The Feasibility of Sick Child Day Care

Business Report regarding the feasibility of a sick child day care center 

Prepared for the Vice President, Human Resource Management 

Prepared by Human Resource Officer 

Grey Hook Inc. 

October 18, 2016 

Memorandum of Authorization 

To Human Resource Officer 

From Vice President, Human Resource Management 

Subject: Solution for the constant absenteeism by employees in the company who have infants 

Date: October 5, 2016 

It has come to my attention that on several occasions, employees who have infant children have been victims of absenteeism without notice due to the illness of their children. In many cases, the absence happen on crucial days leading to major losses for the company. Further, the fact that an employee who has an infant can be absent at any moment in time without notice has created many complications with regard to planning. 

This is to authorize and instruct you to conduct due diligence in order to come up with a plausible and practical solution for this predicament. Do contact my office for any clarifications on the scope of the proposed solution. Due to the urgency of the issue, I anticipate to have your report at the earliest. 

VP-HRM 

The Memo of Transmittal 

To Vice President, Human Resource Management 

From Human Resource Officer 

October 18, 2016 

Subject: Feasibility of sick child day care 

Further to your instructions and after a careful analysis of the problem, I attach herewith the requested report. 

I have arrived at the well informed and considered opinion that the best solution for the predicament is to create a day care center within the premises of the company for sick children. 

If the proposal is approved, I will be happy to lend a hand in bringing it to fruition. 

Human Resource Officer 

Executive Summary 

The purpose of this report is to establish a plausible, practical and cost effective solution for the recurring problem of absenteeism by members of staff who have infants. 

This report delves into the main grounds for the absenteeism and how they can be resolved. The plausible options thereof have also been analyzed. A preferred solution has then been analyzed with substantiation for its preference. Particulars of this solution have been presented as well as its feasibility from all perspectives. 

The main premises for the rampant and inordinate absenteeism of employees who have infants relate to a larger problem of the American day care centers. In the contemporary times, most parents have to double up as professionals in order to cater for the needs of their children in the harsh economic environment. Therefore, immediately after the end of the paternity and maternity leaves respectively, children will more often than not be committed to the day care system. 

The particulars of the day care systems are alarming as shall be shown herein below. More pertinent however is the fact that as a general rule, sick children cannot be accepted in any day care center. Therefore, when a child is unwell, the parent will either have to find someone to look after the child or call in sick. This is the premise for the perennial and inordinate absence from work. With regard to children who get ill often, the parent will exhaust all available sick-offs, yet cannot leave the child alone. This predicament has, therefore, contributed to a high turnover of employees. 

A careful analysis of the problem shows that from a workforce of 250 individuals spread across three branches, 96 of them are young parents with children below the age of 5 years. The headquarters has 56 parents, the southern branch 24 parents with the northern branch having the lowest at 16 parents. On an average week, about 7 of these parents will call in sick mainly due to their children being unwell and therefore inadmissible at their daycare centers. The upshot of the foregoing is that there is an almost daily interruption of work by this predicament. In some instances like during the peak season, this may leads to tens of thousands of dollars in lost revenue on a bad day. 

It is on this premise that as particularized herein below, it is proposed that we create an avenue for these employees to bring their children with them to the office when they are unwell. The practical element of the proposal is the creation of a miniature daycare center for sick infants. This will not only comprehensively resolve the predicament, but also be a remarkable improvement in our human resource management strategy. 

Introduction 

Purpose 

The first purpose of this report is to establish the premise for the perennial absenteeism for workers who also happen to be parents of children below the age of 5 years. The second purpose is to establish as plausible, practical and cost effective solution to the aforesaid problem. 

Scope 

The first part of the project as aforesaid is to establish the main premise for the problem. Once established, the wider scope will entail researching on possible solutions and narrowing it down to the most practical one which will be recommended with substantiation. 

