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High unemployment lowers job absenteeism, but for the wrong workers: study

December 1, 2008

For more information, contact: Benjamin Haimowitz, HHaimowitz@aol.com

A possible consolation for employers during periods of recession, like the one the economy is now experiencing, is a drop in employee absences. Any number of studies have confirmed that absenteeism falls when unemployment rates rise, as workers become wary of losing their jobs when other jobs are scarce.
 
But according to a new study, involving thousands of employees of a state department of transportation in units across the state, this phenomenon may not amount to much of a benefit for employers after all. Yes, high unemployment lowers absenteeism, the research in the current Academy of Management Journal finds. But the drop is concentrated among dissatisfied, disaffected workers -- in other words, those whose contribution to productivity is likely to be least.
 
"In units low in commitment or satisfaction, absenteeism was about 7% or 8% less in locales with high unemployment than it was in areas with low unemployment," explains John P. Hausknecht of Cornell University, who carried out the study with Nathan J. Hiller of Florida International University and Robert J. Vance of the firm of Vance & Renz in State College, Pennsylvania. "In contrast, local unemployment rates had little, if any, effect on job absences in units with high satisfaction or commitment, since absenteeism in those groups was consistently low."
 
The study also contains another piece of bad news for employers: worker absenteeism has a tendency to creep up over the years, through good and bad times alike. Over the course of five years, it increased at a rate of about 5% a year.
 
Says Hausknecht: "The largest increase for a single unit over this period was about 143%, while the largest decrease was about 26%. Taken together, these rates suggest that absenteeism increases relatively easily, while decreases of similar magnitudes are much tougher to achieve."
 
What accounts for this upward creep? "Individuals have a tendency to overestimate the negative behaviors of others while underestimating their own, and also report inflated perceptions regarding group absence norms," the study notes. "Thus, they may rely upon upwardly biased estimates to legitimize their own absences. When these estimates compound across group members and over time, one would expect absence rates to increase."
 
Although the slippage is slow enough to "go unnoticed in annual comparisons," the study continues, "the practical implications become more evident when considered across the organization and over time. Assuming a 2,000-hour work year per employee, the cumulative time lost to absenteeism by the final year of the study translates into one additional 8-hour day of absenteeism per member. Given the 12,500 members and a conservative estimate that each day of absenteeism costs the employer $500, the organization sustained $6.25 million in absence-related losses in the final year alone (as compared to the initial year)."
 
The organization in question was the department of transportation of a large state, with 12,500 employees and 115 work groups, including both county maintenance units and office units. Data for the study, gathered annually from 1998 to 2003, consisted of 1) employee surveys developed by the researchers to gauge individuals' work attitudes; 2) departmental records of unit-level absenteeism; and 3) county unemployment information from the U.S. Bureau of Labor Statistics. Absenteeism data was restricted to absences of one or two days, since absences of three or more consecutive days required documentation from a physician and were assumed to be medically rather than motivationally based.
 
Workers' job satisfaction was assessed by asking them to rate on a scale of 1 (very dissatisfied) to 5 (very satisfied) seven aspects of their work -- job challenge, relationship with coworkers, relationship with supervisor, independent thought and action, job security, recognition, and chances for promotion. Organizational commitment was gauged by asking employees to indicate their agreement on a scale of 1 (strongly disagree) to 5 (strongly agree) with six items -- organization has personal meaning, feel like "part of the family," want to give to the organization as well as receive, feel proud to work here, feel attached to the organization, intend to remain. Employee response rate to the annual surveys was about 50%. With the exception of one county, local unemployment rates ranged from about 3% to 8% over the course of the study.
 
Local unemployment rate, job satisfaction, and organizational commitment all had a significant inverse effect on absenteeism (the higher one was, the lower the other was), with commitment having the greatest effect and unemployment the least. Commitment proved to be most important, too, when the effect on absenteeism of the three factors combined was analyzed. As the study puts it, "The preeminence of organizational commitment is evident, as the three combinations of predictors that yielded below-average absenteeism all involve high levels of commitment. It is noteworthy also that these high-commitment trend lines are virtually superimposed on one another, revealing that absenteeism was low regardless of levels of job satisfaction or unemployment if commitment was high."
 
Still, even units with high commitment saw their rates of absenteeism creep upward over the course of the study. What can be done to stem this trend? Organizations "might consider adopting group-level targets of incentives as part of an absence-management plan," the authors offer. "Unit-level incentives, inter-unit competition and the like are worthy of consideration. Given the powerful nature of referent-group norms and unit-level norms, such interventions seem promising."
 
The new study, entitled "Work Unit Absenteeism: Effects of Satisfaction, Commitment, Labor Market Conditions, and Time," is in the December/January issue of the Academy of Management Journal.  This peer-reviewed publication is published every other month by the academy, which, with about 18,000 members in 102 countries, is the largest organization in the world devoted to management research and teaching. The academy's other publications are the Academy of Management Review, Academy of Management Perspectives and Academy of Management Learning and Education.
Media Coverage:
Reuters. Higher Jobless Rate, Less Absences for Unhappy Workers. (Friday, December 12, 2008).
The Globe & Mail. You're Valuable to Us -- It's Not Just Lip Service. (Friday, December 05, 2008).
The Washington Post. More Days on the Job. (Tuesday, January 13, 2009).

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