This article was updated on July 26, 2018.

An absence management audit helps you understand the direct and indirect costs of absenteeism for your firm, allowing you to be proactive about the problem. Developing the capacity to track all the data related to absenteeism and aggregate it for reporting/analysis is an essential first step in absence management. Absenteeism has an impact across your entire organization, and its management requires expertise in multiple areas, including legal, payroll, compliance and health care and wellness.

The Costs of Absenteeism Are Huge

According to a study by the ADP Research Institute, the annual average rate of absenteeism is 3.5 percent. Health-related issues are the top reason for absenteeism, but other big reasons include childcare and elder care obligations. Absenteeism has a high cost for employers, not just in having to replace an absent employee with expensive temporary or agency labor, but also in terms of diminished workplace morale when employees are called upon to do more with less. Moreover, absenteeism causes a drain on the time of managers who need to perform administrative tasks related to absenteeism, from communicating the absence policy to giving warnings and updating data.

Beyond the obvious managerial disruptions, unplanned absences make "co-workers 29.5 percent less productive when providing coverage for a typical absence day," according to the Society for Human Resource Management. Adding up the direct and indirect costs of absenteeism, it estimates a cost equivalent to 15.4 percent of payroll.

There are three steps that are vital to conducting an absence management audit: The ability to track relevant data, access appropriate benchmarks and develop proactive solutions to absenteeism.

1. Tracking

Absence management begins with the capacity to track who is absent, when and why. If you don't have easy access to the relevant data, you won't even know if and when you have an absenteeism problem — nor will you be able to evaluate its cost. If you are tracking and managing absences with manual systems such as spreadsheets, you are adding to those absenteeism-related costs. By implementing an automated absence management system, you can relieve the heavy administrative/paperwork burdens on supervisors and lay the foundation for efficient absence management audits. You also gain the flexibility to account for partial days, allowing your people to take time off in two- or four-hour increments, increasing their potential for work-life balance and overall satisfaction.

Automation allows you to move beyond just tracking and auditing. An automated system gives you and your employees a channel for handling absence requests. It can even identify patterns in absences, letting the right people know at the appropriate time when occasional absences are transitioning into larger problems. An automated system will also let HR managers easily report absences, view an employee's absence history and comply with relevant regulations, such as the Family and Medical Leave Act. Employees benefit from automation by being able to apply for leave on an always-accessible platform and view their absence history.

2. Benchmarking

Automation lets you benchmark your absenteeism rates against the market, your industry or even within your own organization. You can then identify and compare locations, departments, seasons and year-over-year numbers to see if there have been changes in patterns or if there are any gaps in your absence management efforts. With HR leaders and managers freed from manually inputting data, there is more time to focus on solving the problems at the root of absenteeism. A more holistic approach to absence management might improve communication with employees, establish clearer explanations of absence policies and foster higher levels of employee engagement.

3. Proactive Solutions

The more lead time and data you have to analyze patterns of absence, the better prepared you'll be to manage absenteeism in a way that minimizes operational disruption and maintains workplace morale. The goal of absence management is to reduce costs, facilitate continuity in the quality of products and services, maintain adequate staffing levels and keep employees engaged. By spending less time collecting data, you can take more time to analyze its meaning and develop potential solutions, such as wellness programs, in-house medical services, enhanced communication efforts and more precise workforce planning.

Absenteeism not only places stress on your bottom line and workplace morale, but it can cost you in terms of dissatisfied customers and regulatory penalties. Getting absenteeism under control begins with having the capacity to integrate the relevant data to understand the size of the problem. With the capacity to collect data and perform benchmarking gained through automation, you can then proactively focus on creating solutions that can drive business impact.

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