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Nathan P. Cote
Embry-Riddle Aeronautical University,
Webster University, and Park University, extended campuses
10 Cholla Ave, Alamogordo, NM 88310-890, USA
Raymon R. Bruce
University of Texas at Arlington,
School of Urban and Public Affairs,
Box 19588, Arlington Texas, 76019-0588, USA
The authors were asked to examine a problem of employee absenteeism from the abuse of sick and annual
leave during Competitive Sourcing Program (CSP) study at an U.S. Air Force organization. The purpose of
this study was therefore, to determine if there was statistically more or less absenteeism in the form of leave
being taken in an organization undergoing downsizing through a CSP. Therefore, in order to answer that
question, a comparison of two sets of stratified random samples of leave usage data comparing employees in a
CSP study organization against employees in an organization not under a CSP study was conducted. The
research shoved that the employees in an organization undergoing a Competitive Study took fewer sick leaves
than the employees in the control organizations not undergoing a CSP study. Whether this was due to fear of
being singled out for being let go first or a prudent strategy for the employees to improve the unit’s
competitiveness with outside contractors must be the subjects of further research. In any case, this research
shows the value of researching the facts to verify significant management’s concerns about employee behavior.
Raktažodžiai: išorės ištekliai, konkursinis išteklių gavimas, tarnautojų absenteizmas, įstaigų mažinimas.
Keywords: outsourcing, competitive sourcing, employee absenteeism, downsizing, public sector.
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therefore, was to determine if there was statistically example, the Federal Workforce Restructuring Act of
more or less absenteeism in the form of leave being 1994 required a reduction of 272,900 employees over
taken in an organization under-going downsizing the fiscal years 1994 through 1999. It also required
through a CSP study. federal agencies to look toward changing work pro-
Much of the research on absenteeism conducted cesses, utilizing evolving technology, and elimina-
in the recent past has failed to generate significant di- ting functions and programs. As a result, federal ma-
vidends, whether the research concerned the predic- nagers had to reorganize, train, and empower a smal-
tion, explanation, or control of absence [2]. Absen- ler workforce to deliver essentially the same services
teeism research has in fact been described as every- and programs to U.S. citizens. Often, a misleading re-
thing from bewildering to not very informative [3]. presentation of downsizing through competitive sour-
Therefore, in order to answer the supervisor’s con- cing involves only the reduction of employees provi-
cerns, a comparison of two sets of stratified random ding immediate monetary savings. However, it is
samples of leave usage data comparing employees in only later the find that many key employees were let
a CSP study organization against employees in an go, those who were instrumental with the success of
organization not under a CSP study was conducted. the organization.
The stratified random sample totaling seven emplo- The results of downsizing through competitive
yee records comprising 18 percent of the population sourcing effect most governmental agencies including
in the CSP study organization was compared with an the military. In May 1997, the Department of Defense
exact number of a stratified random sampling of (DOD) published its first Quadrennial Defense Re-
employee records in a similar, but larger organization view (QDR) of U.S. defense posture. This review,
comprising 10 percent of its population. A statistical mandated by the U.S. Congress as part of its efforts
significance could then be established from these to improve the performance of governmental agen-
samples to answer the supervisors’ immediate ques- cies, sought to set the course of U.S. defense policy
tion of whether or not the employees’ use of either for the next eight years, in large part by setting
types of leave might be significantly more in the guidelines for the investment of over $2 trillion in
study organization compared to a non-study organiza- defense expenditures. Congress also mandated an
tion, or whether there would be no significant independent nonpartisan National Defense Panel to
difference. conduct a comprehensive assessment of the QDR and
alternative force structures through the year 2010.
