Study: Leave-Of-Absence Program Costs Are A Mystery To Many

Jan. 13, 2005
Most large firms have formal leave-of-absence (LOA) programs but few track their costs or utilization, according to a recent study by Hewitt Associates, Lincolnshire, Ill. Such lack of monitoring reveals "a potentially huge and uncontrolled expense for ...

Most large firms have formal leave-of-absence (LOA) programs but few track their costs or utilization, according to a recent study by Hewitt Associates, Lincolnshire, Ill. Such lack of monitoring reveals "a potentially huge and uncontrolled expense for many organizations." While some 96% of larger companies have formal documented leave-of-absence policies, fewer than two in 10 calculate the costs associated with them and just one-third track their utilization, the human resources consulting firm says. "In an age where companies are asked to identify and cut expenses wherever possible, it is surprising to find that so few organizations have a sense of how many of their employees are on leave at any one time and how much it's costing them," says Richard North, absence management strategy leader. "What's really unfortunate is that, because LOA costs remain hidden from management, often bundled with other expenses, such as benefits and labor, some HR leaders may incorrectly view LOA expenses as the price of doing business." The top three reasons given for not tracking LOA costs are lack of resources (34%), not a top-management concern (20%) and no methodology to generate meaningful results (17%). The Family and Medical Leave Act of 1993 was cited as the most common reason for taking leave.

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