Method 

Establishing the problem was done through active investigation including a study of employee records. This was followed by interviews on the relevant employees and supervisors. Once the problem was established, a literature review on how similar companies have solved the problem globally was conducted. This was followed by a research on the proposed solution for particulars and feasibility from all aspects. 

Limitations 

The first limitation was an element of reluctance by members of staff to divulge particulars as they feared it was an investigation that would lead to disciplinary action. There were even a few instances of trade union intervention. 

As with all novel projects, some particulars were arrived at on best option premise. These particulars may not operate as anticipated once put into practice. 

Assumptions 

The only variable in the entire matrix is the contemporary status of day care centers in the nation generally and particularly regarding admission of sick children. The feasibility of the proposed solution is based on this factor remaining constant in the near future, perchance 10 years. 

Background 

One of the major aspects of the transition from personnel management to human resource management (HRM) is the consideration of an employee as an integral stakeholder of an organization (Kocakulah et al., 2009). Further, HRM dictates an employee being treated as a human being first and foremost. This makes the secondary needs of an employee that do not directly relate with employment status a part of HRM jurisdiction (Kocakulah et al., 2009). This means that what adversely affects an employee outside the workplace should be of concern to a good HRM officer. This is because the outside bearing factors will also affect the primary efficacy of the employee and by extension the workforce. 

Absenteeism due to parental obligations is a particular example of the correlation outlined above. Instead of seeking for punitive measures, this report seeks for a solution for the parents, and will also double up as a solution for the company. Therefore, this report seeks to find out the main reasons for this absences and how the company can be of assistance in ending it. A solution to this problem will, therefore, be of joint relief to all parties involved from the employee to the company itself. 

Findings, Conclusion and Proposal 

The totality of the research conducted herein showed that the absenteeism mainly happened when the employees’ children are unwell. A majority of the employees in the institution have had to adopt day care centers as the preferred places to leave their children as they report to work. Despite many challenges, this solution has been made to work for the employees. However, due to poor staffing from a health perspective and the fear of adverse consequences, a predominant majority of day care centers will not accept children who are unwell. Further, if children are taken ill during the day, the center will immediately alert the parent to pick the child. This is the main premise for the aforesaid absenteeism. 

The upshot of the foregoing is that there is a basic need for a parent/employee whose child is unwell to have their child close by and well taken care of while still working. This can only be made if work is localized, or the sick child is brought to the office. As a software and cloud provider and management company, the work done by most of our members of staff cannot be done outside our centers due to security concerns. This leaves the only plausible solution as the seeking of a way to have the employees come with their sick children to work as and when it becomes necessary. 

It is on this premise that a proposal is made for a creation of three miniature sick daycare centers for children in our three branches. This will not only enable our employees to come with their sick children to the office, but will also enable them to focus on their work in the knowledge that the children are being well catered for. Further, the fact that this amenity is available will create a sense of security for both management and the members of staff. During planning, management will not have to factor in perennial absences while workers will not have to operate under the apprehension that any moment may become a child sickness dilemma crisis. 

Discussion 

Analysis of the Problem 

The predicament entails absence of employees, without prior notice when their children, below 5 years are taken ill. The American educational system considers formal education to begin between the ages of 5 and 6 years old (Susser & Ziebarth, 2016). Before a child attains that age, it is generally the obligation of the parent to take care of all the necessities of the child. This includes care and preschool education (Susser & Ziebarth, 2016). The contemporary times have a harsh economic environment that ensures that anyone who is able works (Kocakulah et al., 2009). Therefore, even when they are young parents, our employees only get a basic short term paternity or maternal leave and resume duty. 

The cost of a nanny or a private care giver is currently extremely expensive (Susser & Ziebarth, 2016). Further, this caregiver may only be versed with the basics of care without an understanding of early childhood education. Research has however, proven that the formative years are fundamental to a child’s future education. It is on this premise that an overwhelming majority of our employees have elected for day care centers as the preferred place to leave their children as they report to work. 

