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Attendance Incentives Are Critical for Some Organizations

Sick leave incentive plans—also known as attendance bonuses—take many forms, from a monthly, qu​arterly or annual cash bonus, to gift cards or extra planned time off. But what would make a company give employees something extra just for coming to work? The answer depends on the nature of business.

Chana Anderson, CCP, SPHR-CA, director of human resources at Casa de las Campanas, a Southern California retirement community, and member of SHRM’s Employee Relations Special Expertise Panel, says companies focused on delivering services rather than products are more likely to be concerned about employee absenteeism.

This is particularly true for an organization such as hers, which is a cross between a hospital and a hotel and relies heavily on hourly workers to provide key services to residents.

Employees receive a $100 bonus for three months of perfect attendance, she says, and the amounts increase during the holidays when employees are more likely to want to stay home and may need extra cash. The attendance bonus encourages advance planning and reduces sick leave abuse.

“We’re all about giving staff time off but they’ve got to give us notice in advance,” Anderson says. The company can even arrange for a temporary schedule to accommodate an employee’s personal needs.

But that doesn’t mean employees are expected to report to work sick. “When people are sick we don’t want them on property,” Anderson says. “We send people with the sniffles home when they try to come into work.”

When To Consider Adopting a Plan

Sick leave incentive plans are most likely to be instituted when absenteeism becomes a problem for a company, according to Paul A. Munoz, president of HR Group Inc., a consulting firm in Plainview, N.Y. For example, he says the unexpected absence of one or two people who work in a customer service department will have an immediate impact on customer service levels. It may also mean hiring temps or paying for overtime.

In May 2007, the Society for Human Resource Management released a survey brief addressing the impact of unscheduled employee absenteeism on their organizations. Nearly one-quarter of HR professionals (22 percent) said that unscheduled employee absenteeism was a problem “to a large degree” and an additional 43 percent reported that it was a problem “to some degree.”

That’s why Munoz recommends attendance incentives to many clients. For a modest investment he says a company can decrease absenteeism, increase productivity and reduce the amount of time managers need to spend juggling schedules to ensure an acceptable service level is maintained.

But Munoz notes that such plans don’t have to involve large cash payouts. “It may be as simple as recognition—like an e-mail to everyone—or a $25 gas card,” he says.

The distribution of the reward—no matter how small—is a key element for a successful program. “If you do something like a gas card or gift card and a senior manager or the owner of the company hands you the card and thanks you for being there every day, it doesn’t go away,” Munoz says.

Public, person-to-person distribution has another benefit, Munoz says: “If at the end of every month you didn’t get a card and the people sitting around you did, it’s going to hit home.”

Munoz suggests companies distribute incentives on a monthly basis to keep employees focused. “When it’s a beautiful day outside we want people to think twice about blowing off a day because they don’t want to lose their bonus,” he says.

Anderson recommends employers talk to employees to make sure an attendance incentive meets their needs and accomplishes program objectives. “Don’t design a program in a vacuum,” she adds. “Get manager input.”

She also notes that some departments in an organization like hers—such as dining services and housekeeping—may have bigger absenteeism issues than others. As such, customized approaches may be needed.

Casa de las Campanas also supplements its attendance incentives with other assistance, such as regular communication about the services available through the company’s employee assistance program. This helps employees manage problems such as home foreclosures, domestic violence and other family issues which could interfere with the work day.

Anderson says the Casa de las Campanas program is constantly updated to keep employees engaged: “We take input from our employees about what they want,” Anderson says. “Some want cash, some want gift cards, some want gas cards, some want a trip. It’s really about refreshing the same program over and over again.”

But Munoz says employers need to stress the importance of staying home when sick. “If you’re sick we want you to stay home and get better so you can come back and do a good job,” Munoz says.

“The point is not to affect people who are really sick,” Munoz says. “It’s to get to those who don’t want to get out of bed in the morning on a rainy day.”

Encouraging Unexpected Absences

One small company actually encourages its employees to take unplanned leave.

“When someone has done an exceptionally good job, they get a ‘hooky’ day,” says Carla Morelli, owner of FreyerMartin, a bill paying services company in Gaithersburg, Md. “It’s a wonderful, unexpected day off that can be used on demand, at any time, without prior scheduling.” Employees are expected to use good judgment, however, and avoid taking hooky days when there are pressing deadlines.

Morelli instituted hooky days because her six-employee firm couldn’t afford to give straight paid time off. But she says her approach is more powerful than a regular paid day off. “Everyone knows when someone is out for a hooky day, so it sends a message to everyone else that contributions are valued,” she says.

But that doesn’t mean hooky days are easy to come by. Some employees might earn up to two or three days a year, while some get none. “You have to have done something pretty special, like gone over and above for a client or come up with a great idea that was implemented,” Morelli says. “You have to be recommended by a peer or supervisor, and it requires management approval.”

Morelli also rewards employees for lesser accomplishments with a choice of gift cards. “It keeps the bar high without leaving people feeling unrewarded for trying,” she says.

Find a Strategy that Works

According to the 2007 CCH Unscheduled Absence Survey, employers use a variety of methods to control absences such as disciplinary action, personal recognition, and buy-back programs and bonuses, each with varying results. The key, experts say, is to choose a program that meets the employer’s specific needs.

Absence Control Method Used

Effectiveness on a 1-5 Scale (5 Is Very Effective)

Paid leave bank


Buy back


Disciplinary action




Verification of illness


Yearly review


No fault


Personal recognition


Source: 2007 CCH Unscheduled Absence Survey

Claremont Savings Bank in New Hampshire abolished its attendance bonus three years ago, says Beverly A. Widger, SPHR, senior vice president of human resources, in favor of an earned time policy which combines sick and vacation time into one lump sum. Instead of a monthly or quarterly bonus, up to a week of unused leave can be carried over or cashed out at the end of the year.

Widger says the bank gave employees three months’ notice of its intent to eliminate the attendance bonus at year’s end. But the earned time policy’s design also helped pave the way for what could have been a very unpopular change. For example, some employers, in an effort to minimize the cost of paying for time not worked, give employees fewer earned time days than the total of vacation and sick time previously earned. But the bank’s employees didn’t lose any time. And Widger says that employees who cash out unused time actually earn more than they would have received under the attendance bonus.

The bank plans for unexpected absences by cross-training employees so they can move from job to job to cover for coworkers who take unplanned leave, whether due to their own illness or to care for a sick child or parent.

Widger, who is also a member of SHRM’s Employee Relations Special Expertise Panel, says employees are now more likely to stay home from work when sick because the previous attendance bonus is not at risk.

“People have managed their time very carefully since the change,” Widger says, “and, as a result, managers have seen more pre-planned days off and honesty in the use of time off.”

Rebecca R. Hastings, SPHR, is an online editor/manager for SHRM.


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