Whitepaper

Absence Management Time is Money

How Organizations Can Effectively Monitor and Manage Absences to Improve Productivity and Mitigate Risk
Employee absence is a significant cost for businesses, and absence management has gained C-level visibility as more organizations seek to understand and reduce the direct and indirect costs associated with employee absences while increasing the productivity of their workforces. An automated workforce management solution with time, attendance, self-service and scheduling optimization functions can empower organizations to appropriately plan for scheduled absences according to policies, as well as monitor and understand patterns of unscheduled absences. Businesses using this analysis to take actionable steps are ensuring the right skill sets are available at the right time (and at the right cost) to keep the business moving forward. As a result of these informed decisions, organization leaders can go beyond controlling the costs associated with absent employees, to improving workforce schedules and facilitating compliance with government and internal regulations.

LESS THAN

of organizations measure or manage employee absences effectively

Executive Summary
Whether planned or unplanned, workers are going to be absent. Your employees may need time off for illness, vacation, family care or even to pursue their studies on an extended leave. In the past, organizations with a high population of shift workers may have felt the impact of absences sooner and more directly than organizations with salaried workers, but in todays environment, where few resources are tasked with the work of many, worker productivity and business objectives have leveled that playing field. When employees are out of work, organizations face increased risks related to regulatory compliance (such as the Family Medical Leave Act), workplace safety staffing guidelines and business performance objects. Also, organizations that need to use overtime or temporary workers to maintain the same output will feel the effects of diminished margins. Even though the problems with absenteeism may seem obvious in this light, the Gartner Research study Managing Employee Absence: Absence Makes the Heart Grow Fonder, and Time is Money, shows that less than half of organizations measure or manage employee absences effectively. The same study notes that employee absences can account for more than 3 percent of direct payroll costs. And with further considering, businesses would find that employee absences cost more than just money, impacting customer satisfaction, sales, production, employee morale, and safety and compliance, among other things. A recent CCH Unscheduled Absence Survey notes that the nations largest employers estimate that unscheduled absenteeism costs their businesses more than $760,000 per year in direct payroll costs, and even more when they considered lowered productivity, lost revenue and the effects of poor morale.

Source: Gartner Research study Managing Employee Absence: Absence Makes the Heart Grow Fonder, and Time is Money.

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Absence Management: Time is Money

Companies have a lot to prepare for when it comes to unexpected or any length of scheduled absences such as vacations, jury duty, military leave and medical and professional appointments. Their priority is to ensure that the necessary talent is available when needed to minimize the disruption caused by absences and to maintain the level and quality of service for optimal business performance. Relying on manual processes to track absences impedes the organizations ability to proactively identify, manage and minimize the impact of employee absences and to validate and monitor policies and trends dealing with workforce improvement. An automated workforce management solution with absence management capabilities is an essential tool for improving staff deployment and productivity, increasing decision-making accuracy and ensuring precision in payroll processing while adhering to a diverse set of pay, work and union rules. Because absences impact the bottom line, employers would immediately benefit from data that would be able to correlate the management style of a particular manager or increased workloads to an increase in absences. Using your current system, review how many of the following questions you can easily answer:

An automated workforce management solution with absence management capabilities is an essential tool for Improving staff deployment
and productivity

Increasing decision-making
accuracy and ensuring precision in payroll processing

Adhering to a diverse set

of pay, work and union rules

Are there patterns of behavior, such as Monday

or Friday absences?

Are there environmental causes? Is stress brought on by economic pressures,

increasing workloads or specific managers causing an increase in absences?

Are policies and thresholds too strict or too weak? Are policies enforced by managers? Are disciplinary actions managed properly,
and are they appropriate?

