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Employer benefits and costs of employing
a person with a disability Joseph Graffama,, Kaye Smitha, Alison Shinkfieldb and Udo Polzina Institute of Disability Studies, Deakin University, Burwood, Vic, Australia School of Psychology, Deakin University, Burwood, Vic, Australia Abstract. This paper derives from a national study of employer outcomes when employing a person with a disability. Questionnaires were completed by 643 Australian employers who had employed a person with a disability. Individual performance was considered by comparison of the employee with a disability and the “average” employee. The “average” employee was rated significantly better on productivity variables, and employees with a disability were rated somewhat, but not significantly, better on reliability variables and employee maintenance variables. Organization performance was considered in terms of benefits and costs of workplace modifications and changes to staff training and supervision. In each domain, employers identified more organization benefits than costs, a large majority considering the financial effect of modifications and changes cost-neutral, with financial benefit more common than net cost. Employers reported short-term, but no long-term or broader benefits from employer subsidies and/or incentives. The need to take a broad, “big picture” view to understand cost effectiveness is discussed. Keywords: Cost benefit analysis, disability, employing a person with a disability 1. Introduction Benefits and costs experienced by employers when employing a person with a disability have received very little attention by researchers thus far. Most of the work that has been done focuses on cost effectiveness, cost of accommodations and adjustments, or employer subsidies and incentives. Very few cost effectiveness studies have been conducted. Crow [5] reported results of a 1987 Harris Poll of 900 managers. In reference to attendance and punctuality, 40% of managers rated employees with a disability as better than and another 40% rated them the same as their non-disabled co-workers. In addition, 75% reported that the cost of employing someone with a disability was the same as that for a non-disabled person. In a job performance survey employer/trainers reported that the workers with a learning disability outperformed their peers without a learning disability in punctuality, attendance at work, and ability to accept constructive criticism or redirection. Six behavioral conditions were considered more problematic for workers with a learning disability. Those included insecurity about role, low self-esteem, memory problems, distractibility, inability to transfer learning, and inability to follow directions [15]. In another study [19] employers rated attendance, punctuality, and willingness to work hard as the most important aspects of a job, while leadership and ability to handle work were rated least important. Employees with an intellectual disability rated high in the three most important aspects. They were rated as performing significantly better than expected for the job in work safety, reliability, motivation, bearing responsibilities, willingness to work hard, honesty, and speed. They were rated below expectation in appearance, transportation to work, experience, and personality, and equal to expectation in education. Employees with an intellectual disability received an average of 30% less income for performing the same jobs as employees without a disability. Samorodov [16] has suggested employers may assume that employing a person with a disability will result in higher costs due to loss of productivity and additional costs required in accommodating the disability. He has also suggested that the fact that very few cost effectiveness studies have been undertaken supports the view that factors other than cost also impact on employers’ decisions to hire, and that cost effectiveness studies can give misleading results if a short term perspective only is taken. In any case, cost effectiveness studies that have been conducted have focused on either employee performance, the effects of workplace accommodations and adjustments, or incentives and subsidies. Costs of workplace accommodations have also been investigated. Samorodov [16] argued that costs for workplace modifications were not high. He cited 906 pounds as the average cost in the United Kingdom for equipment granted under the Special Aids to Employment Scheme. The European Trade Union Committee [7] reported that half the accommodations resulting from the Americans with Disabilities Act cost employers less than US$500. Lower costs have been anonymously reported [1] by citing evidence from surveys conducted by the Job Accommodation Network in 1994 in which just over half the accommodations made by employers cost a maximum of US$200 with over two thirds costing no more than US$500. This investigator also reported that almost a third of employers considered that accommodations had benefited them more than US$15,000. The Job Accommodation Network reported that in 1994 the majority of workplace accommodations cost less than US$500, with the median cost being US$250. Of employers asked to assign a dollar value to the savings resulting from accommodations,38% reported $1–$5,000, 33% reported $5,000–$20,000, 25% reported $20,000–$200,000, and 3% reported no discernible value. The median benefit was $29 for every $1 spent on accommodations [4]. There are, however, no figures available for comparison on the Australian experience to date. Financial incentives to the employer in the form of subsidies have been shown to have little impact on an employer’s decision to employ a person with a disability [13]. Factors such as