ACMI has operated for about 40 years, with about 30 years spent primarily on providing industrial grade refrigeration units. About eight (8) years ago, the company entered the software side of the refrigeration business by purchasing proprietary software that precisely managed various refrigeration systems. With this strategic move, the company also redeployed its workforce. ACMI has been successful in positioning itself in the market, with clients from operators and wholesalers in and outside of Australia. These clients pay ACMI a management fee for providing technical support services.
ACMI has 1,384 technical employees in all 22 locations. The numbers of employees are shown in the table below, as well as the distribution per work hierarchy. For example, on average one (1) senior associate manages 2.34 junior associates, while one (1) junior associate manages 1.93 senior technicians and 5.21 technicians, and so forth. In one location, there are about 63 employees on average.
Table 1 Employees and Hierarchical Distribution
ACMI employees work 12-hour shifts three times a week or a total of 36 hours of work per week. Their work shifts rotate from weekdays to weekends every month, with their schedules equitably distributed monthly. ACMI employees are paid a regular salary commensurate to their work levels. The pay levels are a result of the negotiations between ACMI and the Unionized Unioner’s Union (UUU). ACMI employees also receive benefits and entitlements as prescribed by Australian employment regulations. ACMI employees receive 144 hours of sick leave annually (equivalent to 12 shifts). Of the 144 hours of sick leave, 120 can be accrued with no expiry date.
ACMI has very low employee turn-over, with the average age of ACMI employees being around 50 years and average tenure at 20 years.
Nature of The Problem
The problem of ACMI is the high rate of absenteeism among its employees. In any industry, a 5% per week rate of absenteeism is a very serious problem (a 3% rate is acceptable). ACMI experiences a high of 11.35% for night shifts during weekdays and 13.68% during night shifts on weekends. The absentee rate on weekdays and weekends during the day shift is relatively lower, but is still at an alarming level. Clearly, the problem is an indication of a serious morale issue among ACMI employees.
The problem can partially be explained by the history of ACMI and UUU. When ACMI ventured into the software side of the business, the redeployment of its workforce was not managed efficiently. This resulted in a disgruntled workforce that did not leave the company, but evolved into an organization with an embittered culture. Since then, there have been a lot of disputes between the employees and ACMI management.
ACMI’s response has not resulted in the resolution of the problem. ACMI since then has tried intervention strategies, with lukewarm if not negligible results. There is still a high rate of absenteeism in the company. Absentee data indicates that the liberal stance of the company on absenteeism is being abused. The figure below shows that absenteeism is highest on Saturday nights indicating that the absences are made deliberately. There is random distribution of absenteeism throughout the year meaning absenteeism is not due to any holiday season. Data also shows that one of the probably reasons of high absenteeism during weekends, is because employees don’t need to justify their absences and present certificates of sickness. However during weekdays, their absences are justified with certificates. The data also shows that more absences are made by personnel of lowest rank and long-tenured employees maximize all their absences every year.
The impact of absenteeism is significant in ACMI’s case. If an employee is absent, call-ins are initiated. Those that are working in a particular shift are asked to stay until the call-in arrives. Call-ins are normally personnel of higher rank thus the effect of a single employee being absent results in the company paying five (5) times the absent employee’s rate (sometimes more!).
ACMI is held hostage by the fact that it needs to retain a certain service level as stipulated in its contracts with its clients. ACMI employees, knowing this fact relish in stepping in for absent colleagues and the problem remains unresolved. Other contributory factors to the problem include the receipt of full entitlements for both certified and uncertified absences; negligible penalties for absences due to dismal pressure from management, strong protectionism from the UUU and unavailability of employee counseling; and there are no management directives to solve the issue since it is not part of their Key Result Areas.
Recognizing this problem, ACMI has initiated several intervention programs such as developing incentives to attend work through education, FGDs, public display of absentee data, establishment of a committee that recognizes lessening of absenteeism as an achievement, letters of commendation for employees with reduced number of leaves, reduction of routinization and work-induced boredom, and providing greater flexibility to employees with families. The data shows that providing incentives and recognition of reduced levels of absenteeism as an achievement is the most effective method for reducing absenteeism.