A problem arises however, whenever a child is taken ill. Healthcare in the US is not guaranteed by government, including basic medical care for infants (Susser & Ziebarth, 2016). Therefore, any medical services offered have a commercial element and is subject to either payment or Medicare. Further, there is always the issue of civil and criminal liability based on treatment of children in a medical facility without the express permission of the guardian ad litem (Susser & Ziebarth, 2016). It is for this and other reasons that daycare centers will not accept a child who is unwell. 

An employee whose child falls ill is, therefore, stuck with the infant and has to call in sick in order to cater for the child. This may extend through to the period of convalescence leading to several days off work. Further, when the illness of the child intensifies or keeps on recurring, the employees might find themselves having to make a choice between taking care of the child and working (Kocakulah et al., 2009). Few parents will elect work over a child, and this leads to a relatively high employee turnover and the resultant expensive hiring and training process (Kocakulah et al., 2009). 

Another pertinent factor bearing on this problem is timing. Many ailments common to children have an underlying seasonal element. A good example is the flu season in the USA that comes once every calendar year (Susser & Ziebarth, 2016). It is possible at some time of the year to have as many as a third of all children affected by the flu during a bad season (Kocakulah et al., 2009). In many cases, this occurs suddenly. Therefore the manager at the main office can have all members of staff present on a day and on the following day have as many as 15 members of staff missing. No matter how much effort is placed to mitigate the losses, the magnitude of damage control necessary is too grand. This will, therefore, more often than not result in large direct and indirect losses to the organization. 

The nature of this company’s business makes it difficult to accurately predict the cost of the absence of a singular employee. Further, this figure will vary exponentially due to the variances between the scopes of work carried out for our various clients. Another aspect that may not be quantifiable is the loss of repeat business, which is our mainstay, when absenteeism disgruntles a client. Industry experts have however, conducted intense research on the issue and reported on it. According to Kronos Incorporated (2016) absenteeism by a worker in the US costs employers exponentially. 

A salaried employee will cost the average employer US$2,650 through unexpected absenteeism while by the hour employee costs the employer US$ 3,300 annually (Kronos Incorporated, 2016). These costs cover wages paid for not work done, finding replacements for the work the absent employee was meant to do, as well as increased administrative duties (Kronos Incorporated, 2016). This however indicates the averages, with the cost of an employee’s absence for a singular day being exponentially higher. Majority of our employees are technical staff payable by the hour. 

With the average pay being US$20 per hour, an absentee employee will be paid approximately US$160 for an 8 hour day not worked. An emergency replacement technical employee will cost about US$25 per hour which will amount to about US$200 per day. Miscellaneous costs for hiring and supervision may cost the company about US$50 extra. Thus, a singular incidence of absence costs the company approximately US$410 in direct losses. This is without factoring secondary losses such as client disenchantment and the kindred loss of repeat business. These statistical derivatives clearly show that the issue of unexpected absenteeism is a major financial burden for the company. 

According to the records there are 96 young parents working for the company whose children are 5 years and below. Considering that the total workforce in the company is 250 employees, this account for 27% of the entire workforce. The absence directly creditable to the problem of day care centers declining to admit sick children cannot be explicitly indicated. It can however, be estimated as the average difference between normal sick offs for employee and those for the 96 employees aforesaid. Through this formula, it became apparent that every parent took an average of 15 extra days of sick off. This cumulatively amounts to approximately 1440 working days per calendar year. From a pecuniary perspective, the losses amount to a total of US$590,400. 

Another major predicament kindred to this issue is that of employee turnover. Our technical staff requires not only raw talent in the rare field of algorithm based computer programs, but also a high level of specialized technical training. It is, therefore, expensive to recruit such an employee as precautions have to be made to avoid employing one with any element of ill intent. Testing raw talent in algorithm based programing is also an expensive and time consuming process. After hiring, there is the equally expensive process of specialized training, which according to the company records is estimated at US$30,000 per new employee. However, after the number of sick leaves run out and the child does not improve, many employees elect to either take indefinite unpaid leaves or terminate their services. Further, absenteeism creates friction between the employee and management. In some cases, this friction also results in termination of services. This comes at exponential cost to the company as aforesaid. In the past 2 calendar years, the company has lost 10 employees in this manner. 

