Table of Contents

BUSIDATE

Volume 28, Issue 4, 2020

BUSIDATE

Volume 28, Issue 4, 2020

“I WON’T BE COMING IN FOR WORK TODAY” - USING THE ABSENTEEISM RATE TO EVALUATE THE EFFECTIVENESS OF HUMAN RESOURCE MANAGEMENT

Joe Alvaro, Business Studies Teacher, De La Salle College Revesby Heights, Sydney, NSW

Introduction

It is essential that human resource managers are effective in managing workplaces because when workers feel valued they can increase productivity and less resources will be devoted to resolving workplace grievances. There are various indicators that can be used when evaluating the effectiveness of human resource managers. One of these is the absenteeism rate. Although it is sensible for workers to be absent when they are genuinely sick or when they have carer responsibilities, excessive absenteeism can lead to lower levels of productivity and workplaces which are less innovative.

What is absenteeism?

Absenteeism refers to a worker who does not attend work when they are expected to do so and who does not have a genuine reason.

Absenteeism can manifest itself in the form of whole days off or arriving to work late or leaving work early. It should be noted that absenteeism does not include scheduled absences such as annual leave or rostered days off.

Absenteeism as a form of covert industrial action

In some cases, absenteeism can be considered a form of covert industrial action, as opposed to overt industrial action like strikes, for example. Absenteeism as a form of industrial action is difficult to measure as it can be hard for a business to identify why workers are not attending work, e.g. working out whether sick leave is being taken for genuine illness or as a form of protest.

Case Study – 71 bus drivers call in sick

On 22 August 2007, 71 out of 300 bus drivers working for State Transit Authority at the Ryde depot in Sydney, NSW called in sick, forcing 90 services linked to the depot to be cancelled.

The Rail, Tram and Bus Union denied the drivers had taken de facto industrial action because of a pay claim in progress.

The union blamed a flu epidemic but the NSW Opposition’s acting transport spokesman at the time, Brad Hazzard, did not agree saying “drivers off out of one depot today is not the flu. It is just not humanly believable. It’s a strike.”

Reference : “STA suspicious of bus drivers’ sickies” 28 August 2007 ABC News

Source: https://www.abc.net.au/news/2007-08-23/ sta-suspicious-of-bus-drivers-sickies/648404

Why is excessive absenteeism a problem?

Out of all the resources a business uses to achieve its goals (e.g. human, financial, physical) human resources are critical if the other resources are going to be utilised effectively (e.g. physical resources like machinery will not be very effective if they are not used by highly motivated and well trained workers). The right talent can help a business achieve a competitive advantage (something a business does better than its competitors). If talent is absent from work, it is very difficult for a business to function effectively.

When investigating if absenteeism is a problem, human resource managers need to explore issues such as which departments in the organisation are experiencing more absent workers than the average and whether or not there are more workers likely to be absent on particular days of the week.

Businesses need to be concerned about the rate of absenteeism because it can disrupt work schedules, lower productivity and result in an increase in costs (think about sick leave and the cost of replacing workers who are absent plus the increase in administrative work for the human resources and finance departments).

Sometimes an absent worker may not be replaced by another paid worker, resulting in other workers covering for the person who is absent while at the same time completing their own work (resulting in high job demands, stress and possibly overtime payments).

If workers are absent regularly, they may miss training and development programs which can result in an increase in workplace accidents as they perform tasks without the required knowledge and skills.

Causes of high absenteeism in the workplace

a) Disengaged workers

Workers who are disengaged are those workers who do not enjoy being part of an organization, do not enjoy the work they perform and who do not feel valued by other workers. These kind of workers can cause the absenteeism rate for a business to be very high.

Disengaged workers can be caused by poor job design. Poor job design can include unclear task identity (workers not knowing exactly what they need to do) and poor physical environments related to factors such as noise, air and temperature. Effective job design ensures workers perform tasks that are not boring, and tasks that contribute to high levels of productivity.

As far back as 1826, the English parliamentarian Disraeli saw variety as “the mother of enjoyment”.

