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Attendance Incentive Programs: Pro's and Con's
August Risk Management Tip of the Month
By Kevin M. Quinley CPCU, ARM AIC, AIM, ARe


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Got a sore throat and don’t feel like going to work? Feeling overwhelmed and in need of a “mental health” day?

You’re not alone.

Increasingly, risk managers get involved in administering employee benefits and taming their costs. Further, they are engaged in enterprise risk management, addressing risks which are not treated with insurance. Employee absenteeism is certainly one such enterprise risk. Absenteeism can be a drag on corporate productivity and morale. It can also be a barometer of morale and a sign that the organization is at risk of losing key employees and intellectual capital. Thus, risk managers need to take a look at employee absenteeism as another risk to address.

A recent survey conducted by CCH found that over three-fourths of the time that employees call in "sick," they’re not. Another survey for American Demographics magazine reveals that nearly 41% of the people questioned about why they fake sick days say they just need a day off.

To boost attendance and corporate productivity, some employers are implementing attendance incentive programs. These use various inducements to provide employees with additional motives to come to work. Incentives can include cash bonuses, public recognition, in-kind prizes, extra time off or a commemorative plaque. Awards may go to employees who have compiled strong attendance records.

In today’s tight labor market, employers find themselves doing many things to stay competitive, to keep employees happy and to boost personnel retention. As an added bonus, attendance incentive programs aim to trim absenteeism and boost organizational productivity.

Some firms give bonus vacation days to employees with perfect attendance – e.g., one day per quarter. Employees can earn up to four extra vacation days a year through perfect attendance. Some firms let employees cash-in unused sick days at the end of every quarter. Others give employees two hours of bonus pay for every month of perfect attendance. Still others provide employees with a buffet lunch, a certificate of achievement, or even a scratch-off card revealing prizes.
If you are considering an attendance incentive program, here are four suggestions:

Provide Meaningful Incentives. Giving employees incentives for improved attendance is not the same as rewarding or giving employees bonuses for reduced absenteeism. An incentive provides employees with a boost to their motivation to avoid unnecessary absenteeism. It helps an employee decide to go to work versus staying home and watching Desperate Housewives.

Calibrate incentives that will work. The type of incentive program a company uses should be one tailored to that organization. Create an incentive program customized to the unique needs of the business by letting employees help develop the incentive program. For example, employees may not care about receiving a $25 U.S. savings bond for perfect attendance, but they might love being able to leave an hour early on Friday if they have perfect attendance all week.

Consider the program’s duration. The length of the incentive program is key. Let employees help to determine the length of time between incentives. Some companies find that they can reward employees with perfect attendance annually, while others decide once a month is best. Still others decide once a week works best. The general rule of thumb is to reward workers more frequently the younger they are and the more difficult the work is to perform. Also, start with small incentives and work up to larger ones, if necessary.

Try “bank time” options. A growing number of companies are increasing flexibility and providing “paid time off” or “bank time.” This is a certain number of days or hours per year that employees can use for any reason they see fit: get the car inspected, help with the kid’s school class party or simply take a mental health day.

Attendance incentive programs are not without controversy. Some companies swear by them. Others swear at them. Risk managers must be careful to avoid the twin peril of “presenteeism,” where sick employees drag themselves to the workplace, infecting other coworkers with their germs, bugs and viruses. As a way to curb absences, consider these pro’s and con’s, along with some sound strategies to implement effective incentive programs.

Kevin M. Quinley CPCU is Senior Vice President, Medmarc Insurance Group, Chantilly, VA. You can reach him at kquinley@cox.net.

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