As a result, there were massive adverse impacts, including a cost of $30 million and a 3% drop in Ryanair's shares, not to mention the thousands of disgruntled customers. While a number of factors were involved in this complex case, it shows how vital proper people management is for all organizations, particularly those whose livelihoods depend on delivering customer service.
With Ryanair’s example fresh in our minds, here are some important lessons to learn that will reduce risk and liability from employee absence – not just vacations, but all forms of absence.
In today’s services economy, people matter more than ever
As we move to a service economy where the trend away from owning assets to consuming services continues, successful businesses will have to change the way they operate. They will have to manage customer retention by delivering what the customer wants as quickly and efficiently as possible – which means they are more reliant on their people than ever before.
This means absence management is more critical today than ever. In the CIPD annual survey of UK HR professionals 2016, the overall median cost of absence per employee per year is estimated at £522 ($690). For organizations that struggle with people management and resource scheduling to accommodate shift patterns and projects, that very quickly adds up and the impact is all too real. A business may need to employ extra people to cover those absences which increases costs considerably.
Many employers do not have the right systems in place to manage their people properly, and therefore, they don’t measure the implications on the business' productivity and customer experience. One survey of 1,200 employers revealed that a mere 36% measure the bottom-line impact of absence on their enterprises.
Ryanair provides an extreme example of how failure to manage what at first sight appears to be relatively easy can end very badly. The disruption affected more than 315,000 customers and cost millions in expenses and share losses, not to mention damage to reputation. With proper systems in place to manage absence and schedule resources, information can be monitored proactively and problems avoided. At the same time, data can be used to improve efficiency and customer experience.
1. Ensuring statutory compliance
Globally, we see that many organizations struggle to manage tasks around human resource management within required timeframes. Our research shows that many companies don’t have visibility of who is off work and they don’t know when their absent employee is planning to return. Because of this, it is a big challenge to manage absences effectively and ensure compliance. Global organizations face an even bigger challenge – with employees operating in multiple countries, they must comply with the regulations for each individual country.
2. Controlling absence costs
People-related costs represent the largest controllable expenditure for most companies in the world, and absence can threaten the ability to keep these costs under control. The average for absence days lost per employee is 7 days per year. There are some notable known trends, as absence is higher in specific sectors and situations.
Studies show that proactive absence management can significantly reduce absence for all organizations. The cost of absence does not just refer to the payment made to an employee while they are off, it also considers the cost of replacing the absent person to ensure business continuity and the impact on engagement levels of those absent and those impacted by the absence.
3. Reducing manual tasks
In many countries, there are no fewer than 23 manual steps in handling an absence from start to finish. Absence Managers spend many days working out numbers of days lost, calculating absence rates and trigger points, running reports, contacting employees, chasing doctor’s notes, arranging meetings, typing and sending recovery-plan letters, arranging cover and updating people involved in the procedure. We have found that 80% of these tasks can be handled automatically with minimal user involvement. North Atlantic Drilling is an organization doing just that, using Unit4 software for offshore crew planning, fully integrated with time Management and travel expense processes to effectively optimize scheduling and use of people resources.
4. Improving employee engagement
Studies show there is a direct link between how absence is handled for an employee (and those impacted by the absence) and employee engagement. Organizations should keep in contact with the absent employee, ensure tasks are completed on time, make adjustments to working environments and keep recovery plans. All this ensures absent employees are looked after, and this attention to detail can positively impact employee engagement.
For those employees who need to substitute for the absent person, planning and full visibility of absence duration can manage expectations and help the company proactively plan for absences, spot trends and make contingency plans to protect their business. For example, Unit4 supports crucial resource planning and time management at software and professional services firm, SAS Institute in Norway. They benefit from a constant overview of utilization looking forward which helps them manage projects and absences, and also provides a basis for billing clients.
New technology can drive your people advantage
New technology, such as bots, machine learning and business intelligence (BI), that self-drives and proactively alerts managers to potential issues related to people planning, can help to prevent staffing problems arising. Absence Managers and HR leaders have more intelligence available to them than ever before for proactively managing open absences and accidents, arranging appointments, sending letters, updating people involved, running reports and keeping track of all cases. Organizations can plan ahead based on absence statistics, such as absence rates and days lost.
Automation of these processes is possible to help manage the absence or accident from start to finish and ensure compliance with local statutory regulations including generating tasks, requesting doctor’s notes, generating documents, storing documents and automatically notifying management when trigger points are reached. For example, managers who use technology that uses BI and machine learning can measure absenteeism costs and track patterns of most requested days off or provide reports with insights on illness-related absences. Moreover, new technology like chatbots can be leveraged to help manage time efficiently and even encourage employees to take time off, and managers to automate vacation review reminders.
Absence management and scheduling issues, whether they’re as extreme as those witnessed at Ryanair or more mundanely routine, can be avoided with advanced self-driving technology that encourages proactive management of employees' time. Managers can use tools powered by today's digital technology to intelligently ensure that people in their department and team actually take the vacation they are entitled to take (and should take).
By taking these actions, managers can drastically reduce the impact of employee absence to enhance service delivery and the customer's experience. After all, in today’s services economy customers demand and expect constant value from their interactions and their purchases, at all points in the lifecycle. A business needs its employees in the right place and at the right time to deliver to those expectations.