While the world is experiencing a war for talent, each region has its own, unique talent related challenges. Indeed there are local talent management phenomena, as Jason Averbook from Knowledge Infusion and I discussed in his recent blog.

In some European countries a lot of businesses carry a huge cost for people on sick leave. This cost in most European countries is a shared responsibility between each company and some kind of government funded insurance system (most employers must pay this insurance anyway – in many places it is mandatory).

How much of a burden is this for organizations? There are many consequences when employees overuse sick leave:

• Need to carry extra staff to cover for the absence levels
• Cover the absences with temporary staff that is both costly and not always fully productive in wider-scoped roles
• Lose business – which might be the worst of all alternatives since it will hit both the top and bottom line

Let’s look at this example from a financial service company in Holland:

The employer is legally responsible for paying 70% of the normal salary, after 2 sick days for a full 2 years. In a majority of industry sectors, this is legally raised to 100% through deals with unions. Our research indicates that the sick leave in Holland is about 6% (Sweden, Norway and the UK between 4-6%, France 3%, Italy, Ireland & Germany about 1.5%)

For a global financial service company with about 2 Billion Euros of labor cost and 35K employees there is an average cost per employee of 57K Euros. With 6% absent for sick leave that would mean that 2100 employees are absent at a cost of 120M Euro per year. If that sick leave could be reduced to 5% this company would have 350 more people working while directly saving 20M Euro. This example though showing significant cost savings is only looking at the direct cost of this absence, and not at the more strategic impact of lost business opportunities, or the individual human costs. Though there are arguments for fixing systematic problems caused by over generous sick pay, there is really nothing organizations can do about it in the short term… or is there?

To find the answer I turned to one of SuccessFactors Research Thought Leaders Ken Scarlett who has been researching this, and the conversation left us with some very real solutions.

Aggregately speaking, the higher the Engagement level (as measured by an engagement index) the lower the sick leave rates, and there is no better way to predict the likelihood of abusing sick leave than by the responses to the questions “Do you look forward to coming to work?” and/or “Do you feel you work is important to others?” Ken’s research shows that the group who answered negatively to those questions has the highest propensity to max out/abuse sick leave. With the specific questions above, you can actually create a highly accurate forecast within 10% margin of error.

In any country and any industry your job as a leader is to increase the likelihood that your people answer the question “Do you look forward to coming to work?” positively.