Survey: Companies Lag in Tracking Employee Time Off

January 16, 2006 ( - Companies' neglect in tracking employees' time off is costing employers millions of dollars in payroll expenses and employee productivity, according to a recent survey by Hewitt Associates.

The survey of 421 companies found that most companies do not keep track of the costs associated with their workers’ time away from work, but those companies that do estimate the cost put it at 1% to 3% of payroll.

Hewitt also found that 57% of companies formally tracked sick days for their exempt employees and 46% tracked personal days.

One of the scenarios Hewitt also noted that could cost companies a hefty sum in lost productivity is short-term disability, which 5% of covered employees experienced in a year. For instance, for a company with 20,000 employees, more than $8 million could be lost to lost productivity in year.

The companies were split over how they managed the costs linked to short-term disability, with 80% of companies tracking the short-term disability of their exempt employees, 87% outsourcing their short-term and/or long-term programs, and 28% having a program in place to manage non-occupational disabilities.

Paid-time off (PTO) banks, in which a combination of vacation, personal days and incidental sick time are lumped together, have increasingly gained popularity with employers, making it more effective for them to manage their time-off programs. The percentage of companies offering PTO banks increasing from 18% in 2000 to between 22% and 32% in this year’s survey.

Hewitt also looked at how companies disciplined employees for taking unscheduled time off, and found that 65% of companies said they had no disciplinary policy in place. Of those that did discipline their employees, 53% used a verbal or written warning.

Disciplinary actions to discourage unscheduled time off were more popular than incentive programs for employees, who have sick time remaining at the end of the year.