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Companies take diverse approaches to attendance rewards programs.
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The House of Lords "must be the only institution in the world which is kept efficient by the persistent absenteeism of most of its members," said British politician and diplomat Herbert Louis Samuel.
Although it may have been a blessing for the House of Lords, absenteeism is often a workplace challenge for today’s employers. The Integrated Benefits Institute, which specializes in health and productivity research, reported in September 2013 that poor health costs the U.S. economy $576 billion a year, including $227 billion in lost productivity.
And according to the ADP Research Institute’s 2012 survey report
Total Absence Management: Two Decades After the Passage of the FMLA, most U.S. employers do not take concrete steps to control workplace absenteeism, even though about half of the decision-makers in midsize and large companies report that absenteeism has reduced their productivity.
"Coming to work every day on time is not an easy task," says Donna Towle, SPHR, vice president for human relations at United Airlines. She should know. Back in 1995, when she was with Continental Airlines (before its merger with United in 2010), the airline had a reputation for not being on time, she says. Employee absenteeism was one of the main contributing factors. "If you’re not running an on-time airline, your customers are not happy," Towle notes.
Beginning in 1996, a new CEO changed all that—and so did annually awarding cars to 18 employees with perfect attendance, a practice that was continued after the merger. While United uses giveaways, a variety of attendance rewards programs are in place at other companies.
Typically, these incentives are more prevalent in manufacturing, warehousing, businesses with contractors and tradespeople, and call centers, says Paul Munoz, president of HR Group Inc., a consultancy in Plainview, N.Y. The goal, he says, is not to encourage people who are genuinely sick to come to work, but instead to motivate people who chronically show up late, leave early or abuse their sick leave.
"We wanted to reward responsibility," says Amy Taylor, PHR, HR manager for Steel Warehouse’s Memphis and Chattanooga workforces. "We are a manufacturing environment, so when people aren’t at work, we’re not able to produce."
The steel service center, with 5,000 employees, has an attendance rewards program that provides monetary and other incentives; each of the company’s 11 locations has tweaked the program to make it work for its individual culture. At the two plants Taylor oversees, the program is open to part-time and full-time hourly employees who work onsite.
Steel Warehouse’s attendance policy is built on points. Generally, employees accumulate:
To receive the monetary incentive, employees cannot accumulate any points in a quarter. The reward is $100 the first quarter, and it increases by $50 each subsequent quarter, for a possible total of $700 annually. The point tally resets to zero each January. The company pays all of the employees’ taxes on the rewards.
Besides losing out on the attendance rewards, employees with four or more points are not eligible for job transfers or raises.
Because one of Steel Warehouse’s main goals is to encourage employees to call in as early as possible if they cannot make it to work, employees who notify their supervisors ahead of time about an expected absence—a doctor’s appointment, for instance—may be taken off the schedule and not receive any points.
Exceptions to the Rules
Attendance incentive programs don’t need to be overly rigid.
For instance, at the Mehlville Fire Protection District, employees are not counted as absent for the following circumstances:
At Steel Warehouse, allowances are made for:
Federal statutes that allow leave generally present unique challenges for employers with attendance rewards programs. “For FMLA and ADA, there’s a difference between the attendance policy and the attendance bonus,” explains Myra Creighton, a partner in the Atlanta office of law firm Fisher & Phillips. “You may have to accommodate employees with respect to the attendance policy, but you don’t have to credit their attendance for a bonus program.”
While employers are free to exclude employees on such leaves from their rewards programs, Creighton cautions that they need to treat similar incidences alike. An employee using vacation time for FMLA leave cannot have that time counted against her if the employer does not count vacation time against others in the program. In addition, she says, companies cannot make allowances for those in one group, such as white males, while not doing so for those in a protected group who are similarly situated.
Carla Juelfs, PHR, HR administrator for the Mehlville Fire Protection District, a fire department that serves several communities in St. Louis County, Mo., says its attendance rewards program is about saving money. "Our firefighters generally work 24-hour days, 121 days a year. So if we have to call [a replacement], our cost could be up to $1,000 a day," she says. Considering that the department’s firefighters, medics and paramedics may take six sick days a year, the cost could be significant.
