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The Human Resources Institute of New Zealand

Human Resources Institute of New Zealand (HRINZ) is the professional body for those involved in Human Resource Management and the development of people.

HRINZ represents the interests of 3,000+ individual members who make up around 45% of the known New Zealand HR market. Read More

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Absenteesim and Staff Retention

Absence costs New Zealand businesses nearly $1 billion a year according to research conducted by Conversa Global.

Have you ever stopped to think how much absence or ‘unplanned’ leave is costing your organisation each year? What impact does this absence have on your business? And how can you, as an HR professional take the lead and add real value to your organisation by reducing absence?

Whenever an employee takes unplanned leave, it represents a cost to an organisation. There are two types of costs to consider: the direct costs, which are tangible and therefore quite easy to calculate and the indirect costs, which are much harder to quantify and often substantially higher than the direct cost. To get some idea of what absence may be costing your organisation, take a look at the rate of absence in your workplace, and then try calculating the following:

Direct costs

  • Daily rate of pay the organisation has to pay for someone who has not performed any work for the business
  • Other costs incurred, that is overtime paid to other staff to cover the absence, engagement of temporary staff, etc.

Indirect costs

  • Time, paperwork and administration for the line manager and HR/Payroll
  • Inconvenience: the amount of manager’s time diverted from other management responsibilities i.e. finding replacement staff, reallocating work, etc.
  • Effect on other team members: added stress, morale, work not completed or missed deadlines
  • Lapse in quality due to overworked team members or poorly trained staff being substituted into an unfamiliar role
  • Impact on customers: upset customers due to missed timelines and/or issues with quality, etc.

Even taking a conservative estimate, you will probably find the figure is significant enough for senior managers to sit up and take notice of your findings. However, while identifying a leak in the bucket is one thing, mending it can be quite another. If you determine that absence is a concern in your organisation, what steps can you take to rectify it?

There are a number of actions HR can take to add real value to the organisation that could also positively impact bottom line results:

  • Collect and analyse absence data, regular reporting on absence will help you spot trends i.e. particular site locations, days of the week, departments (where absence seems particularly high compared to the rest of the organisation). If you notice trends you can start to delve deeper and begin investigating what the underlying issues might be. It is important to include senior management on the absence reporting distribution list so they can be made aware of the cost implications caused by high rates of absence.
  • Understand the health status of the people in your organisation. Many organisations do not know how healthy or unhealthy their staff are, and ironically some employees are not aware that they may be suffering from an undiagnosed health problem. For example, chronic diseases such as diabetes can go unnoticed for a long time, and if left undiagnosed may slowly affect performance and contribute to increased absence from work.
  • Health checks are easy to organise, don’t take long (usually about 20-30 minutes), and can be conducted onsite. A basic health check usually includes testing blood pressure, cholesterol, blood sugar levels, waist circumference, and Body Mass Index (BMI). Optional extras include drug, vision, and hearing tests. A well-designed health check programme will provide an employee with a summary report documenting their health check results. The report will identify specific areas of risk, as well as providing useful tips on lifestyle changes that could help an individual to improve their health. If an employee’s result indicates they are in a ‘high risk’ category they may be referred to their GP for further follow up tests and/or treatment.

Once all the employee health checks have been completed, a business should expect to receive a high level report that provides analysis about the state of the health within the organisation. A good report should highlight particular areas of risk i.e. a large percentage of staff suffering from high blood pressure.

Having this information is a valuable benchmark for an organisation to measure against. It then enables them take positive action and design strategies aimed at combating health risks. In addition, offering health checks sends a clear message to employees that their employer cares about them and their health, which can help improve an organisations culture.

Wellness programmes - collecting health check data is a great starting point to understanding where health risks exist. The next step is to design a wellness programme to target identified problem areas, motivate staff, engage them, and ultimately help reduce absence. A wellness programme can be planned to target specific problem areas. There are a range of options available, from seminars and workshops, to fully managed and incentivised wellness programmes.

For example, Southern Cross is in the second year of running its in-house wellness programme ‘Switch2well’. To date, they have successfully reduced unplanned absence by around 15 percent.

  • Provide a health insurance scheme in your workplace. Health insurance complements in the public health system by covering the cost of non-urgent procedures that qualify for treatment. It provides your employees with access to private health care and faster treatment. Faster treatment can mean a quicker return to work and a better quality of life.

A 2004 TNS survey showed that for those waiting for surgery, absenteeism from work for the insured averaged 14 days compared to a considerably higher 48 days for uninsured.

  • Encourage a ‘culture of wellness’ within the organisation. The workplace has been identified as an influential place to encourage lifestyle and behaviour change. In a supportive environment you can help people to stay healthy so that they in turn, can perform to the best of their ability.

Organisations are reliant on the energy and discretionary effort of their workforce to fulfil their obligations. By giving employees the opportunity to take more responsibility for their health, you can help create a happier, healthier workforce while helping to reduce the high costs associated with absence. The workplace has been identified as an influential place to encourage lifestyle and behaviour change.

This article was written  for HRINZ publication by Jo Broadhead is Market Segment Manager – Corporate for Southern Cross Corporate Solutions.

Staff Retention

Retention of staff is more important than ever in this tight labour market. Therefore, employees who are satisfied with the way their organisation treats them as employees and rewards them for their performance or efforts, are less likely to leave the organisation.
Generally it is considered that if your organisation has a high turnover of staff due to retention issues, this will result in low staff morale, poor service delivery, damage to your organisation brand and your reputation in the market place, and most importantly will be impacting on your financial bottom line.

It is best practice to consider aligning your companies recruitment strategy with your business plan, making sure your future employees are a good fit with the existing team and that their skills will assist the organisation with its goals. Provide training and coaching to all new members of staff in order to enhance their existing capabilities and develop new skills and potential. This training should also be provided to managers, to ensure that they are kept up to date with their communication and interpersonal skills, providing interview training wherever possible to ensure that they understand the recruiting process and who to recruit, rather than going into the process blind and going on a gut feeling. Sucession Planning or Talent Management Training can also be used as way to retain staff within an organisation, as it sends a clear message to all your employees that the organisation is committed to developing future leaders from within. 

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Disclaimer: This information has been written for and submitted to HRINZ for publication and has been published in good faith for the general information of HRINZ Members of the Institute. HRINZ accepts no legal responsibility for the contents of the Knowledge Base and appropriate professional advice and assistance should be sought in particular cases.

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