Can employees trade vacation time for pay? What is the carry-over policy for unused sick
and vacation time? This paper explores the advantages of a workforce management solution with absence management capabilities to minimize the impact of employee absences and ensure organizations can effectively match labor supply with business demand. The more sophisticated solutions can also help management determine the daily, weekly, monthly and yearly financial impacts of employee absences, which is why you should make sure any solution you consider contains the following capabilities: Deliver business intelligence that empowers organizations to more effectively plan for employee absence. Through an automated solution companies can leverage data to identify and respond to absence trends, gain

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Absence Management: Time is Money

insight into the true cost of employee absences and have the necessary visibility to improve workforce deployment. Optimize schedules and ensure employees with the right skills are available at the right time and cost. An automated workforce management solution with optimized scheduling and absence management capabilities helps organizations accurately forecast and schedule shift workers and salaried professionals to meet both customer service and cost objectives. Facilitate compliance with regulations. A workforce management solution automates administration and tracking of employee leave to ensure compliance while making sure requests are valid, thereby reducing exposure to noncompliance violations. Ensure adherence to policies, procedures and work and union rules and automate disciplinary actions. The system should be able to track deviations from planned attendance, including such activities as late arrivals, early departures or not working on a scheduled day. Actions such as verbal and written warnings, last chance agreements and suspensions or terminations are automated through the system. Provide employees with self-service options to monitor vacation and sick balances. When employees are empowered to manage their own schedules, morale improves. Through the system, employees can request time off, trade shifts and schedules, view balances and monitor and manage leaves more efficiently. Managers can also respond electronically and ensure fairness by making equitable staffing decisions.

A sophisticated workforce management solution can Deliver business intelligence

that empowers organizations to more effectively plan for employee absence

Optimize schedules and

ensure employees with the right skills are available at the right time and cost

Facilitate compliance
with regulations

Ensure adherence to policies,

procedures and work and union rules and automate disciplinary actions

Provide employees with selfservice options to monitor vacation and sick balances

Ease Absence Administration

According to Gartner Research, disciplined absence management has a direct cost saving benefit, with the best-in-class organizations incurring one-quarter of the costs of their less disciplined peers. Controlling direct and indirect costs of absences is near impossible without a consistent, comprehensive absence policy, tracking procedure, and firm understanding of the various leave types and government regulations. While there are four general types of absenteeism, the possible combinations they lead to are expansive:

Schedule/Authorized Unscheduled/Unauthorized Short-Term Long-Term

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Absence Management: Time is Money

For example, a scheduled absence might be paid or unpaid time off, such as vacation time, a sabbatical or educational leave of absence, or maternity or other medical leave. To further complicate the picture, there are unanticipated but scheduled leaves such as military leave or time off related to a workers compensation injury. These types of absences are granted when the appropriate persons are notified in advance and the absence is in accordance with workplace policies. Authorized absences may include all the above, as well as instances such as time off to vote or for emergency situations that are beyond the employees control. Unscheduled absences occur when an employee is not present during a normally scheduled work period and can include illness, a death in the family, short- and long-term disability, family care or personal issues. Unauthorized absences represent time taken without a managers permission, time taken outside of corporate guidelines, and tardiness or early departures all of which create challenges for the business, as well as for other employees. Whether planned or unplanned, any type of employee absence presents its problems. When employees give advance notice that theyll be using vacation time or personal days, managers have time to prepare, but they still need visibility into resource skill sets and corresponding availability in order to plan accordingly. When the unexpected happens, that visibility becomes even more crucial as they need to appropriately staff and maintain performance levels. With an automated workforce management solution in place, businesses understand absence occurrences and impacts and plan more effectively when people take time off. In addition to the types of absences and the differing ways leave can occur, organizations are also concerned with compliance issue regulations related to leaves of absence like FMLA. Organizations will face harsh penalties not only if they fail to comply, but also if they grant a leave that isnt valid. For example, FMLA leave can be granted to an employee needing to provide medical care to a spouse, but not to a life partner. If an employee approaches their manager with a request for time off to care for an ailing partner they are not married to regardless of their living situation or length of commitment that manager could leave the organization liable for a compliance violation should they grant a leave under FMLA. The cost in time and money associated with administering FMLA and leave of absence requests is burdensome to many organizations. Many organizations simply dont have in-house staff to manage the processes, leaving such expertise to the costs of outsourcing. From a payroll perspective, there are costs associated with employee absence. For example, time entry adjustments may be necessary when an employee takes time off. Studies show that such errors predominantly favor the employee through overpayments. This can result in benefit calculation errors as some benefits programs are based on the number of hours worked as opposed to time taken for sick time. For example, if an employee is out on a paid or unpaid leave of absence, they may not continue to accrue sick pay or vacation time until they