The issue of absenteeism is an issue about workforce morale. When employees experience low levels of morale, high rates of absenteeism are sure to follow. Since this is a general observation across industries, it follows that improving the level of employee morale will address the issue of absenteeism. The issue then becomes determining the causes that bring employee morale down and then resolving those conflicts ultimately.
Absenteeism is a serious business issue. In the case of ACMI, absenteeism has exceeded the industry benchmark of 3%f. While the issue has not been left unchecked by ACMI, it has nevertheless caused serious financial set-backs to the company.
Absenteeism is normally linked to specific managers or supervisors. In the case of ACMI, there is no data to support that a particular person is causing the unwanted attrition. Therefore, the causes of absenteeism, since it is observed equally in all locations of the business, are not due to under-trained managers and may be more systemic. Consider for example the fact that the absenteeism occurs mostly in very low ranking employees, this may indicate that the problem is with ACMI’s hiring procedures first and foremost. The company is recruiting people who may be technically competent but cannot commit themselves to the highest level of professionalism.
Secondly, the nature of absenteeism seems to be heavily sickness by nature, as supported by a medical certificate. This is already allowed by ACMI as a valid leave and is not scrutinized further, as to what type of sickness and if that sickness is work related and therefore can be avoided. Often employees provide this reason, sickness, as the main excuse for not wanting to go to work. The very lax policies of absenteeism causes employees to infer that management does not care about the issue, and there is strong proof that management does take it lightly since it is not part of their Key Results Areas (KRAs).
An effective program that understands the core of the issue must be developed by AMCI to resolve this problem. This program should move in two parallel lines of approach and these are:
1. Identification of worker discontent with the purpose of eliminating them – employees will find legitimate excuses each and every time they need to because something at work is providing them with discontent. While this is a behavioral issue, an effective absenteeism program should be able to locate what is causing “sickness” among employees and then eliminate the problem entirely. Dealing with the issue head on provides employees a clear sign that management wants to and will take care of the problem immediately.
2. Changing employee behavior to discontent – in a study conducted with the help of 3,000 workers in 18 companies, the top causes of employee discontent are:
a. The level of pay – this is one of the primary causes of absenteeism, but since in ACMI’s case the pay levels have been determined based on their agreements with the UUU, the level of pay is not the culprit behind the excessive absenteeism
b. Overburdening Work – this is another clear cause of absenteeism and occurs when employees reach workloads that are stressful. However, in the case of ACMI this is also not the culprit since there are even periods of boredom induced from not working at all!
c. Physical work conditions - if the work place is not conducive to productivity, employees will naturally absent themselves. This occurs when the physical work conditions are too much to bear and if repeated reporting to management results in no or inappropriate action (i.e. filthy restrooms must be addressed).
d. Company identity – this is another cause of absenteeism and occurs when the employee cannot relate to the identity of the company. This could be a reason in ACMI’s case. There was a long history between the company and UUU which was caused by employees feeling disassociated with the company because the change process during the company transition was not handled properly.
The recommended action therefore leans on building the company identity in ACMI’s case. This could be accomplished through teambuilding. Teambuilding will foster respect between employees and management, and will help remove the stigma of ACMI’s and UUU’s history of eight years ago. Teambuilding will give employees a sense of belongingness, will lend them more responsibility and accountability both in addressing the absenteeism issue but in other corporate issues as well, and will give employees the feeling of importance which is equivalent to improving their morale.
Team building must be facilitated by someone outside of the organization, who will help embittered employees feel empowered and contributive. Working together will make employees feel that they can contribute the best of their abilities to meet a common objective. It removes their ingrained advocacy to oppose, because now they are part of the steering force of the organization, rather than just the workforce.
While this is not a be-all and end-all solution, it is clearly where ACMI should start since the company suffers most from the lack of uplifting employee culture and sense of unity.