It All Begins with Downsizing Downsizing is not an easy process and it is one in
which the end result impacts employees in some
Since the Clinton administration National Per-
negative way. This is especially true when down-
formance Review (NPR), there have been several
sizing is by a competitive outsourcing process that
changes in the US federal government, all designed to
can take anywhere from 18 months to four years to
either improve its efficiency and/or to reduce costs.
complete. In this paper, the authors examine the
The ultimate goal of one of the primary down-sizing
possible effect a competitive sourcing study had on
and cost-saving tools, the federal competitive out-
employee's use of annual and sick leave. It must be
sourcing process, is to make government work better
noted that one of the reasons for doing research on
at a lesser cost by Competitive outsourcing various
this paper was because supervisors in an organiza-
government service support functions through a com-
tion conducting a competitive outsourcing program
petitive bidding process. This concept was originally
perceived their employees to be demoralized as a
attempted nearly 50 years ago and has undergone
result of the competitive sourcing process. They
several modifications since then. To that end, compe-
believed that as a result employees were taking more
titive outsourcing has been a critical component of
time off from work. These supervisors believed the
actions taken in later years as re-energized by the
use of sick leave in particular was being abused,
NPR and most recently as one of President George
partly because of an increase in stress caused by the
W. Bush's agenda issues.
competitive sourcing process.
Most public sector downsizing is driven by the
strategy to reduce funded items in a budget to make
Competitive Sourcing
better use of the remaining budget for technological
improvements. Rationally, establishing more efficient Outsourcing is a management strategy by which
governmental organizations or outsourcing non-core an organization invites other organizations in a
governmental functions made good sense. However, competitive bidding venue involving more efficient
a drawback to competitive outsourcing is that if it is specialty service providers, to provide major, non-
to be successful, it generally results in fewer workers core functions for the host organization. Private
who must perform the same amount of work. For companies have always hired special contractors for
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particular types of work, or to level-off peaks and sick, annual leave, or leave without pay on any given
valleys in their workload. Also, they have always for- day. Because of the prevalent availability of annual
med long-term relationships with firms whose capa- and sick leave, the use of leave without pay is rare.
bilities complement their own. In recent years, com- The U.S. Department of Labor calculates rates of ab-
panies have commonly contracted for shared access senteeism by dividing the number of working days
to resources that were beyond their individual reach - lost through absence in any given period by the num-
whether it be buildings, technology or people. Howe- ber of available working days in the same period [5].
ver, the difference between simple sub-contracting Absenteeism often causes work to remain un-
and outsourcing is that outsourcing involves the done, or to require that other workers complete
wholesale restructuring of the host organization certain tasks with no additional compensation. It is
around core competencies and outside relationships. therefore important that management assess any
Outsourcing is often referred to as Competitive causes of excessive employee absence. This is
Sourcing. It pits the government service unit per- especially true because varying levels of absenteeism
forming the function to become a competitive bidder on any given day can appear excessive, but may in
against independent private contractors to perform fact not be due to such reasonable causes as flu
the government support function of that government outbreaks, inclement weather or natural disasters.
unit. Competitive Sourcing in the public sector has G.Levine notes that absenteeism costs organizations
been increasing, and is now driven by economic millions of dollars each year [5].
concerns, which is a drastic change from the past. Moreover, relationships of other variables with
Military leaders continue to downsize and reorganize absence are often inconsistent. Even when well
their respective agencies to meet U.S. military established and of practical magnitude, such relation-
objectives using this Competitive Sourcing strategy. ships may be poorly understood [3]. Unfortunately,
However, spending on support functions has not seen much of the research on absenteeism conducted in the
any significant reduction due to overhead costs that recent past has failed to generate significant divi-
still remain high. In fact, support and infrastructure dends, whether the research concerned the predic-
now consume nearly 70% of all defense dollars, at an tion, explanation, or control of absence [2]. Absen-
annual sum of roughly $160 billion [4]. Outsourcing teeism research has in fact been described as every-
in the DOD is encouraged to promote efficiency and thing from bewildering to not very informative [3].
improve service. P.Taibl noted, however, that real It is also the case that conclusions drawn from
value to the DOD's bottom line will not occur until absenteeism research may be of little value to
there is buy-in at the top, with incentives for first-line managers unless "the information about the incident
managers to risk new outsourcing and privatization of absenteeism leads to procedures which reduce it
opportunities - an acceptance that, in many cases, the without being in violation of the law or being com-
private sector has an advantage over the public sector pletely impractical" [3, p.293]. They suggest that
[4]. early absenteeism research had been done in order to
There is little known about the specific impact of draw a correlation between demographics and
DOD's competitive sourcing process on employees attitude; however, results do not easily correlate to
on a military installation. A lengthy competitive sour- organizational intervention. Indeed: in many cases,
cing process continues to have an impact on emplo- organizational policies not only do not reduce
yees, who receive a mixed message because of legal absenteeism, but they may actually encourage it [3].