Unauthorized absences represent time taken without a managers permission, time taken outside of corporate guidelines, and tardiness or early departures all of which create challenges for the business, as well as for other employees.

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Absence Management: Time is Money

are actively back at work. There also may be different rates of pay based upon specific jobs people perform and whether they are using sick time or vacation time. Since these business rules drive accruals, paid time off, time accrued towards participation in retirement programs and leave management, tracking and validating them properly with an automated workforce management solution can result in greater accuracy of benefits accruals and lower payroll costs. For example, direct benefit and direct contribution benefit plans are calculated on formulas based on time worked, in addition to other factors. Employees may no longer be eligible for contributions to their retirement plan should they take a leave of absence or fail to meet the minimum years of service due to excessive absences. By tracking incidences through the system, payroll can reduce discrepancies in sick leave balances and forward accurate calculations of retirement benefits to plan administrators. Other hidden costs of absences may include the need to hire temporary workers to meet production deadlines or the use overtime to keep the business moving forward. In addition, indirect costs such as lost sales, poor customer service, missed deliveries, higher benefit costs and increased turnover result from employee absences. Not only is absence a significant payroll cost, but excessive absences may indicate deeper workforce-related issues such as poor management, increased worker fatigue due to excessive overtime, substance abuse or lack of accountability. To address the problem of absenteeism and its resulting impact on the organization, employers need to gain better insight into the issues that lead to employee absence, understand the direct and indirect costs of absenteeism, and use technology to enable cost-reducing and productivity-enhancing processes. The major step to this enablement is taking advantage of automated workforce management.

To address the problem of absenteeism and its resulting impact on the organization, employers need to Gain better insight
into the issues that lead to employee absence

Understand the direct

and indirect costs of absenteeism

Use technology
to enable cost-reducing and productivity-enhancing processes

Effective Absence Management

Effective absence management begins with the collection of time and attendance data, whether capturing all or just exception time data. Through an automated solution, employers can get to the root cause of absenteeism, accurately track time and attendance and optimize the productivity of their workforce, and the other benefits that follow: 1. The ability to track, manage and analyze absenteeism according to organization policies - Manual methods of tracking employee time are labor intensive, compromise accuracy and can call fairness into question when scheduling replacements. With an automated system, companies can manage absences through time clocks, telephones, or remote worker devices like Web-based portals, kiosks and smartphones. This results in more accurate time keeping and provides managers with meaningful information for workforce planning.

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Absence Management: Time is Money