an ability to perform the job and a low risk of absenteeism are more powerful determinants for employers than financial incentives [6,21]. The Vocational Rehabilitation Branch – ILO [21] advocated subsidies that emphasize training and integration rather than rewarding employers for “good will”. Trach, Beatty, and Shelden [18] indicated that employers who had employed people with a disability not only reported a willingness to provide supports, but did not discriminate between the supports provided to staff with and without a disability. These authors suggested that service providers should focus on benefits to the employer of employing a particular worker rather than emphasizing financial incentives. The present study investigated employer benefits and costs associated with employing a person with a disability. Unlike earlier studies that have tended to focus purely on individual performance, this study also looked at the impact of the employee with a disability on organization performance. Individual performance was considered by comparing productivity ratings speed/rate an duality/accuracy), reliability ratings (attendance and sick leave records), and employee maintenance costs (recruitment, occupational health and safety, compensation, and insurance costs) of the employee with a disability with those of the “average employee”. Organization performance was considered in terms of reported benefits and costs associated with workplace modifications and changes to general staff training and supervision resulting from employing the person with a disability. The employer-reported value of employer subsidies and/or incentives was also investigated. 2. Method 2.1. Participants A total of 643 Australian employers participated in the study, all having employed a person with a disability through a funded disability employment service during the preceding three years. Participants presented a mixture of major metropolitan (43.8%), regional centre (29.1%), rural (19.0%), and multiple (8.1%) locations across all states and territories. Approximately three-quarters were from very small or small organizations (0–49 employees), with approximately 15% from medium sized organizations (50–199 employees) and 10% from either large or very large organizations (200+ employees). Industry distribution was broad with manufacturing (16.7%), health and community services (14.5%), hospitality (14.0%), and trade/sales (13.6%) most prevalent. The size and industry spreads are very typical of Australian organizations in general. The gender split was 58% male respondents and 42% female respondents. The age distribution of respondents was 18–30 years (9.2%), 31–40 years (30.8%), 41–50 years (36.8%) and 51+ years (23.2%). 2.2. Instrument The 7-page questionnaire was developed in consultation with representatives from disability employment services, national and state chambers of commerce and industry, disability self-advocacy organizations, and the Commonwealth government. Definition and selection of variables for measurement, as well as methods of measurement, resulted from this consultation process. Separate sections addressed: characteristics of the employer organization and respondent; factors that can impact on decisions to hire and retain a person with a disability; characteristics of the employment conditions of a referent employee with a disability; impact of the employee with a disability on the workplace; benefits and costs of employing a person with a disability and other employees; and summary questions. Results reported in this paper relate to the benefits and costs of employing the person with a disability in terms of individual and organization performance. In the benefits and costs section, employers were asked to specify by employer records or estimates: the number of occupational health and safety incidents and accrued costs; the number of worker compensation incidents and accrued costs; accrued “other insurance” costs; accrued unexpected costs and benefits; number of days absent and accrued cost of absenteeism and sick leave; speed/rate and accuracy/quality of work; and accrued cost of recruitment. Comparisons between the employee with a disability and the average employee were included. Employers were also asked to identify whether there were any benefits or costs resulting from employing a person with a disability in terms of work place modifications, training, and supervision. Possible benefits and costs were related to productivity, profits, staff skills, staff practices, work practices, staff relations, customer relations, and “other”. Employers were also asked to judge the overall financial effect of employing a person with a disability as beneficial, neutral, or a cost. An additional aspect of potential benefits and costs to employers relates to receipt of subsidies and/or incentives. In this study, employers were asked two questions, one relating to their use of financial subsidies and/or incentives, and one concerning the relative importance of financial subsidies and/or incentives in decisions on employing a person with a disability. 2.3. Procedure Employer lists were solicited from all funded disability employment services throughout Australia. Lists were received from 127 of the 291 funded employment services. This is an agency participation rate of 43%.Questionnaires were sent to all employers who had employed a person through those agencies between 1996 and 1998. The response rate was 12.5%. Representative ness of the sample was tested in relation to a national database of employment for people with a disability over the preceding 12 quarters. Thirteen variables were tested. The sample was within one standard deviation (SD) for 5 of the 8 states/territories in Australia, “permanent regular” employment, “percent of employees earning less than $200 per fortnight”, and “intellectual/learning disability” and within two SDs for one state and “psychiatric disability”. With respect to two states and gender, the sample was not representative of the national database. 