One approach to effective job design is job rotation where employees switch for a period of time from one job to another. This ensures workers experience variety and can enhance enjoyment at work. For example, job rotation in a bank may involve a worker for part of a day serving customers as a bank teller, another part of the day may be spent welcoming customers as they enter the bank and then another part of the day may be spent working on the information brochures that the bank produces for customers.

b) Not enough effort during the acquisition stage of the
human resource cycle

Hiring workers during the acquisition stage of the human resource cycle who are not a good fit for a business can result in workers who do not attend work because they feel they are not suited to the workplace they are a member of. For example, if employees in a business are required to work in teams then they should be hiring workers who enjoy working collaboratively.

c) Not enough effort during the maintenance stage of the
human resource cycle

Workers who are not motivated to contribute to the goals of a business may not attend work as they are not driven by making a difference and contributing to the triple – P bottom line of the business (that is, people, the planet and profit). This could mean that human resource managers are not being very effective during the maintenance stage of the human resource cycle. An example could be a human resource manager who just provides negative feedback to a worker and does not pay any attention to what the worker is doing well. This imbalance in feedback can de-motivate an employee.

d) Poor workplace culture

Workplace culture refers to the shared beliefs and values within a business. If there are values (such as honesty, respect and fairness) that are being ignored by one or more of the people working in a business, then workers may decide not to attend work because they are unhappy and do not want to be part of the poor workplace culture.

e) Psychological injury

Psychological injury can cause a worker to feel unsafe at a workplace and this can lead to absenteeism. Psychological injury is in breach of the Work Health and Safety Act 2011 (Commonwealth). It is important to understand that health and safety at work is not only about physical safety but psychological safety as well.

Employers have to take out compulsory insurance to cover employees who are injured as a result of carrying out their work duties. The insurance is used to compensate these workers (e.g.paying for lost pay, medical costs). However, only 6% of workers compensation claims are for psychological injury, yet psychological injury is associated with substantially greater time off work. Economic costs are three times that of physical injuries (Safe Work Australia, 2015; Safe Work Australia, 2019).

There are a number of causes of psychological injury:

i) High job demands

High job demands can include long hours (including unpaid work at home), fast pace work, unreasonable deadlines, extended vigilance and monitoring (which can make workers feel they are constantly being watched, judged and condemned) and a lack of breaks.

ii) Low job demands

Low job demands can include too little to do, boring work and monotonous duties.

iii) Poor support

Poor support can involve limited support or assistance from peers, lack of training and limited equipment/ resourcing.

iv) Poor workplace relationships

Poor workplace relationships can include workplace bullying. When employees are bullied at work they are less likely to come to work in order avoid the bully or bullies at work. Other causes of poor workplace relationships include discrimination, conflict, poor peer relationships and unfair/inequitable management practices.

Case Study – Brodie’s Law

In 2011, a young woman named Brodie Panlock was the victim of repeated and serious workplace bullying. Brodie died of suicide as a result of the bullying. The owner of the café where Brodie worked and who was present during the bullying, stood by and did nothing. This caused concern in the community.

In response, Victoria amended existing criminal legislation to make serious repeated bullying, which is intended to cause physical or mental harm to the victim, a crime with a maximum penalty of 10 years in prison. These new legal rules have become known as “Brodie’s Law” and seek to recognise the harm that workplace bullying can inflict upon victims and their families and punish those responsible.

Source: https://www.brodieslaw.org/

v) Work related post traumatic stress disorder

Beyond Blue defines post-traumatic stress disorder (PTSD) as “a particular set of reactions that can develop in people who have been through a traumatic event which threatened their life or safety, or that of others around them. This could be a car or other serious accident, physical or sexual assault, war or torture, or disasters such as bushfires or floods. As a result, the person experiences feelings of intense fear, helplessness or horror”.

Work related PTSD might manifest itself when a worker is exposed to workplace violence, harassment, work pressure or workplace bullying. The types of workers that have been found to suffer from work related PTSD include health care professionals, train drivers and journalists. Lack of training and poor follow-up of employees after a traumatic event increases the likelihood of work related PTSD occurring.

Case study – Work related PTSD

Hannah Jones was a manager in the hospitality industry who left her job and now suffers from work related PTSD. She says “I was petrified of going to the city, petrified of anywhere I might see my former coworkers. I was terrified of checking my emails. Two years on, I’m still out of work.I struggled with the idea of working under a superior, someone who can have power over me. That makes me feel incredibly vulnerable.” The case of Hannah Jones is associated with an increase in work related PTSD caused by corporate workplaces with ineffective human resource management.

Hannah Jones says her symptoms began to appear 10 months before she left her job. She says she experienced high job demands and that her boss had ineffective leadership skills.Hannah Jones says “my job had always been stressful but, after another manager left, I was asked to combine my role and hers. I stopped sleeping. My insomnia kicked in – hard.”

