Rein in costs by managing sickness absence

It’s been reported that Portsmouth Hospitals trust has saved £9m from its overall pay bill for 2010-11, partly due to a ‘renewed emphasis’ being placed on the management of sickness absence and other employee relations activity. Over the last year it has formed a team within its existing workforce directorate with the objective of reducing sickness-related absence. Managers were trained by the team to manage sickness absence and to deliver informal sickness management meetings.

The trust dismissed 75 people through a ‘formal management process’. It reveals that 56 of the dismissals related to sickness absence. However, the trust was able to help 85 members of staff back to work after long-term absence.

In February the Audit Commission published a report that said the NHS could save £290m by reducing staff sickness rates, which costs the NHS an estimated £1.7bn annually. There are many costs associated with sickness absence including ‘direct’ costs such as statutory sick pay, the cost of replacement staff, and loss of output. In addition, there are also other costs that are harder to quantify such as lowering of morale amongst employees who have to do extra work to cover for those who are off due to sickness, and the cost of managing sickness absence.

Managing sickness absence in a robust way helps all businesses reduce costs and improve business efficiency. The worst performing businesses lose an average of 12 days per year for each employee due to physical conditions and mental health problems, such as anxiety or depression. The effect on the profitability of a small business can be dramatic. The Health for Work Adviceline website provides advice on managing sickness absence to improve business sustainability and profitability.

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