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How your time-off policy can cut costs and improve productivity

Sharon Florentine | Jan. 9, 2015
Having a clear, concise and generous time off policy in place will allow your business to better budget for employees' planned absences as well as cut costs associated with unplanned absences. You'll also have a more engaged, loyal and productive workforce.

Having a clear, concise and generous time off policy in place will allow your business to better budget for employees' planned absences as well as cut costs associated with unplanned absences. You'll also have a more engaged, loyal and productive workforce.

Kronos recently released study, the Total Financial Impact of Employee Absences survey, explores the many residual effects that employee absences have on an organization, including how they affect co-worker and supervisor productivity; the use of replacement workers and overtime to cover absences; direct and indirect costs of paid time off; and the importance of policies and procedures to manage employee absences.

The research, commissioned by Kronos and conducted in collaboration with the Society for Human Resource Management (SHRM), was conducted online in the spring of 2014 by SHRM, and a total of 1,280 organizations responded.

Reducing Workplace Stress

The study results show that the number-one cause of workplace stress is inadequate staffing, which can lead to lost productivity, an unsatisfied workforce and higher turnover, as well as higher costs, says Joyce Maroney, director at the Workforce Institute, a division of Kronos.

Employee absence appears to affect workers' colleagues the most, as perceived co-worker productivity loss ranged from 24 percent in Europe to 40.3 percent in Mexico, while perceived supervisor productivity loss ranged from 15.7 percent in the U.S. to 26.0 percent in Mexico, according to the study.

  • 69 percent of respondents say unplanned absences add to workload
  • 61 percent say it increases stress
  • 59 percent say it disrupts the work of others
  • 48 percent say it hurts employee morale

"All workers need time off for a variety of reasons — from vacation time to relax, sick time to recover and time needed to address the unexpected emergencies of life. However, the impact that absences can have on co-workers is a factor that should not be overlooked when examining the impact of absenteeism.

"By accurately tracking absences and the trickle-down effect they have on the entire business, organizations can improve productivity and minimize compliance risk while addressing issues that may increase the rates of absence to improve team cohesiveness and morale, " says Maroney.

So, what are the hallmarks of a well-planned, effective time-off policy, and how can you improve on your own if it doesn't measure up?

Make It Generous

Paid time-off and paid leave are a major benefit for employees, and should be generous enough to allow for almost any situation that should arise, says Maroney.

"This is an employment benefit that drives trust, that drives engagement, which can then increase productivity and reduce turnover," says Maroney.

"When employees feel they can have an adult conversation about work-life balance and come out feeling that their employers care about them and what happens outside the confines of the office, that has the effect of making the employee more willing to work harder, more productive, more engaged," she says.

 

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