Financial Solutions for Human Resources

Fred WhittleseyPay and Performance: The Compensation Blog0 Comments

I think many were taken aback by my three-part infomercial published and distributed at the SHRM Conference. In it, I suggested that HR continues to overlook the need for financially-oriented business-based solutions as the field continues to get waylaid into concepts like “work-life” and such.Not being a soccer (sorry, “football”) fan, I have paid scant attention to the World Cup. Before you conclude that I just did a random change of topic from the preceding paragraph, read on. I probably wouldn’t have noticed the blurb in the 03 July 2006 issue of Business Week, with a photo of face-painted, flag-waving fans, had they not printed this in red ink: “Companies pay a premium of 2% to 4% of an employee’s salary. In return, the policy covers the cost of an AWOL worker’s salary for up to two days…”

Following my reading of this article I Googled around and learned that World Cup related absenteeism is apparently a worldwide human resource issue (decidedly more pronounced outside the US than inside) and that there has been a fair amount of thinking and writing about how to address this thorny human resource issue. How should HR deal with the possibility that 15% to 20% of the workforce – or more! – may no-show on a day when the home country team is playing? And if that turns into a two-day no-show due to those employees having watched the game in a local pub and suffered the morning-after consequences? This is HR’s concern.

The solutions proffered range from wide-screen TVs in the workplace (Why is it better that the employee comes to work and then spends their time watching a soccer, sorry, football game? That one baffles me.) to other solutions including communication meetings with managers and employees to emphasize the importance of coming to work; arranging for flexible schedules so fans can watch the game and come to work earlier or later; ensuring good communication with non-fans so they don’t feel slighted; and so on. The usual fluffy HR stuff.

The Business Week article reports that Dutch insurance broker SEZ developed a financial solution to this. (Apparently this is a severe problem in the Netherlands.) After all, it’s not a “people problem” that people don’t come to work, it’s a financial problem. If the people don’t come, they use a sick day, or a vacation day, or lose a day’s pay. If we were to treat them like adults instead of schoolchildren, we would allow them that choice and hope they gave advance notice. The financial problem is that the company then has to hire a temp for a day or two, at roughly twice the price, or suffer the profit impact of the missing employee.

SEZ developed an insurance policy that allows the company to pay the premium of 2% to 4% of salary and in the event of a “loss” (loss of employee attendance) the policy pays enough for a temp (or that amount could presumably be applied to cover the lost profit). This was first offered about four weeks ago according to Business Week.

The result? About 600 employers purchased a policy.

While some employers are buying TVs so that employees can be paid to work while watching the soccer, sorry, football game others have hedged using a financial product and left the “work-life” nonsense behind. The employers maintain their profitability, the employee takes the day off to watch the game, and everybody wins. No HR needed. How about that?

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