Plausible Solutions 

The foregoing reflects a serious management and pecuniary crisis that cannot be allowed to persist. Indeed, the circumstances creating the situation are beyond the purview of the company as they affect the nation as a whole. From a capitalistic perspective, the company can opt to wait for the problem to solve itself. This would be premised on an assumption that the healthcare industry would soon change. An alternative assumption would be that this is a temporary problem for which the parents generally will establish a solution to. This may look like the cheapest option for the company as it involves no spending at all. It however, becomes untenable considering the magnitude of pecuniary losses that the problem causes the company. There is also the major loss as indicated emanating from client discontentment and loss of repeat business. Therefore, not doing anything about the problem is not a viable option. 

The second possible option is to direct the employees to drop their children in the various hospitals that the company has an arrangement with through the company sponsored Medicare system. This would solve the problem of absenteeism and also remove the worry from the parents about the status of their children. The children would, therefore, be placed in the hands of professionals with the parents reporting to work. This seemingly perfect solution is untenable for two major reasons. Due to the nature of the company’s contractual relationship with the Medicare providers, the arrangement would amount to an actual fraud. This can easily create civil liability or in the very least lead to the cancelation of the Medicare product. Further, healthcare in the USA is a capitalist venture with extreme discretion on being placed on doctors. A less scrupulous medical team can get very creative with a hapless infant in order to make money from a Medicare policy. 

This leaves the final solution to wit creating an avenue for the parents to bring their sick children with them to the office. This solution would, therefore, entail the creation of day care centers within the precincts of each of our three branches, or within their proximity. This will ensure that when a child is too ill to join the others in a day care center, the employee will come with the child to work, hand it over to a qualified team and proceed to work. The proximity will also make it possible for the parent to periodically check on the infant. Further, the parent will be at hand to offer guidance if the situation deteriorates. 

Suitability of the proposal 

Among the fundamental reasons why the proposal is suitable is that it clearly solves the problem at hand. With the employee having the option of bringing their sick child to work, the impasse created by the child not being acceptable at the normal daycare is resolved. This will, therefore, exponentially reduce the problem of sudden absenteeism as well as the associated pecuniary and management issues kindred there to. The second point of suitability is the nature of the company. Due to the nature of business conducted by the company, there has been an intentional avoidance for sky scrapers by all three branches. 

Indeed, all the branches are situated in gated compounds with enough space for the erection of structures to house the temporary day care centers. With the compounds being gated, the erections made for the proposed project do not have to be permanent and can even be prefabricated. This will exponentially reduce the cost of construction. Further, with the company being an entity that the individual trusts having the overall control over the whole issue, it will exponentially reduce the anxiety on the parent/employees. This will in turn improve their capacity to work in spite of the predicament. Finally, through a simple registration process, the project which has emanated out of necessity can easily be transformed into a commercial venture. As all the three branches of the company are within business parts, there is a very high likelihood that the neighboring companies suffer the same predicament. At a fee, their employees can also enjoy the services offered by the sick day care centers. 

Particulars of the proposal 

The Structure and equipment 

Since that the company has three branches with employees who have little children within the category, it is proposed that a centers be erected in each of the three branches. The justification lies in the fact that the cost of erection and construction is relatively low. This as aforesaid is because the main work is to be done within the precincts of the branches. Therefore, a prefabricated building will be sufficient, alongside the construction of the floors and ablution facilities. Further, save for the slightly increased cost of construction, the centers will only be operational as and when there is a sick child. This means that having more centers may not result in exponentially higher management costs. 

