Beating Absenteeism

Employee absenteeism can be a costly problem in terms of lost productivity, aggravation, poor customer relations, and more. Fortunately, there are ways to combat it.

By Jim Fowler

Blue Monday” was a big hit for Fats Domino in the ’50s, and one that lingers on for scrap plant managers. It’s a hit of a different color, though, when employees don’t show up for work on Monday—or any other day. The color is green and the hit is dollars lost due to inefficiency and lower productivity from a shorthanded work force.
   Depending on how you measure it, employee absences reportedly cost North American businesses $30 billion to $50 billion a year. Scrap companies certainly suffer some of those losses, though the precise amount is unknown. Jim Lawrence, plant manager for ELG Metals Inc. (McKeesport, Pa.), says it costs a scrap firm $50,000 or more annually to have a single worker absent each operating day. “It kills us when we don’t have the people to handle the scrap and we’re forced to go to overtime to meet a mill schedule,” he states. Ed Arnold Jr., vice president of Edward Arnold Scrap Processors Inc. (Corfu, N.Y.), estimates the cost to be three to four times the absent employee’s pay for the day in lost production.
   Beyond financial repercussions, absenteeism is an annoyance to supervisors and managers, who must reschedule work and shuffle employees to cover for a missing worker. Absenteeism can also strain customer relations if, for example, scheduled pickups or deliveries can’t be made or if suppliers can’t unload quickly due to insufficient help in the yard. Equally important, absenteeism can be a corrosive force among staff, eroding morale and breeding resentment in workers who must pick up the slack for absent employees.
   Of course, unscheduled absences can occur for legitimate reasons, such as illness, family emergencies, and uncontrollable events. But they also stem from minor aches and pains, sleepless nights and sunny days, hangovers, and the momentary desire to be someplace other than work.
   There are ways to prevent many employee absences, however. Here are some tips on how to do it:
   Establish a Firm Absence Policy. Your policy should set 100-percent attendance as the goal and include procedures outlining the circumstances under which employees can be absent and the check-in steps they should take to alert you to absences. Also, make it clear that attendance is a factor in every employee’s performance appraisal.
   Publicize Your Expectations. Promote your 100-percent attendance policy whenever and wherever possible, such as at staff meetings as well as in your employee handbook and employee newsletters. While reporting to work is every employee’s primary responsibility, stress that their second most important duty is to provide as much advance notice as possible if they’re going to be absent. Such notice gives managers time to adjust for the missing worker, says Richard Lerner, vice president of Cycle Systems Inc. (Lynchburg, Va.). “Most will call and let us know,” he notes, “but there are always some who don’t. We probably terminate one or two employees a year due to absenteeism.”
   Hire Wisely. Smart hiring practices can make a big difference in reducing absenteeism. One rule is: The better managers are trained at interviewing job candidates, the better hires they’ll make, says Rex Wood, human resources manager for Alter Trading Corp. (St. Louis). As William Cook, human resources manager for Skagit River Steel & Recycling Inc. (Burlington, Wash.), adds, “We hire straight off the street as well as using temp employees. With a well-conducted evaluative interview, you can determine a lot about an individual. We just try to manage the risk.”
Macon Iron & Paper Stock Co. Inc. (Macon, Ga.) likewise hires direct and uses temp agencies. Though the company currently gets the majority of its new workers through temping, it is beginning to question the worth of the premium paid for temporary employees, says Evan Koplin, vice president.
   For Liberty Iron & Metal Co. (Erie, Pa.), temp agencies offer just the right service, says David Hilbert, vice president of human relations. “We’ve developed a good relationship with several agencies,” he explains. “They know the kind of jobs we have, what we’re looking for—they know our needs.”
   One major advantage of the temp route is that it gives scrap companies the chance to evaluate an employee before permanently hiring them. As Hilbert notes, “Over a 90-day period, we get a good idea whether the individual will work for us. We can weed out the problems.”
   Cook of Skagit River concurs, noting, “We’ve avoided making some bad hires by using temp employees. We’ve also found some good ones. We have six employees who have been with us five years or more who started as temps.
   “Bottom line—character is everything,” Cook stresses. “If a person has character, we can work with them. We don’t have time to babysit, but we do take the time to work with them. In 90 days, we can generally figure that out and make a good hire.”
   Orient New Employees. All new hires must be told that perfect attendance is your company’s goal. “We lay it out for them from the beginning—they’re expected to come to work every day,” says Rex Wood. Also, remind new hires that absence procedures must be followed in all cases and that failure to follow them is cause for disciplinary action.
