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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.

Fairness is one of the key tenets for a successful time-off policy, says Maroney, and making sure a time-off policy is fair for all employees goes a long way toward navigating tricky issues around managing absence and cutting costs.

"Most of the survey respondents said they struggle to address patterns of absence around Fridays and Mondays — that makes sense, and to some extent that's unavoidable, but you have to address the impact on coworkers by making sure policies are applied fairly, "says Maroney.

You don't want other workers feeling like they have to pick up the slack because one employee isn't pulling their weight. "If you have one employee who consistently calls in sick on Fridays or Mondays, their coworkers are going to notice because they'll be picking up the slack, and they'll be disgruntled. 'Wow, doesn't anyone else notice that this is happening? It's not fair — they don't care about me,'" Maroney says.

Even with a solid time-off policy, there may be instances where you must address deeper attendance issues and let go of the underperforming workers in favor of those who don't abuse your time off policies, she warns.

Make It Automated and Measureable

You can't manage what you can't measure, so having a time-off tracking and approval system is of utmost importance. Many organizations allocate a specific number of days to employees for both planned and unplanned absences as well as offering paid holidays, bereavement time, time to fulfill civic obligations like jury duty and the like, which can make budgeting much simpler.

"If you set out the same number of days for each employee to take sick time, vacation time, to attend jury duty and also offer things like floating holidays, it's much easier to budget overall. While you can't necessarily make up for the cost of lost productivity, impact on coworkers or missing project deadlines, it's at least a baseline for being able to estimate costs and plan for them," says Maroney.

Employee absences carry hidden costs that significantly affect an organization's productivity and revenue — in fact, 75 percent of respondents perceived absence has a moderate to large impact, according to Evren Esen, director of survey programs with SHRM.

"The more accurately employee absences are tracked and managed, the more effectively organizations can monitor, plan, and budget for this expense. The impact to the bottom line of the business can be substantial, making it pertinent that organizations have a strategy to effectively track the costs associated with employee absence," Esen says.

Though it may seem counterintuitive, offering a generous, flexible and easily tracked time-off policy can actually lead to greater employee engagement, productivity and loyalty. The more employees feel their employers understand and contribute to a healthy work-life balance, the greater their loyalty and the lower their stress levels, which makes for a very happy workforce.

 

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