Author: Sally Roberts

In addition to family and medical leave programs, some employers offer their employees extended leaves of absence to pursue personal endeavors or just rejuvenate.

The purpose of such leaves or sabbaticals is simple: Give valued employees the time off they want and avoid the costs associated with turnover by keeping them tethered to the company.

Given today’s turbulent economic times, such leave programs offer employers an alternative to layoffs, experts say.

Sabbaticals are a response in part to today’s 24/7 work world, says Kathie Lingle, director of the Scottsdale, Arizona-based Alliance for Work-Life Progress, a global human resources association.

“We’re just burning people out right and left,” Lingle says. “Smart organizations are looking at how to keep people whole and sane with them.”

Despite this, the number of employers offering such leaves and sabbaticals remains low, experts say. According to Hewitt Associates’ latest figures, only 4 percent of employers offer unpaid sabbaticals.

“Many employers still have a hard time offering a big chunk of time off, whether it’s paid or unpaid, to employees just because it’s difficult in terms of operations,” says Carol Sladek, head of Hewitt Associates’ work/life consulting practice in Lincolnshire, Illinois.

Additionally, “when you have an employee out for a long period of time, there’s always a concern that the employee might not return,” she says.

However, Sladek says that “we have seen a significant increase in the number of employers looking at these kinds of programs as a way to attract, engage and retain talent” in the past five to 10 years. “Employers realize that one of the key work/life needs we all have is time.”

New York-based consulting firm Accenture is one of those employers.

Although the firm offers a variety of work/life programs, an employee survey revealed that the most requested work/life program the company lacked was a sabbatical, says Sharon Klun, Accenture’s Phoenix-based director of work/life initiatives.

“It was not necessarily about the pay,” Klun says. “It was about having time in their lives to do what was really important to them.”

In response, Accenture launched a self-funded sabbatical program in 2007 called Future Leave for all U.S.-based employees, under which workers can take up to three months’ time off every three years to do whatever they want.

Although the program is unpaid, employees can set money aside each paycheck or each month, “so when the leave does come, they are not necessarily as strapped” for money, Klun says.

“The beauty of it is it’s not so static or confined,” she says, noting that each quarter the company has between 100 and 200 employees taking leave under the program. The idea is that an employee can figure out what they need or want to do in life—whether it’s taking care of an elderly parent or climbing the Himalayas—and plan for it by putting money away, she says.

For Accenture, the return on investment is “huge because you’re keeping people you would normally lose,” Klun says.

Sabbaticals are embedded into the culture of Intel Corp., says Dana Vandecoevering, work/life program manager in Hillsboro, Oregon.

For more than 20 years, the Santa Clara, California-based technology giant has been offering two-month fully paid sabbaticals to all full-time employees after every seven years of service, she says

“The goal is to return to Intel revitalized, with new ideas and a fresh perspective,” says Vandecoevering, who has taken two sabbaticals herself.

At the same time, sabbaticals open opportunities for other employees to cross-train and assume greater responsibilities, she says. “So when people are out, depending on the job and the work involved, it represents an opportunity for someone to come in and cover for that person,” Vandecoevering says.

Since 2006, eligible employees at Deloitte can take up to five years of unpaid leave under its Personal Pursuits program.

While employees are technically severed from the company and receive no health benefits while on the program, they are given a host of resources to keep them connected to the company, including mentors, short-term work assignments and subsidized training to keep their skills and professional licenses up to date, says Rebecca Amoroso, vice chair and U.S. insurance leader for Deloitte, a Parsippany, New Jersey-based financial advisory firm.

“There are situations where people leave the workforce for a period of time to deal with something personal,” she says. “If these are highly valued individuals, we wanted to find a way to make it easy for them to re-enter the workforce and we would be at the top of their list to get them back, rather than leave the firm, get disconnected and not come back,” Amoroso says.

Not only does Personal Pursuits differentiate Deloitte as it competes for talent, it also allows the company to retain proven, experienced employees, she says. On average, the cost of replacing an employee is twice the employee’s salary, which “is significantly higher than the $2,500 a year” per person that the Personal Pursuits program costs Deloitte, Amoroso says.

Currently, about 72 people are taking advantage of the program.

Sabbaticals can be more than a tool to attract and retain employees. They also can be an alternative to layoffs, experts say.

In today’s turbulent economy, a host of employers are cutting their workforces to reduce costs. But when the economy rebounds, many of those employers once again will look to fill out their employee rosters.

