Employers Mismanage Time - Off
Employers should calculate how much their time-off programs cost and establish formal tracking of paid leave to help save what could be millions of dollars in payroll expenses, experts say.
However, only 11% of companies provide the same time-off programs to all employee groups, making them difficult to administer, track and manage, according to a new survey of 421 firms by Hewitt Associates. Only 57% of employers formally track sick days for their exempt employees, and just 46% track personal days.
Most companies do not know the size of their paid leave costs. Firms that do monitor the toll of sick leave estimate the potential cost to be between 1% and 3% of payroll. For a company with $450 million in payroll, the cost of sick leave could be between $4.5 million and $13.5 million per year. Including all types of paid leave (sick time, vacation and disability), the overall costs could reach an estimated 9% of payroll, or $40.5 million in paid-leave expenses.
“Time-off programs are important tools for attracting and retaining employees, but they’ve gotten so complex that the administration of the programs typically overshadows this,” says Kim Stattner, a principal in Hewitt’s health management consulting practice.
She recommends taking a holistic inventory of time-off programs to ensure they still meet the needs of the employee population. Companies also may consider offering floating holidays or a paid time off bank, which could enable companies to better manage time off and gives workers more freedom to choose how they spend their time. Between 22% and 32% of employers offered PTO banks this year, up from 18% in 2000.
Employers also could outsource short-term and/or long-term disability. Hewitt discovered that 51% of companies that outsourced short-term and/or long-term disability experienced reduced disability duration, and 47% reported a more effective return-to-work program. At least 27% noticed reduced disability incidence.
Reprinted with permission from Employee Benefit News, 2007 www.benefitnews.com |
