Absence Management - the Gold Mine That No one Owns

Absence Management - The Goldmine No One Owns...

By Gordy Steele, Bartech Group

Imagine leaving a cost center, which represents 15% of payroll dollars, barely supervised. For an organization that has 5,000 employees with an average salary of $40,000 - that's $30 million per year pouring out with no one managing the faucet. Hard to picture? This describes absence management for the majority of U.S. businesses.

Part of the problem is data. Most organizations have not collected the information needed to understand the actual cost of workplace absences, much less begin to control and minimize the expenditures. Conversely, a few organizations have tracked so much data on absences that they don't know how to extract useful information or what to do with it.

Typically, absence management programs include:

* Short Term Disability (STD) 1 -26 weeks

* Long Term Disability (LTD) 26 -51 weeks

* Workers Compensation (WC)

* Family Medical leave (FML) 12 weeks unpaid

Some organizations also have programs defined for fully or partially paid Family Medical Leave.

Absence management at most organizations is composed of siloed programs that are administered by a combination of internal and external resources. The administrators include: HR, Finance, business unit managers and Third Party Administrators (TPAs).

This fragmented environment leads to sub-optimal program administration, unnecessary administrative costs, loss of productivity and litigation risk. Examples of overlooked problems include:

* Line managers responsible for categorizing and reporting absences often view this as a secondary responsibility and therefore, absences do not get tracked or managed.

* Line managers often are not well-trained in the legal technicalities of the Americans with Disabilities Act (ADA), Family Medical Leave Act (FMLA) or workers compensation laws, which vary in each state.

* Service level agreements negotiated with TPAs are often insufficiently controlled and reported on.

* Trends in absences that could be addressed to minimize costs are overlooked.

* Administrators are frequently practitioners (i.e. psychologists or nurses), who are often technically proficient but not business or process-oriented.

* Case managers often view themselves as employee advocates and forget that they also need to be good stewards of the organization's resources.

The good news is that applying management techniques commonly used in other business functions can dramatically reduce risk and