Posted: July 20th, 2016

Will the incentive plan to reduce absenteeism succeed?

Motors might just as well have negotiated a cash bonus for the hourly workers or given them another 10 to 15 cents per hour. After reviewing the division s absenteeism rates for controllable absences (i.e., those categories of absences believed to be of the employee s own choice), Parks concludes that the company could reduce this rate from the previous year s figure of 11%.
And then Parks had a brainstorm. What USA Motors needs to negotiate is an incentive plan for reducing absenteeism. The plan Parks has in mind entails a standard for the amount of controllable absence deemed acceptable. If a chronically absent employee exceeds the standard, then vacation, holiday, and sickness/accident pay would be cut by 10% during the next six months. If worker absence continues to exceed the allowable limits, then vacation, holiday, and sickness pay would be cut during the next six months by the actual percentage of absent days incurred by the chronic absentee. Hence, if a worker misses 15% of scheduled workdays during the first six month period, vacation pay for the new six month period would be reduced by 10%. If the employee continues to be absent at the 15% rate, the vacation rate would be reduced by 15% during the next six months.
Parks immediately drafted a memorandum outlining the program and submitted it to the corporate HR manager of USA Motors for inclusion in the upcoming bargaining session. To Parks surprise and delight, the memorandum received strong corporate support and is scheduled as a high priority bargaining topic for the fall negotiations.
1. Will the incentive plan to reduce absenteeism succeed? Explain your opinion.
2. How much absenteeism is really under the employee s control?
3. Why didn t the paid absence plan work?
4. What plan would you recommend to USA Motors? Provide rationale for the plan.