Jan Czyrmer, the employee benefits manager at Ludlow Enterprises, wants to restructure the leave policy for the company. He is concerned that employees abuse the sick leave policy, taking sick leave time for personal reasons not related to illness. He wants to abolish particular types of leave (such as sick leave, vacation leave, personal leave) and give employees a certain number of general leave days per year to use as they choose.
a. What advantages might Jan cite to convince upper management that consolidating leave time may be helpful for Ludlow Enterprises?
b. If upper management rejects Jan’s idea of a major restructuring of leave time, what can he do to prevent abuse of the current sick leave policy? What steps can be taken to reduce moral hazard within the traditional leave system?