   Pay particular attention to younger new hires, advises Richard Lerner, because their work ethic is “not as well-oiled. They don’t care as much as older employees, and they generally don’t have the pressures to go to work, particularly if they’re single. They don’t have the commitments at home.”
   Echoing this point, William Cook notes that during Skagit River’s 90-minute new employee orientation session, he stresses that “attendance is an essential function of the job,” adding that “those in their twenties always look surprised.”
   Record and Follow Up on Every Absence. Maintain a simple information system in which you categorize absences by employee, work unit, and reason for absence. A review of the data every month or quarter can help you spot absence trends. Some employers require workers to complete claim forms upon their return, while others informally discuss the absence. Large firms often refer absent employees to their in-house health service. The point isn’t to judge the validity of absences but to impress upon employees that you’re vitally interested in their attendance.
   Dan Feltz, director of human resources for Galamba Metals Group (Kansas City, Mo.), has been collecting data since the beginning of this year to determine, track, and measure his company’s absence rates. “If you can measure, you can manage better,” he says. Feltz uses a formula in which the total number of workdays in a month are multiplied by the average number of employees. Then absence days (unplanned or unscheduled, not holiday or vacation) are calculated and divided by the total workdays. The result is the percent of absenteeism.
   In Feltz’s view, tracking absence rates and presenting the data to managers and employees provides an incentive to control absenteeism.
   Cost It Out. Periodically, publish a chart detailing the documented costs of all employee absences. Employees with potentially serious attendance problems might receive customized charts detailing the economic consequences of their absences.
   Hold Supervisors Accountable. If your firm is large enough to have several layers of management, hold supervisors accountable for the attendance of employees. Research studies suggest that the quality of supervision frequently affects attendance levels. When managers and supervisors are attentive to absenteeism, it goes down, maintains Rex Wood. “Employees will respond to manager attention, and managers that are active in that area have a high degree of success,” he says.
   Get Employees Involved. If your company has an absenteeism problem, ask your workers how they’d solve it. They’ll be more committed to resolving the problem if they’ve had a hand in creating the planned approach. Similarly, self-policing—in the form of attendance monitoring by peers and peer involvement in the rescheduling of absent employees’ work—makes absent employees accountable to everyone. Alternatively, absent employees might be required to procure substitutes, switch shifts, or ask other workers to assume their duties.
   Forget the ‘Doctor’s Note.’ Many employers still require absent employees to provide a physician’s note, though research suggests that this doesn’t prevent absences. One exception: It’s a good idea to require seriously ill employees to receive permission from their physicians to return to work.
   Save the Work. Consider requiring absent employees to complete work that accumulated in their absence. This isn’t an option for every workplace or every job, of course, but it can promote accountability and provide a serious disincentive to unnecessary absences.
   Watch the ‘Doldrums Days.’ In many industries, absences skyrocket on Mondays and Fridays as well as just before and after vacation periods. In the scrap industry, Monday seems to be the most-abused day. As one plant manager remarks, “I know I’ll always have at least one employee out on Monday—I just don’t know which one.” 
   Offer Incentives for Good Attendance. Provide bonuses, gifts, extra days off, or other incentives to reward workers with perfect or near-perfect attendance. It’s also a nice gesture to recognize them in staff meetings, on employee bulletin boards, and in employee publications. If you provide sick leave, consider partially compensating employees for unused leave once a year in the form of a cash bonus or extra vacation time. Another idea is to reward employees with sick-leave allowances after a period of no absences.
   Macon Iron and Paper Stock initiated an attendance bonus program in which employees with perfect attendance for a month receive a $25 bonus. Though this financial carrot helped, the company still had an absence problem, so it decided to add a stick. “We told our employees that they’d be held accountable for following all company rules,” says Evan Koplin. This sent the message that “we’ve got a business to run and we’re going to stand firm on the issue of discipline.”
This carrot-and-stick approach did the trick. “In the past three or four years, about half of our 75 employees in operations earned the bonus,” Koplin says.
   Edward Arnold Scrap Processors gives a $30 gift certificate at its monthly safety meeting to workers with perfect attendance and, according to Ed Arnold, 80 percent of the firm’s 52 production employees qualify. “It has made a difference since we started the program four years ago,” he says, noting that “there were four problem employees who came around immediately.”
   Liberty Iron & Metal has had an attendance incentive program for its 62 production employees for the past five years. Workers who report to work—on time—for three months can choose either a day’s pay or a vacation day, which must be taken within the next three-month period, says David Hilbert, who notes that 60 percent opt for the day’s pay. 