exclusions and shortcuts to the use of outsourcing P.O.Brooke summarized the idea of "organizational
providers. Outsourcing is growing at a rapid rate in permissiveness" with, "Do firms reward employees
the U.S. because organizations view it as a way to for failing to show up for work on a regular basis? As
achieve strategic goals, reduce costs, improve cus- preposterous as this question may appear, recent
tommer satisfaction, and provide other efficiency and studies indicate that the compensation programs of
effectiveness improvements. Like any organizational some firms encourage and even reward absenteeism"
decision, however, outsourcing requires effective ma- [6, p.345].
nagement from the outset. This becomes intensively Absenteeism in the context of downsizing may be
true during the competitive sourcing process under a withdrawal behavior. D.R.Dalton and W.D. To-dor
Office of Management and Budget (OMB) CSP [1]. suggested that some employees who are unable to
transfer to another job as a way to change an
Absenteeism During a Post Competitive unacceptable work situation might quit. It is likely
Sourcing Program that employees may also temporarily remove them-
selves - through absences - from unacceptable work
Absenteeism is defined as an abnormally larger situations. Essentially, there are any numbers of
number of employees in an organization who are on situations in which employees utilize sick leave or
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un-planned vacation time to avoid their places of similar blue-collar occupations and pay classification
work. levels. The stratified random sample was obtained by
Organizational stress causing increased absen- selecting names from an alphabetical list of
teeism, lower morale and motivation, deteriorating employees retrieved from the human resources data
industrial relations, lateness, high staff turnover, and file, retrieved by predetermined defined parameters to
a decline in productivity and quality. Personal stress include pay classification levels, pay play (blue
can manifest itself in relatively minor symptoms such collar), and career tenure. Every seventh employee
as headaches, general feelings of lethargy, and from the alphabetical competitive sourcing study
tension. C.Herbert suggested, "employers can intro- organization list was selected and every tenth
duce a workplace policy that recognizes mental employee the non-study organization list.
health as an important issue and outlines the support Based on the results of the statistical analysis
available to employees with mental health problems" between the non-study organization and the organi-
[10, p.27]. Finally, J.Vahtera wrote that those indivi- zation under competitive sourcing study, a decision
duals who remain at work during downsizing may could be made to reject or fail to reject the null
suffer an increase in ill health, but the extent of that hypothesis. The two-tailed t-test was used; the t-test
ill health is dependent on the degree of the is used to compare the mean of two different sets of
downsizing [8]. independent samples. Using this methodology meets
the following test [9]:
Methodology 1. The sampling groups used are independent of
The purpose of this study was to determine if each other;
there was statistically more or less absenteeism in the 2. Each sampling subject appears only in one of
form of leave being taken in an organization under a the groups; and
CSP study than one not under a competitive sourcing 3. The two groups represent a random sample of
study. This study was established to examine one their respective populations.
specific unit undergoing a competitive sourcing study The results using the two-tailed t-test to compare
on a medium to large size Air Force installation. The the two independent sample groups were expected to
ultimate goal was to provide a quantitative analysis to either reject the null hypothesis or fail to reject the
reject or fail to reject a null hypothesis. The research null hypothesis. Two sets of independent sample data
hypothesis statements are: were compared; one set was annual leave usage, the
1. There is no significant difference between the other was sick leave usage (see Table 1). A statistical
amounts of absenteeism in the form of annual significance could then be established from these
leave taken by employees in an organization samples to answer the immediate question of whether
under competitive sourcing study than in an or not the use of either types of leave might be
organization not under competitive sourcing significantly more in the study organization compa-
study. red to a non-study organization, or if there was any
2. There is no significant difference between the significant difference. The results would then address
amounts of absenteeism in the form of sick the supervisor's question of whether or not there was
leave taken by employees in an organization increased absenteeism in the organization under
under competitive sourcing study than in an competitive sourcing study.