The structure at the headquarters will be relatively bigger, perchance twice the size of the other two structures. Therefore, for the headquarters, a 4 roomed 300 square feet prefabricated structure with full amenities can be constructed at a cost of about US$70,000 (Menayan, 2016). The branches can have a two roomed 150 square feet structure for approximately US$45,000 each. The particulars of furnishing and equipment can be purchased by the company. The full total from industry estimates for all three structures is approximately US$20,000. 

Licensing and regulation 

This is a complex area due to three main reasons. First is that the issue involves children and daycare service, and this brings in regulation from the social services at the local government level as well as the state department of education (Shi & Sing, 2011). More importantly, the day care will be specific to sick children and will have to involve a healthcare practitioner. This will also call for registration from the state health department as well as local authorities (Shi & Sing, 2011). Upon careful research, the plausible solution for the licensing and regulation impasse is partnership with a local healthcare provider. This will transform the three sick daycare centers into satellites of the healthcare facility thus falling under its ambit for the purposes of licensing and regulation. The payment for this can be negotiated with the preferred healthcare provider. 

Members of staff 

From its very nature, these projects will not be continuously operational. With the example of the headquarters sick daycare center, records show that it is possible to stay even for a fortnight without any related sick off. However, during the times of the year when children are most susceptible to ailments such as fevers and flus, there can be as many as 15 sick off in a day for a few days. It would, therefore, be counterproductive to hire permanent employees to work at the centers. After research and enquiry, the plausible solution is to lump up the issue of employee with that of licensing and negotiate for the same alongside that of licensing and regulation with a healthcare provider of choice. In this manner, the healthcare partner can be sending members of staff as and when they are necessary. This mirrors the relationship between healthcare providers and event managers where for a fee, members of staff are provided for events where there is a high likelihood of injury. 

Supplies and amenities 

With regard to amenities such as electricity, water, sewerage, garbage disposal and cleaning, the three centers can share amenities with the adjacent offices. With regard to cleaning where the company reserves a contract with a professional body, a minute adjustment to the contract can be made to reflect the additional work. With this regard therefore, the costs of running the centers would be exponentially reduced. Supplies can be divided into three categories. Normal supplies such as toiletry and snacks, infant educational material, toys, and medical supplies can be requisitioned alongside the normal supplies of the company. For the purposes of accounting, they can be allocated a separate vote-head. 

The educational and toys can be purchased at the recommendation of the team from the healthcare facility as they are well versed with the same. The medical supplies are however a problematic area. Requisition of medical supplies mainly limited to licensed practitioners due to their sensitive nature. Further, it is impossible to tell what would be needed and when since ailments are not usually predictable. Storage will also be a major challenge, seeing that different forms of medical supplies had different forms of storage regimen. To remedy this, medical supplies can be requisitioned contemporaneously alongside licensing, regulation and personnel from the healthcare institution elected. 

This creates three basic elements that will require requisition from the healthcare facility. The issue of costs can however be mitigated in two major ways. The first is the selling to the hospital in question the idea of providing the sick daycare services to other companies. This will transform the healthcare provider into a business partner as opposed to a contractor. The metamorphosis will exponentially reduce costs. The second means is to convince the Medicare provider that this facility, being limited to sick children who are under the cover of the Medicare instruments amount the provision of healthcare. With this, they can be convinced to subsidize the payments necessary for the services provided to the children of the members of staff of the company. With proper planning, the three sick daycare center projects might with time become profitable ventures for the company. 

Financial Pro Forma 

Expenditure from the current problem 

Total number of employees in the company 250 

Number of Branches 3 

Total Number of Employee with infants under 5 years 96 

Employee with infants at main office 56 

Employee with infants at southern office 24 

Employee with infants at northern office 16 

Average annual absenteeism from infant issues 1440 hours 

Average annual cost emanating directly from the issue US$590,400 

Fixed Cost of Proposed Solution 

Construction at Main office US$70,000 

Construction at Southern office US$45,000 

Construction at Northern Office US$45,000 

Fixed supplies purchases total US$20,000 

Totals US$180,000 

Conclusion 

The upshot of the foregoing is that employees who have sick children being absent without prior notice is a real predicament for the company. Further, it carries with it major adverse effects for the company. This includes the management predicament of having a sudden shortage of employee, especially in the seasons of the year when children are most prone to ailment. Despite all management efforts, when over 15% of the workforce in a technical department is absent without proper notice, losses will clearly ensue. 