   Linda Klapperich, human resources manager for American Iron & Supply Inc. (Minneapolis), administers an 8-year-old attendance program based on a point system. If an employee has perfect attendance for 30 days, he or she earns 10 points. When the worker accumulates 60 points, he or she is entitled to a free day off. Hence, an employee with no unexcused absences can earn two extra days of leave a year. And since the points are posted, Klapperich notes, there’s a degree of peer pressure on who is and who isn’t showing up for work.
   Galamba Metals Group is initiating a quarterly cash bonus plan based on an attendance point system for its 175 hourly employees, says Dan Feltz. In the system, employees receive one absence point for every unjustified absence. An employee is only allowed six absence points within a rolling six-month period. If an employee gets seven absence points in any six-month period, he or she is terminated.
   On the bonus side, employees who have perfect attendance in a calendar-based quarter receive $50. For each consecutive quarter of perfect attendance, they receive $100 per quarter, including an extra $100 (for a total of $200) in the fourth consecutive quarter. It’s possible, therefore, for a Galamba employee to earn $450 in bonuses for perfect attendance in four consecutive quarters.
   According to Feltz, this point-and-bonus approach will dissuade employees from taking unjustified absences and prompt them to give proper notification when they must be absent.
   Skagit River Steel & Recycling takes a somewhat different approach. “Long-term employees participate in profit-sharing and retirement programs and can receive a bonus in good years,” William Cook observes. “We explain to new employees that to become a long-term employee, they have to be in attendance. That’s the benefit of showing up for work every day.”
   Implement a PDO Program. Instead of giving employees separate vacation time, sick leave, and personal days, simply give them a fixed amount of general leave each year and require that sick days be credited against it. Any remaining days can then be used for vacation.
   Cycle Systems is one scrap company that has adopted such a paid day off (PDO) program. As Richard Lerner explains, a worker receives 11 days after six months of employment, 16 days after three years, and 21 days after 10 years. In addition, employees receive seven paid holidays annually. An employee can use a PDO for any purpose, but when the days are gone there’s no more leave available regardless of the situation.
   Make Provision for Physician/Dental Appointments. These appointments often create full days of leave. By allowing for time off in small chunks, employees can keep these appointments without guilt or worry.
   Consider Flex-Time. If some of your employees face excessive demands on their time outside of work, consider flex-scheduling. This approach can allow employees to schedule absences around a flexible work week.
   Foster Wellness. Poor eating habits, lack of exercise, and stress are leading causes of short-term illness. Occasional wellness seminars and health-related bulletin board information can keep good health habits in front of your employees. 
   Fostering wellness can also mean helping employees who have substance-abuse problems. Skagit River, for example, belongs to the Washington Drug-Free Business Association, a private group funded by businesses that offers an employee-assistance program. “If an employee has a problem,” says William Cook, “I tell them to call the association for help. It’s completely anonymous and costs them nothing.”
   Such programs are a win-win situation. For employees, they offer a chance to “get straightened out,” Cook says. For the company, they can ensure a safer work environment, higher productivity, and lower absenteeism. “We can’t have someone working here who is high on drugs, or drunk, or not in control of their faculties,” Cook states. “It’s a safety issue and a profitability issue. Our objective is to have clean, sober employees. We have less absenteeism with a drug- and alcohol-free workplace.”
   Promote Job Satisfaction. Studies indicate that as job satisfaction increases, employee absences decline. Thus, the wise manager will promote job commitment, information sharing, and involvement every day. Once these qualities pervade the workplace, employees have a tough time staying away.
   Use Progressive Discipline. When you detect an absence abuser, take the first appropriate disciplinary measure, usually a verbal reprimand. If the situation happens again, step up your discipline. Accept no excuses, and make no excuses for the actions you take.
   In many scrap companies, the general disciplinary procedure is a verbal warning after the first offense followed by two written warnings, suspension, and termination. It must be noted, however, that the existence or absence of a union contract will have some bearing on the procedure followed.
   Interestingly, while employee absenteeism was a major problem in the past for many scrap companies, it seems to have diminished in recent years. In fact, some scrap managers say absenteeism is approaching “nonissue” status. This positive change hasn’t just happened, of course. It has come about thanks to rigid enforcement of company attendance rules, smarter hiring practices, innovative incentive programs, and a greater effort by management to improve job satisfaction among employees. 
   Still, the absenteeism problem will never completely disappear. For scrap managers, that simply means they must continue to be vigilant at minimizing the problem. •

Jim Fowler is retired publisher and editorial director of Scrap.