed by 56 per cent of participants, followed by the ageing workforce (54 per cent) and employee engagement (48 per cent).

The emergence of mental health claims as a key area of concern created a range of challenges for employers, added Bill Wilkerson, chief executive of the Global Business and Economic Roundtable on Addiction and Mental Health.

"We are not going to solve these problems through the narrow context of disability practices," he said.

"Organisations must begin to understand how management practices impact employee health," he added.

In spite of increased recognition of the toll that short- and long-term disability absences took on workplace productivity, most organisations continued to deal with the issue in a reactive rather than a proactive way.

Echoing results of earlier studies, the 2005 survey showed the majority of companies failing to measure the total costs associated with employee absenteeism.

Just 35 per cent measured short-term benefit costs per employee and only 30 per cent measured those costs as a percentage of their payroll.

For long-term disability benefits, just 35 per cent of organisations tracked cost per employee, while only 28 per cent looked at the cost as a percentage of payroll.

And these costs were on the rise, Watson Wyatt warned.

While workers' compensation costs decreased slightly in 2005 (to 1.2 per cent of payroll costs from 1.3 per cent in 2002/2003) and reported short-term disability costs stayed the same (1.9 per cent), long-term disability costs rose 27 per cent to 1.4 per cent.

This was largely because of the effects of an ageing workforce and rising mental health claims, it said.

In addition to the direct costs of disability, absences also created many indirect costs such as overtime, replacement workers and lower levels of productivity.

Despite these rising costs, just 36 per cent of organisations said they tracked the reasons behind long-term disability claims and just 38 per cent said they did so for short-term disability.

This left organisations without the information they needed to identify potential problems before they arose, warned Watson Wyatt.

"Organisations are focused on tracking lag indicators, such as absences, rather than the lead indicators which could provide better measurements to help reduce costs and improve productivity," said Ricciuti.

"The lack of this critical information is an obstacle to developing proactive strategies for total absence management," he added.

Most organisations, worryingly, had no plans to address the issue of rising mental health claims with tangible measures.

Only 31 per cent of those polled indicated they were likely to implement programmes to address the issue over the next one to two years.

And just five per cent had any plans to deal with the social stigma of mental illness, which may keep sufferers from coming forward and prevent organisations from improving results, the research added.

"Mental health problems have both physical and psychological components," said Claudine Ducharme, disability management consultant at Watson Wyatt's group benefit & health care practice.

"While employers recognise the impact absences have on the workplace, they don't yet fully perceive the connection to workplace practices and general environment," she added.

Other conclusion from the study included that "presenteeism" was becoming a growing concern.

Employee assistance programmes were one of the success stories of disability management practices, the survey also reported.

Respondents rated the programmes as very effective in improving employee health and satisfaction and moderately effective in contributing to lower costs.