With regards to her boss, she says that “he was also under a lot of pressure and began lashing out. It started with angry emails in the middle of the night, then public beratings. I was getting smacked over the hand with calculators and over the back of the head with files in his frustration. He was drinking a lot! I’ve since learnt that workplace bullying can be a particular trigger for Post Traumatic Stress Disorder”.

Hannah Jones lived in one of the hotels in the company’s portfolio and could never detach from her workplace. She says “I didn’t dread going to work – because I never left work”.

One day, during an argument with her boss he fired her. Hannah Jones was later diagnosed with work related PTSD.

Hannah Jones says that “we are becoming more aware of the impact of ongoing stress on the mind and body. So naturally, you will see more of it. I also think you’ll see a massive spike over the coming years of staff suing their employer for the impact on their mental health. It has to be taken seriously.”

Case study – Absenteeism at Commonwealth Bank
of Australia (CBA)

During the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in 2019 and following the release of the final report, staff absenteeism levels at the CBA increased.

This Royal Commission made 76 recommendations aimed at addressing greed, dishonesty and the pursuit of short-term profit which trampled on the rights of customers and took advantage of them. The CBA welcomed the Final Report of the Royal Commission and all 76 of its recommendations.

This Royal Commission had a significant impact on the management of human resources at the CBA. One indicator that can be used to measure the effectiveness of human resource management at the Commonwealth Bank during this time is the absenteeism rate.

CBA’s absenteeism levels hit 7.2 days per worker for the year to June, 2019. This was the highest level since at least 2007, the first year CBA began publishing its absenteeism data.

Reasons for the high absentee rate included:

1. Customers expressing their concern about the findings from the Royal Commission which included evidence that the CBA treated a number of customers unfairly. The Royal Commission resulted in compensation for disadvantaged customers with $5.8 billion being set aside by banks, including the CBA, to refund customers and for remediation programs.

2. Poor workplace culture and low staff morale. A drop in staff morale was indicated by the CBA employee engagement index**, which fell from 81 per cent to 61 per cent in five years, in a period when scandals at the CBA started surfacing.

3. A cost cutting program which resulted in increased workloads for staff resulting in staff pressured to do more work under time pressure In response to a Herald Sun article in 2019 about the high absenteeism rate at CBA titled “Bank rage, royal probe weigh on Commonwealth Bank troops”, a reader named Philip wrote “terrible place to work, you are just a number to management”.

Conclusion

High levels of absenteeism can indicate that human resource management has been ineffective. Businesses need to be concerned about the rate of absenteeism because it can disrupt work schedules, lower productivity and increase costs. Valued, engaged and motivated staff are less likely to be absent from work.

If anything you have read in this article has caused distress for you and you need to talk to someone, please call one of the following numbers:

– Kids Helpline: 1800 55 1800

– Lifeline: 13 11 14

Student activities

Multiple choice questions

1. Which of the following could be used by a business to assess the effectiveness of human resource management?

  1. Products and accidents
  2. Accidents and absenteeism
  3. Profitability and flexibility
  4. Absenteeism and price

2. Legislation such as the Work Health and Safety Act 2011 (Commonwealth) requires employers to protect:

  1. employees when they are using dangerous machines
  2. the physical wellbeing of employees
  3. the rights of employees with regards to pay and superannuation
  4. the physical and mental wellbeing of employees

Read the following information and answer questions 3 and 4.

A business has noticed that a number of its workers appear unmotivated and as a result the absenteeism rate is increasing. The human resources manager is asked to investigate the situation and find solutions to the problem.

3. Which process of the human resource cycle would the human resource manager be undertaking?

  1. Acquisition
  2. Developing
  3. Maintenance
  4. Separation

4. Which of the following would most effectively re-motivate the workers?

  1. Free tea, coffee and biscuits
  2. Extending the working day
  3. Rewards
  4. Identifying staffing needs

Read the following information to answer question 5.

Anna Wong is the CEO of a company and would like to find out some information related to the effectiveness of human resource management in the company.

5. Which of the following should Anna Wong pay attention to?

  1. Ethical issues related to financial reports
  2. Competitive positioning
  3. The plant layout
  4. Analysing levels of absenteeism

Read the following information to answer question 6.

Mario was injured at work and receives payment to make up for his injury and suffering.

6. What is the name of this payment?

  1. Workplace Health and Safety
  2. Unlawful Injury Pay
  3. Equal Employment Opportunity
  4. Workers’ Compensation

Use the following information to answer question 7.