The second predicament is a direct financial loss. When a child is sick, this qualifies as an official sick off and is therefore a paid off day. The company, therefore, has to pay an employee for work not done. Further, the company also has to hire qualified staff, or recall members of staff on leave to replace the staff member on sick off. These replacements attract premium rates which also costs the company. Finally, the extra management work comes with extra costs. Over and above the direct costs, there are the unquantifiable but immense costs emanating from customer disenchantment and loss of repeat business. 

Whereas there are several other possible solutions to this predicament, the only plausible one is the creation of daycare centers at the three branches of the company. These centers will be operational as and when the company has an employee with a sick infant. Further, and most importantly, neighboring companies in all three branches, which are established in business parks also have the same predicament. The proposed solution herein can, therefore, be transformed into a business venture if the same services are extended to employees of these other companies at premium charges. Regulation, staffing and medical supplies are complex arrangements. 

This complication is indeed a pro rather than a con as it is the premise upon which the company can have a level of autonomy in the business parks of operation and therefore rake in profits. The solution to the same is to partner with a healthcare provider and operate under the licensing, regulation, staffing and medical supply capacities of this provider. This will eliminate the issues of staffing as the centers will not be operational daily. The problems of regulation and licensing will also be eliminated. Finally, this solution will transform a predicament that has been creating losses into the business venture, while contemporaneously solving the problem itself. It is worthy of notice that the cost of solving the problem is less than half of how much the problem costs the company annually. 

Recommendations and implementation 

The findings and conclusion in this report support the following recommendations: 

Three sick day care centers in each of the three branches be constructed and equipped. 

A healthcare provider partner in the field of children-based healthcare be found and partnered with in the project. 

The aforesaid partner will provide cover for regulation and licensing by having the three centers affiliated as satellites. 

The said partner will also provide members of staff and medical equipment when they become necessary. 

The Medicare Company should be convinced to foot part or the bills emanating from the services provided to individual children of covered staff members. 

When the centers are operational, word will formally be passed around that a sick child day care center operated by certified healthcare providers is available at a minimal fee. In partnership with the medical provider, this will transform the project into a profitable venture. 

From a practical perspective any member of staff who has a sick child will inform the HRM department of the fact with general particulars of the ailment. HRM will liaise with the healthcare provider who will deputize staff members necessary and resources as per the magnitude (number of children) and nature (type of ailment) of the issue. Upon arrival, the member of staff will hand over the child to the team at the sick daycare center and proceed to work. 

References 

Kocakulah, M. C., Kelley, A. G., Mitchell, K. M., & Ruggieri, M. P. (2009). Absenteeism problems and costs: Causes, effects and cures.  The International Business & Economics Research Journal (Online) ,  8 (5), 81-88. 

Kronos Incorporated. (2016). Absenteeism - the bottom-line killer. Retrieved from http://www.workforceinstitute.org/tool-kit/absenteeism-the-bottom-line-killer/ 

Menayan, J. (2016). 2016 prefab/modular home prices for 20 U.S. Companies. Retrieved from https://toughnickel.com/real-estate/Prefab-Modular-House-Prices 

Shi, L., & Sing, D. A. (2011). Delivering Healthcare in America (5 th ed). Burlington, MA: Jones & Bartlett Publishers 

Susser, P., & Ziebarth, N. R. (2016). Profiling the US sick leave landscape: Presenteeism among females.  Health services research , 1-13. doi: 10.1111/1475-6773.12471