Calculating accruals and allowing employees to view balances improves accuracy of information, employee morale and effectiveness of policy enforcement. Managers gain visibility into balances to prepare staffing plans for regular and peak scheduling times. 2. Having comprehensive, up-to-date analysis of absence data can also reveal trends and patterns. Organizations might discover certain days of the week and times of the year where levels of employee absence are elevated. For instance, analytics may reveal that a large portion of the workforce is calling in on days that directly precede a holiday. This type of information enables companies to develop a policy that sets expectations or to make provisions to improve morale while maintain predictability and optimization of the workforce. Uncovering these trends might also reveal workload imbalances that contribute to excessive turnover or increased absenteeism. For example, changes in the pattern of demand may contribute to serious fatigue problems if overtime is required. Depending on the industry, this impact could be significant, so having insight into schedules and absence patterns allows businesses a more proactive approach to fatigue management and absenteeism minimization. 3. Automated solutions also help automate policies and the workflow of the approvals. The system will track deviations from planned attendance, including activities like late arrivals, early departures or not working on a scheduled day. A formal communication plan or employee handbook outlining policies is essential. An automated solution ensures employees adhere to policies, and through selfservice functionality, managers can easily approve or decline requests. The system can then manage such actions as verbal and written warnings, last chance agreements and suspensions or terminations. 4. Understanding absence occurrences enables businesses to optimize schedules and ensure the right people with the rights skills are placed accordingly. Once an organization has visibility into its workforce movement and metrics, managers can rapidly identify and work to resolve issues. An automated system also promotes a greater sense of fairness by making sure that managers arent scheduling the same employees to work holidays or given preferential hours. The system can also align the necessary skills sets and right certifications for achieving business goals.

Additional Benefits Track, manage and analyze

absenteeism according to organization policies

Have comprehensive,
up-to-date analysis of absence data

Automate policies
and approval workflows

Understand absence
occurrences to enable optimization of schedules

Ensure compliance
with government and safety regulations, union rules and corporate policies

Have better data

to promote better decisions

Reduce operational costs

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Absence Management: Time is Money

5. Ensuring compliance with government and safety regulations, union rules and corporate policies is also facilitated through an automated system. A workforce management system tracks multiple types of leave and reduces the risk of non-compliance with regulations. It centralizes absence-related data and facilitates the ability to manage policies and effectively comply with laws and regulations. 6. Better data promotes better decisions and more engaged employees. Timely attendance at work is crucial to making the business run smoothly. A workforce management solution with scheduling optimization and absence management can reduce and better distribute labor costs, boot sales and increase productivity by ensuring the right staff is available. Beyond time and attendance tracking, the system becomes a smart tool that enables businesses to improve operational efficiency and productivity and leverages workforce performance to affect the bottom line. Scheduling solutions also empower employees to consider their choices when adhering to specific guidelines. 7. Reduce operational costs and foster a more productive work environment. A workforce management system including time and attendance, scheduling optimization and absence management capabilities enables organizations to efficiently align workforces with business demands to meet objects. Getting it right on time, the first time, allows a company to hit their profit marks without the costs of added work.

Better Process, More Informed Decisions, Better Results

Automating absence management enables companies to go beyond tracking time and attendance to make more informed decisions, improve their schedule of resources and deploy their workforces. Companies will require less outside knowledge in order to facilitate compliance with union and government regulations and ensure adherence to internal policies. By taking a proactive approach to absence management, organizations can control costs associated with employees missing work, while ensuring employees get the time off theyve earned without hampering the effective business flow. Adding a workforce management system to your companys repertoire means you will be able to make the most of the exceptional workforce that you have selected and trained. Being able to leverage your existing assets in a more effective way is a smart decision for your companys objectives and bottom line.

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Absence Management: Time is Money

More Information
For additional information, send an email to connect@sumtotalsystems.com

About SumTotal
SumTotal Systems, Inc. is the global leader in strategic Human Capital Management (HCM) solutions that provide organizations with a new level of visibility to help make more informed business decisions and accelerate growth. Recognized by industry analysts as the most complete solution, SumTotal provides full employee lifecycle management, including a core system of record, from a single provider for improved business intelligence. The company offers customers of all sizes and industries the most flexibility and choice with multiple purchase, configuration, and deployment options. We have increased the performance of the worlds largest organizations including Sony Electronics (NYSE: SNE), AstraZeneca (NYSE: AZN [ADR]; London: AZN), Amway (KUL:AMWAY), Seagate (NYSE: STX), Dell (NASDAQ:DELL), and Google (NASDAQ:GOOG). For more information, or to request a demo, please call +1 (866) 768-6825 (US / Canada), +1 (352) 264-2800 (international) or visit www.sumtotalsystems.com

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