The senior Human Resource Manager of a small company calls a meeting of his management team about the following data.

 20182019
Number of
employees
3030
Number of
days lost to
disputes
15095
Absenteeism
(average days/
employee)
1030
Staff turnover20%20%
Accidents1015

7. Which of the following would best describe the changing state of the workplace in this business?

  1. There has been an overall improvement in the workplace cultureof the company
  2. The staff turnover indicates that employees are satisfied with job design
  3. Strikes have decreased but staff may be using other forms of industrial conflict to express worker dissatisfaction
  4. The change in the number of days lost to disputes and absenteeism indicates that human resource management is now effective

8. Which of the following can be effects of high rates of absenteeism in workplaces?

  1. Lower productivity and an increase in cost
  2. Less work for other employees and lower productivity
  3. Disrupted work schedules and less work for the finance department
  4. Unemployment and an increase in costs

Read the following information to answer question 9.

Maria is experiencing long hours, unreasonable deadlines and a lack of breaks at work.

9. Maria is most likely to be experiencing:

  1. High job demands
  2. Job rotation
  3. Low job demands
  4. Worker satisfaction

Read the following question to answer question 10.

A high level of workplace bullying is happening at a workplace.

10. Which of the following should be used by the human resource manager to deal with this problem?

  1. Ignore the workplace bullying as the focus should always be the customer
  2. Inform staff that if they are being bullied or if they witness a worker being bullied they should report it to their supervisor
  3. Invite all workers to a Friday night staff dinner
  4. Encourage staff who are being bullied to stay at home and not come to work

Short answer questions

1. Define absenteeism in relation to the effectiveness of human resource management

2. Explain the difference between overt and covert industrial action, using examples.

3. Explain why some employees may use “sick days” to express their dissatisfaction at the workplace.

4. Explain why absenteeism as a form of industrial action is difficult to measure.

5. Describe the consequences of high absenteeism for a business.

6. Explain how high levels of absenteeism in the operations department of a business would affect this key business function.

7. Discuss the causes of high absenteeism in the workplace.

8. Describe what could happen if a business fails to comply with the Work Health and Safety Act 2011 (Commonwealth).

9. Evaluate the effectiveness of human resource management at the Commonwealth Bank of Australia.

10. Imagine you are a human resource manager and are trying to reduce the high absenteeism rate in the cinema you work for.

  1. Create a job design for a worker within the business.

  2. Evaluate the job design you have created.

11. Staff absenteeism is costly. Discuss this statement.

12.

  1. Describe “Brodie’s Law”.

  2. Visit the “Brodie’s Law Foundation” website: https://www.brodieslaw.org Go to “Media” and then “Videos”. Choose one video to watch and write a summary the video.

  3. Evaluate the effectiveness of “Brodie’s Law” in addressing the issue of workplace bullying.

References

Beyond Blue (2020), viewed 20 August 2020, https://www.beyondblue.org.au/the-facts/anxiety/types-of-anxiety/ptsd).

Dagge, J (2019), “Bank rage, royal probe weigh on Commonwealth Bank troops”, Herald Sun (9 August 2019)

Disraeli, B (1826), Vivian Grey, Book V, Colburn, London.

Amy Molloy, “ I got PTSD from my office job – Are you traumatised by your 9 – 5?”, 11 July 2017, Viewed 4 August 2020 at https://www.bodyandsoul.com.au/wellbeing/i-got-ptsd-from-my-office-job/news-story/8040e58b18a27fd1812dadf2af314766

Safe Work Australia (2015), Work related mental disorders profile 2015, viewed 4 August 2020, https://www.safeworkaustralia.gov.au/doc/work-related-mental-disorders-profile-2015

Safe Work Australia, Mental Health, viewed 4 August 2020 https://www.safeworkaustralia.gov.au/topic/mental-health

Towler, A (2018), Absenteeism rate: The hidden champion key performance indicator to measure job satisfaction in an organization,

CQ Net C, viewed 4 August 2020, https://www.ckju.net/en/blog/absenteeism-rate-hidden-champion-key-performance-indicator-measure-job-satisfaction-organization/20908

Yun, J (2020), Banking Royal Commission, one year on: What’s changed?”, Yahoo Finance AU, viewed 4 August 2020 https://au.finance.yahoo.com/news/banking-royal-commission-one-year-later-013631266.html