Four years ago, the Royal Mail was struggling with absence rates. Nearly 12,000 of its employees were off work at any one time, costing the organisation more than £1m a day. It had also seen its profits slump and losses widen in the previous financial year, meaning savings were vital across the business.
Yet after significant investment in absence management, the organisation has turned itself around to become a blueprint for other companies looking at tackling persistent levels of absenteeism.
A London School of Economics (LSE) report out last month found that between 2004-07, Royal Mail reduced absence rates for its 167,000-strong workforce from 7% to 5%. About 3,600 employees who had previously been absent were back at work, saving the group £227m.
The study predicted that if some of the worst offending sectors for absenteeism, such as the health service and central government, adopted absence management policies like those at the postal services provider, the UK economy could save £1.45bn a year through reduced salary and temp costs and incrreased productivity.
The government is increasingly looking to employers to take more responsibility for workplace absenteeism, which last year alone cost the UK economy £13.2bn, according to last month’s CBI/Axa survey.
Health secretary Alan Johnson recently urged companies to encourage a ‘well-note’ rather than ‘sick-note culture’, following Dame Carol Black’s review of the health of working-age people.
But improving attendance doesn’t only boost the bottom line, according to Royal Mail’s corporate responsibility director and chief medical adviser Steve Boorman. “The LSE report clearly highlighted the economic impacts of poor attendance, and large financial savings have shown it was worth the investment.
“But absence significantly impacted on our quality of service. By improving non-attendance we relied less on temporary staff cover or overtime arrangements and achieved the highest levels of service quality for more than 10 years,” he told Personnel Today.
Across the group, which includes Royal Mail Letters, Parcelforce Worldwide and Post Office businesses, the company invested £46m in health and wellbeing activities to improve attendance. These included a £350,000 occupational health and gym facility at Royal Mail’s main London sorting office training for managers to keep in regular contact with staff who were off sick and better attendance records for managers to discuss behaviour and any patterns with staff.
Ben Willmott, employee relations adviser at the Chartered Institute of Personnel and Development (CIPD), labelled the policies “impressive” because they made line managers take ownership for absence issues.
“Royal Mail completely focused on the importance of line managers taking primary responsibility for managing absence, and for creating healthy workplace environments – such as enabling early access to occupational health services,” he said.
Royal Mail also cut its sickness absence by launching an incentive scheme for staff in March 2005. It offered employees the chance to win a car in a prize draw if they had a 100% attendance record. Just one year later, the group had slashed its absenteeism rates by 1.1% – the equivalent of 1,800 extra people at work per day.
The following year, the scheme offered employees the chance to win £2,000 of holiday vouchers and five days’ extra annual leave. The company stopped the incentive scheme this year to “create a more holistic approach to managing attendance”.
Indeed, just 17% of UK companies offer an attendance bonus or incentive, according to the 2007 CIPD Absence Management Survey. But Wilmott said bonus schemes can work well if used correctly. “As long as incentives are part of a whole package, not just seen as the panacea to reducing sickness absence, they can create a ‘buzz’ around the importance of managing absenteeism.”
Yet the simple tactic of monitoring attendance is how Royal Mail improved its absence rates, according to Boorman. “Improved monitoring of absence and consistent management support enabled managers to intervene earlier with occupational health to avoid longer absence, and avoid loss of contact with individuals who were sick.”
HR has a role to play in ensuring line managers consistently apply the company’s attendance management processes, including recording absence, and to address those people who don’t, he added.
Both central government and the health sector – the two worst performing sectors for absence management, according to the LSE report – admitted Royal Mail’s absence strategy set a “good example”. Employees working for the NHS have an average absence rate of 5.5%, costing in excess of £500m, and workers in central government recorded absence rates of 4.9%, costing more than £100m.
The Department of Health said it was developing a trial ‘fit for work’ service for people in the early stages of sickness absence. “Any such pilot will be evaluated to assess the benefits to individuals and businesses and the level of potential savings which could support the costs,” a spokesman said.
Royal Mail’s tips for reducing absenteeism
Empower line managers to improve attendance record-keeping
Train managers on attendance and sickness absence
Improve access to occupational health services including physiotherapy and occupational therapy. Refer employees to OH on day one.
Advertise OH services to staff.