Among the many responsibilities that fall to an employeebenefits manager, one of the most important is absence management. An effective absencemanagement program reduces lost worker productivity and limits theliability for mismanagement of employee absences, ultimatelyproducing a positive impact on a company’s bottom line. Yet,management of this important function is often overlooked ormisunderstood.

Brokers and advisors can play an important role in ensuring thatemployers address this need. By understanding the basics of soundabsence management, as well as the resources and third-partyexpertise available in the marketplace, they can help employers toa proven path for successful absence management.

The need for absence management

In the past few years, numerous changes have impacted howemployers track employee leaves. While the Patient Protection andAffordable Care Act has garnered much of the attention, otherfederal rulings have had an effect on the benefits landscape aswell. The Department of Labor released additional regulations for the FamilyLeave Act, while the EEOC has updated requirements as part of theAmericans with Disabilities Act Amendments Act(ADAAA). These changes have forced employers to focus greaterattention on their absence tracking and reporting practices.

The cost of mismanaged absences can be steep. For example, arecent lawsuit regarding a mishandled FMLA claim resulted in acourt-ordered payment of damages totaling more than a milliondollars in lost pay and attorney fees. The risks of lawsuits orfines for non-compliance are simply not worth it, and an effectiveabsence management program can greatly reduce this exposure.

The state of employer absence managementprograms

The 2015 Guardian AbsenceManagement Activity Index and Study provides a snapshot ofemployer proficiency with absence management programs. Based onemployer activity on 10 elements of a potential absence managementprogram, the majority of employers have programs that are notconsidered advanced. The data also shows that larger employers aremore likely to have advanced programs than smaller companies.

The level of effort employers make to reduce absenteeism ishighly correlated to their degree of program advancement. And, notsurprisingly, companies with highly advanced programs are more thantwice as likely as those with less advanced programs to achievedesired outcomes.

Opportunities for improvement

While many companies have absence management efforts in place,the Guardian study suggests that opportunities for improvementexist, considering that:

• 58 percent of employers have difficulty interpreting federal andstate leave laws

• 54 percent of employers have challenges ensuring employeesare able to perform their essential duties before returningemployees to work

• 42 percent of employers lack staff resources to manageabsenteeism

Even as companies are actively trying to improve theirproductivity and absence management capabilities, the statisticssuggest they still struggle to do it well. And these challengesexist for companies of all sizes, ranging from 50-personorganizations to companies with 20,000 employees.

A four-step approach

1. Setting a solid philosophy. A philosophy thatemphasizes return-to-work and employee health and wellness programs is thekey to getting started. A company’s early decisions are oftenbased on its underlying philosophy.

2. Taking key foundational steps. Getting buy-infrom senior management and following a strategic communicationscampaign are essential to having the greatest impact on programefforts.

3. Developing an effective model. Using the sameoutside resource for short-term disability and FMLAadministration, and making health management referrals are keypredictors of success.

4. Carefully measuring success. It’s important todetermine how program effectiveness will be assessed.Nearly half (48 percent) of all employers reported employeeengagement to be the most critical measure of success.

Outsourcing options for managingabsenteeism

While all employers continue to grapple with managingabsenteeism, certain tasks have become less burdensome thanks toincreased access to expert advice, third-party technology andtools, and more outsourcing options. This reduces some of theregulatory, decision-making and reporting challenges, particularlywhen applying ADA/ADAAA regulations and coordinating a variety ofabsence types.

It’s now easier for smaller organizations to outsource theirabsenteeism needs so they can start or improve an existing absencemanagement program and manage it effectively.

More carriers now provide services to companies with as littleas 50 employees that traditionally were only available to largercompanies.

Absence management best practices

There are five best practices that are the strongest predictorsfor achieving six positive outcomes: enhancing productivity;improving employee experience; reducing lost time; decreasingoverall absenteeism; increasing return-to-work rates; and reducingdirect costs.

1. A full return-to-work program. A surprisingnumber of companies do not have a written return-to-work policy,yet this is paramount as a foundational step.

2. Access to usage/claims reports. Detailedreporting for disability and FMLA is needed so there’s knowledgeabout know why people are out and how quickly they resume work.

3. Referrals to health management programs. Theability to provide employees with assistance programs (EAP),disease management or wellness programs helps them get back to workmore quickly.

4. A central portal for reporting. Whether it’sfor FMLA, STD or PTO, it’s important to have a central place whereemployees report their absences. A single resource means morereliable data and more accurate reporting.

5. Using the same STD resource for FMLA and additionalbenefit programs. It can be challenging for two separatecarriers to manage these functions because they’re not integratedfrom a claims management perspective. It’s preferable forFMLA to be administered by the same department or vendor thatadministers STD.

Getting started

Absence management is a specialized field that requires aproactive approach. With recent marketplace advances in technology,reporting and expertise, there are numerous options for employersto pursue. Employers who are just getting started can follow aseries of prescriptive steps to establish their programs andcontinually improve them. Brokers, agents and consultants, as partof their fiduciary responsibilities, can help bring attention tothe importance of absence management to their clients and referthem to available resources.

Michael Estep is second vice president, group life,disability and supplemental health product development at TheGuardian Life Insurance Company of America.