To be eligible for attendance rewards, employees must have worked at least two-thirds of their scheduled duty days. They start out with a maximum reward of $1,600, and that amount is reduced for each sick-leave incident that occurs that year, Juelfs says. In 2012, out of 120 employees, 57 had perfect attendance and 116 received awards of $400 to $1,600.
The district spent $150,400 on attendance bonuses in 2012. Even so, it came out ahead: Officials believe that the program saves the district $250,000 to $350,000 in any given year, Juelfs says. Last year, this amounted to a return on investment of between 166 percent and 233 percent.
The first month after Continental employees were given a chance to win one of 18 cars, the airline set a goal of having 85 percent of its flights be on time. That year, the company saw a
60 percent improvement on loss time, or time lost due to employee absences.
All of the company’s 88,000 worldwide full- and part-time employees (except directors and above) are eligible for the attendance rewards program. The program has changed a bit over the years: The company now gives away nine cars, once a year, for those with perfect attendance during the first or second half of the year. United had 28,000 employees in the last drawing for the cars—6,000 of whom were included twice because they had a full year of perfect attendance.
In addition, the company added a six-month rolling recognition program, which is open to all employees who have perfect attendance for any six-month period. Workers may choose a $50 reward, frequent flier miles or a donation made to the employee relief fund. Employees who have two years of perfect attendance will be eligible for a free, fee-waived standby ticket, which will be awarded beginning in 2015. Between 2011 and 2013, almost 50,000 employees earned rewards under this program.
ROI and Peer Recognition
Even though Mehlville estimates savings of at least $250,000 a year, return on investment (ROI) for attendance rewards programs is often hard to measure. But the benefits aren’t just monetary.
After Continental reduced its loss time in the first year of its attendance rewards program, Towle says, the absenteeism rate has held steady—though there was a slight increase right after the merger with United.
Steel Warehouse doesn’t have a tangible ROI figure for its attendance rewards program, but Taylor says the program helps with morale, keeps communication open and lets people know what’s expected of them. Although the company has not kept track of attendance statistics, Taylor says the company’s turnover rate is below average for its industry. She credits the attendance bonuses as well as productivity bonuses that are also tied to the attendance point system. Taylor explains that "these incentives work on those days when an employee wakes up in the morning and thinks they really need a day off. It helps motivate people who are in that gray area."
Both United and Steel Warehouse also make sure employees are aware of their colleagues’ attendance accomplishments.
Steel Warehouse lists the award winners’ names in the employee newsletter. United holds a drawing for the cars in the spring, placing nine big tumblers in the boardroom where senior leaders pick the names. Then it treats the winners to a dinner and lets them choose from several Ford models. The cars are delivered to the employees in September at the company’s annual casino night, a well-attended employee event.
"It’s as important or even more important to provide recognition for these employees as giving them a gift certificate is," Munoz says. "It’s a tremendous morale booster. Recognizing them either at a meeting or by putting a certificate up on a wall adds real value to the program."
Icing on the Cake
Towle cautions that company leaders should not think an attendance bonus is going to solve their absenteeism problems. "People don’t come to work to have a chance at winning a car," she says, noting that Continental’s initial giveaway was only one part of the company’s strategy. "People come to work because you’ve created an environment where they enjoy coming to work each day." The attendance rewards program is just the icing on the cake.
"When you have an attendance problem or a lack of engagement, you really need to figure out why," Towle says. "Programs are not going to fix those things."
Instead, employers need to seek input about what employees need to make them proud to work at the organization. At Continental, employees said they needed a strong sense of community and a better physical environment to work in. So the year the company began the giveaway, it also remodeled break rooms and installed new refrigerators, microwaves and furniture.
In fact, adds Towle’s colleague Robert Thomas, PHR, project manager for employee experience, an attendance rewards program is probably the last piece of the puzzle if a company wants to address absenteeism problems. "You’ve got to work on the core first," he says, "and then you can layer on programs and awards."
Nancy Hatch Woodward is a freelance writer based in Georgia.
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