Employers with paid-time-off programs that don't distinguish between scheduled leave, unscheduled leave, sick days and vacation days may be missing out on an opportunity to reduce health care costs and improve productivity.

The Integrated Benefits Institute recently analyzed the absence management practices of three employers, including a call center that handles all human resources, benefits and payroll issues at a financial service company.

Even the employers that do track paid time off often don't track the cause of the absence or whether it is unscheduled. HR experts assert that, if employers want to understand how health-related absences affect the bottom line, then their PTO programs have to differentiate between the various types of leaves.

"Employers have underestimated what absence really means. Therefore, they use PTO programs to make things easier from an administrative perspective, but fail to use the programs to align absence management practices with the company's business objectives," says Thomas Parry, president of IBI, a California-based organization that focuses on health and productivity in the corporate sector.

With incidental leave, it really matters if employees are sick for a day or two, instead of just taking a vacation, he adds. To manage health and wellness programs separately from a PTO program overlooks the fact that there is a strong link between health, absenteeism and productivity.

Burden of absence

The case study analyzed the PTO programs at a regional power company, national retailer and the HR call center, all of which remained anonymous. IBI found that unscheduled absences in the HR call center resulted in performance problems for the department not only during busy months, but also during slow periods.

The employer with the call center tracked PTO by unscheduled absence and by cause; the other two employers did not. Overall, 80% of paid time off was scheduled during less busy days of the week and months, which helped the department to meet its workload demands.

This suggests that workers understood that scheduling PTO in October, November, December, January and February was probably not a good idea, given that those months correspond with the benefits enrollment period when employees are likely to call the department with questions.

"Employee willingness to schedule time off during the less busy days and months means that the crunch of too few workers to handle the workload during busy times isn't as dire as it would be if employees scheduled PTO uniformly throughout the week and the year," IBI researchers write in the report "The Business Response of Employers to Absence."

If an employee's absence is unexpected, the percentage of calls answered within 30 seconds will be 2.3 percentage points lower on that day, compared to the baseline average of 76.6% to 74.3%, the report states.

What's more, the employer's inflexibility in managing the workload in the HR call center does mean an unexpected surge in unscheduled absences will result in poor performance, regardless of whether it occurs at a busy or less busy time. That is because the workload is too high for the remaining employees to handle, and it isn't possible to bring in replacement workers, IBI observes.

Consequently, it may be prudent to add additional staffing during busy periods. The hiring may prove to be the cheapest response to absence, the report notes. That's because the more time employees spend in getting answers to their questions from the HR call center, the less time they have to spend on customer-related issues and important job tasks.

The Plan B approach

"The report certainty does make us, as HR/benefits professionals, step back and look at how we would handle the loss of a worker or two to unscheduled leave resulting from an unexpected disability," says Chris McSwain, director of global benefits for Whirlpool Corp.

The Michigan-based manufacturer of home appliances is a member of IBI, but not an employer in the research. Whirlpool uses a third-party provider for some HR call center responsibilities.

McSwain believes his department, which includes 10 members, has a deep bench because the company allows employees to learn new skills by cross-departmental training.

"If we had one person out for a few days during open enrollment, we could handle the work because I have access to other people who don't necessarily do open enrollment, but who could certainly come in to help our team," he says.

"Now, if we had two or three people who were to go down, then we would have to look other contingencies," he adds.

McSwain, who is familiar the study, further explains that employers often have knowledge gaps in terms of productivity and health.

Consequently, it's critical for employers to seek out tools that can close those gaps by providing data on productivity and health-related absences, he explains. This will allow companies to have a real, strategic view of where to focus their resources to get the greatest value from their workers.