organization not under competitive sourcing
study. Limitations of the Study
In order to answer the question of whether or not This study relied on a stratified random sample of
employees were absent from work more often during employee data maintained on annual and sick leave
a CSP study it was necessary to look at annual and usage. The findings from this research may have
sick leave usage. To do so, a comparison of two sets limited value to public organizations of varying size
of stratified random samples of leave usage data in other geographical locations or in govern-mental
comparing employees in the study organization organizations conducting their CSP study with vary-
against employees in an organization not under study ing degrees of communication, more or less aggres-
was required. The stratified random sample totaling sive labor union involvement, or other factors that
seven employee records comprising 18 percent of the might cause more or less absenteeism.
population in the CSP study organization was Because parameters were imposed by this study,
compared with an exact number of a stratified the exact replication of any findings may be done
random sampling of employee records in a similar, given the availability of the data. Therefore, the
but larger organization comprising 10 percent of its results may or may not show any significant relation-
population. The sampling was of career employees in ship of competitive sourcing on employee absente-
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eism. Additionally, the results of this study may be The same sample was used and compared using both
different from those of future studies made under annual and sick leave usage in each of the two
different situations. separate organizations (see Tables 2 and 3).
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Unused sick leave has no value at termination of random samples of leave usage data comparing emp-
employment for employees of the Federal Govern- loyees in a CSP study organization against employees
ment. Under the current Federal Employees Retire- in an organization not under a CSP study was
ment System (FERS) unused sick leave has no value required. The stratified random sample totaling seven
toward additional retirement annuity. However, un- employee records comprising 18 percent of the
used sick leave under the pre-1986 Civil Service population in the CSP study organization was com-
Retirement System (CSRS), in which many senior pared with an exact number of a stratified random
employees are grand-fathered in, is used to extend sampling of employee records in a similar, but larger
creditable service hour for hour for annuity computa- organization comprising 10 percent of its population.
tion purposes. Therefore, there is the possibility that A statistical significance could then be established
employees in the CSP study organization do not want from these samples to answer the immediate question
to bring negative notoriety upon themselves should of whether or not the use of either types of leave
their work unit in the organization actually be out- might be significantly more in the study organization
sourced. They may be taking the prudent path of not compared to a non-study organization, or if there was
becoming possible targets for disciplinary action for any significant difference. However, relationships of
sick leave abuse or thought to lack commitment to other variables with employee absence are often
their employer. inconsistent. Even when well established and of
The unexpected research results pose more ques- practical magnitude, such relationships may be poorly
tions than they answer. For example, are employees understood [3] Unfortunately, much of the research
in work units under CSP study denying themselves on absenteeism conducted in the recent past has
needed sick time in fear of being selected for failed to generate significant dividends, whether the
termination? Or are they applying themselves to pro- research concerned the prediction, explanation, or
ductivity by refraining from taking unnecessary sick control of absence [2]. Absenteeism research has in
leave as a strategy to become more competitive with fact been described as everything from bewildering to
outside private source providers? This is perhaps an not very informative [3].
area for further research. In any case, this research These results were counterintuitive to the Super-
shows the value of researching the facts to verify visor’s expectations. The research results show that
significant management’s concerns about employee employees in an organization undergoing a CSP
behavior. In any case, this research shows the value study not only did not use more sick leave, but
of researching the facts to verify significant mana- actually used less sick leave than those employees in
gement’s concerns about employee behavior. the control organization not undergoing a CSP study.
The unexpected research results pose more questions
Summary than they answer. For example, are employees in
work units under CSP study denying themselves
As the economic cycle fluctuates, many organiza-
needed sick time in fear of being selected for
tions, private companies and government agencies
termination? Or are they applying themselves to
alike find it necessary to reduce costs. They often
productivity by refraining from taking unnecessary
focus on reducing their immediate workforce. The
sick leave as a strategy to become more competitive
workforce is usually the organization’s largest cost
with outside private source providers? This is perhaps
bud-get expenditure impacting the bottom-line in
an area for further research. In any case, this research
private industry, and the budget in government
shows the value of researching the facts to verify
agencies. This becomes intensively true during the
significant management’s concerns about employee
competitive sourcing process under Office of Ma-
behavior. In any case, this research shows the value
nagement and Budget CPS [1]. Supervisor’s in go-
of researching the facts to verify significant
vernment organizations undergoing downsizing
management’s concerns about employee behavior.
through a CPS study expressed their concerns the
increased absenteeism in their organizations
undergoing a Competitive Sourcing Study. References
The authors were asked to examine this problem
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79
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