UNDERSTANDING AND MANAGING SICKNESS ABSENCE Terry Coulthard and Peter Dewis PD\ARL\Healthcare 2002.
-
Upload
audra-edwina-powell -
Category
Documents
-
view
218 -
download
0
Transcript of UNDERSTANDING AND MANAGING SICKNESS ABSENCE Terry Coulthard and Peter Dewis PD\ARL\Healthcare 2002.
UNDERSTANDING AND MANAGING SICKNESS ABSENCE
Terry Coulthard andPeter Dewis
PD\ARL\Healthcare 2002
• Introduction
• Background
• Results of IES/UP study
• Case study
• Discussion
• What we did– A detailed case study analysis of a small number of employers to give us a
detailed knowledge of their respective sickness absence and the factors that drive this
• Why we did it– Research by Unum in the US in the early 90’s indicated headline figures for
cost of absence dealt mainly with direct costs only. Full costs were around twice the direct costs at around 10% of salary costs. We wanted to repeat this work in a UK rather than US context.
• Time period– IES commissioned Aug 2000; First results presented Oct 2001
Full report
– Costing Sickness Absence in the UK
IES Report 382
www.unumprovident.co.uk
www.employment-studies.co.uk
The Costs of Absence
Why the concern over absence?
• Lost productivity
• Costs
• Continuity of customer service
• Employers’ duty of care
• Fear of litigation
• Government targets
• Squeeze on ill-health retirement
Ill-health retirements
• Totals £1bn each year in the UK
• Peaked at 40k public servants pa in 1990s
– 39% of all Police retirements
– 39% of all Local Govt. retirements
– 22% of all Civil Service retirements
• In teaching, each ill-health retirement costs over £35k
How serious?
• Average of 7.8 days lost per employee each year (CBI, 2001)
– Public Sector 10.2
– Transport 9.4
– Construction 8.7
– IT 7.2
– Banking/finance 7.0
– Manufacturing 6.9
– Retail 5.8
Published Cost Data
• CBI/Work Foundation £10-12bn
• Civil Service £404m
• Police £210m
• Prison Service £56m
CBI estimate annual cost of £485.60 per employee
Few Cost Absence - why?
• Too time-consuming 35%
• No computerised data 29%
• No accurate records 26%
• No absence problem 23%
• Absence is a problem, but.. 15%
Problems
• Aggregate data only
• No variation by staff group, sector etc.
• Primary focus is on direct costs
• Little account taken of indirect costs and management costs
• No differentiation by duration of absence
Background to UNUM study
Context of study:
Increasing concern among employers
• Growth in long-term illness
Aims of study:
Identify total costs
• Explain variability in costs
Methods:
Case studies
• Analysis of absence data
The nine case studies
Retail store 3
Insurance company 1
Financial services 1
Public sector 2
Law firm 1
Retail group 1
Total 9
Costs by employee group
Absence as % of salary bill:
Low: Managers
Medium: Professional/Technical
High: Sales/Manual
Variable: Admin/clerical
Absence costs per employee
Medium retail store £465
Retail group £497
Regulatory body £809
Law firm £837
Small retail store £861
Insurance company £991
Large retail store £1,268
Financial services co. £1,677
Local authority £2,261
Absence costs as % salary bill
Law firm 1.8%
Regulatory body 2.2%
Insurance company 4.7%
Retail group 6.5%
Medium retail store 6.8%
Financial services co. 7.8%
Local authority 8.2%
Small retail store 11.2%
Large retail store 16.4%
Why do costs vary?
• Proportion of part-timers
• Type of cover organised
• Balance between short & long-term
• Occupational mix
• Age profile
• Adherence to absence policies
Long-term absence
• Stands out as being poorly managed compared with short-term absence
– early intervention
– rehabilitation
• Concern among line managers
• Accounts for between 30% and 75% of total absence costs
• Scope for cost reduction
Full costs formula
Direct Costs = 60%
Indirect Costs = 20%
Absence Management Costs = 20%
Summary
• Existing data on costs inadequate
• Costs range from £465 to £2,300
• Up to 16% of annual paybill
• UNUM figures frequently 300% higher than in-company estimates
• Costs of poorly managed long-term absence is highest (up to 70% of total)
• Direct costs only 60% of total costs
CaseStudy
Case Study
•Male aged 21
•Employed as a clerk in a warehouse
•Salary of £20,233
•He is absent from work suffering from depression
Case Study
•A gradual realisation that the most likely diagnosis is schizophrenia.
•This is likely to be a long standing problem with a poor prognosis of a return to work.
•Benefit at an initial level of £6,600 is insured for over 43 years.
Questions
???