Experts say that by placing employees on extended unpaid leave rather than severing ties with them completely, employers can reduce their payroll costs and, at the same time, keep employees connected to the company and bring them back on board when the economy permits.

“From a talent perspective, it’s an excellent strategy,” says Laurie Bienstock, national director of strategic rewards for Watson Wyatt Worldwide in San Francisco.

When the economy rebounds, the cost of recruiting, retraining and rehiring could outweigh what an employer achieved in cost savings through layoffs, she said.

Carol Sladek, a principal in Hewitt Associates’ work/life consulting practice in Lincolnshire, Illinois, agrees.

“It’s a longer-term solution than just saying, ‘OK, today we’re in trouble. We need to eliminate jobs.’ Certainly there are times when that is unavoidable, but this is a good alternative—especially in an economic downturn,” she says.

While there always is the risk that employees on extended unpaid leave will find another job, “that’s not as easy as it sounds” in today’s economy, Sladek says. Employers, however, do need to offer “hooks” for those employees to wait in the wings, such as access to employer-subsidized health care coverage, she says.

Sharon Klun, director of work/life initiatives for Accenture, says that while the New York-based consulting firm has not yet explored it, sabbaticals such as its Future Leave program “could be a tool to help get companies through a bumpy economy.”

Under Accenture’s leave program, employees can subsidize through payroll deductions up to three months of leave every three years.

“Is this another tool that could be tweaked a little—like could we expand Future Leave to six months or could we expand it in a different way? I don’t know. But I think the opportunity is there,” Klun says.

Employees out on short-term disability are likely to miss less work and have a higher return-to-work rate when their employers have integrated medical and disability programs, according to internal studies conducted by two health insurers.

    In 2005, Aetna analyzed claims incurred between April 2003 and January 2005 and compared short-term disability durations of evenly split groups of members: one with only an Aetna disability policy and the other with an integrated Aetna medical and disability program. Aetna found that the duration of short-term disabilities for members with an integrated program were 4.5 days less than those with only a disability policy. Additionally, the study showed that while 5 percent of disability-only members moved from short- to long-term disability, only 2.2 percent of members with an integrated plan did so.

    Likewise, a 2007 Cigna HealthCare analysis of individuals covered by the insurer’s integrated medical and disability programs showed that those who took short-term disability leave were 37 percent more likely to return to work compared with members in nonintegrated disability-only plans.

There are two approaches employers can take when they integrate disability and health management: use one vendor to administer all of their programs or use multiple vendors for specific services.

    Several health insurers recently launched integrated offerings, often partnering with other vendors, to give employers a single-source solution.

    Such an approach can be more cost-effective and seamless, experts say, but a single vendor may not excel in each of the various programs.

    As such, some employers favor a “best in class” vendor approach, experts say. While such an approach is appealing, it can be more cumbersome as employers are responsible for making sure each vendor is willing to work with other vendors and share data to have a truly integrated program, experts say.

    Vendor selection generally depends on the size of the employer, says George Faulkner, a principal specializing in absence management for Mercer in Princeton, New Jersey. “Smaller employers are more interested in the administrative ease and are more likely to go with a single vendor, whereas larger employers tend to want best in class and may have more clout with vendors to tell them to cooperate and work with each other,” he says.

    “We still see a lot of interest in best-in-class purchasing strategy,” says Dr. Miles Snowden, executive vice president, clinical strategy, at UnitedHealth Group Inc. in Atlanta. Part of the reason few employees are using a single-source provider is that the decision has to come from two different sources: human resources, which oversees health care, and disability, which tends to be overseen by finance, he says. A vendor has to sell to two different parties at the same time in order to get uptake on this product, he says.

    While Aetna Inc. will work with other providers on request, “the beauty of having several programs with Aetna is that we have a shared platform—a common clinical system that the clinicians in disability and clinicians in medial use,” says Adele Spallone, head of clinical services for disability and absence management at Aetna in Plantation, Florida.

    That shared platform allows clinicians to see medical information, lab results and pharmaceutical records in real time and provide integrated reports for employers,” which we would not be able to do if it was through an external vendor,” Spallone says. Those outside vendors must be willing to release information and share data, which she says is a lot more challenging.

    Experts pointed out that while a single-source vendor can provide integrated data, employers utilizing multiple vendors often engage outside data warehouse firms such as Ingenix Inc., a data warehouse owned by UnitedHealth, and Medstat, a unit of Thomson Reuters.