2.4. Analysis Results were analyzed in terms of whole group responses and in terms of within-group and between group differences. Frequencies, means, standard deviations, independent t-tests, and analyses of variance were the main data analytic techniques. Where appropriate, post-hoc Tukey tests were performed as well. Because of the sample sizes involved in most of the analyses, a confidence level of p < 0.01 was adopted for consideration of statistical significance. 3. Results 3.1. Benefits and costs associated with individual performance Table 1 presents results of analyses of benefits and costs in terms of individual performance of the referent employee with a disability compared with the performance of an “average” employee. Ten individual performance variables were included. Two related to productivity (speed/rate and accuracy/quality), two related to reliability (days absent and cost of sick leave), and six related to employee maintenance (recruitment, occupational health and safety, worker compensation and insurance costs). For each item a mean value is provided based on employer records and estimated values. Table 1Individual performance: Mean records and estimates of productivity, reliabilityand employee maintenance costs of employing the person with a disability and theaverage employee
Analyses of variance were conducted to
examine within-group differences between record and estimate based
responses. Only two significant differences emerged between record and
estimate values for there referent employee with a disability. First, a
significant difference was found between the record and estimate values
for accrued other insurance costs over employment,
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| Effects | Modifications | Staff training | Staff supervision | Total | |||||
| Benefit | Cost | Benefit | Cost | Benefit | Cost | Benefit | Cost | ||
| Productivity | 113 | 80 | 231 | 123 | 160 | 115 | 504 | 318 | |
| Profits | 20 | 53 | 50 | 53 | 35 | 46 | 105 | 152 | |
| Staff skills | 78 | 25 | 216 | 36 | 136 | 28 | 430 | 89 | |
| Staff practices | 71 | 43 | 162 | 37 | 105 | 32 | 338 | 112 | |
| Work practices | 114 | 67 | 209 | 52 | 142 | 51 | 465 | 170 | |
| Staff relations | 79 | 34 | 204 | 44 | 124 | 32 | 407 | 110 | |
| Customer relat’ns | 50 | 23 | 80 | 26 | 53 | 21 | 183 | 70 | |
| Other | 11 | 11 | 10 | 8 | 11 | 7 | 32 | 26 | |
| TOTAL | 536 | 336 | 1162 | 379 | 766 | 332 | 2464 | 1047 | |
| Ben Ntrl | Cst | Ben Ntrl | Cst | Ben Ntrl | Cst | Ben Ntrl | Cst | ||
| Financial effect | 92 542 | 92 | 189 471 | 98 | 124 302 | 114 | 405 1315 | 304 | |
3.3. Employer subsidies and incentives
When asked whether they had used
financial subsidies and/or incentives, 546 employers responded:
59%responded ‘yes’, 39% responded ‘no’, and 2% were unsure. When
asked if financial subsidies and/or incentives were important in their
decision to employ the person with a disability, 375 employers
responded: 51% responded ‘yes’, 44% responded ‘no’ and 5% were
undecided.
Receipt of subsidies and/or incentives was investigated in relation to
working conditions of employees with a disability, employer
decision-making, rated impact of the employee on the work
environment, and identified benefits and costs. There was a significant
main effect for use of financial incentives for length of time in
position,F(1, 478) = 9.37,p < 0.01. Employers using financial incentives
reported employees with significantly shorter time in their position (M
= 20.11 months) than those not using incentives (M = 27.04 months). With
respect to employer decision-making, there was a significant main effect
related to influence of cost factors in decision-making, F(2, 595)
= 11.08, p < 0.001. Cost factors were rated as significantly more
important by employers using financial incentives (M = 3.20) than for
those who did not (M = 2.92). There was a significant main effect
related to employee impact on the work environment, F(1, 575) =
9.34, p < 0.01. The employee’s impact on the work environment was rated
significantly better by employers who did not use financial
incentives (M = 4.06) than by those who did (M = 3.90).
There was no significant main effect related to any of the benefit/cost
factors.
4. Discussion
Previous to this study, there has not been a large scale study of
benefits and costs to employers of employing a person with a
disability, other than one general analysis of disability costs to
industry/business in the US [14] and a small number of studies that
investigated costs of workplace accommodations. This study has
identified benefit advantages related to individual employee
performance and general organization performance associated with
employing a person with a disability.
The most basic consideration of employer benefits and costs is in terms
of individual performance. Although more variable, the performance
of employees with a disability as a groupwas in certain respects
comparable to that of “average” (non-disabled) employees. In general,
employees with a disability were rated lower than average employees on
productivity factors (speed and accuracy) and better than average
employees on reliability factors (attendance and sick leave) and
employee maintenance factors (recruitment, safety, insurance
costs). However, productivity was found to be statistically
significantly lower, while reliability and employee maintenance costs,
although better than the average employee, were not statistically
significantly better. The outcome for an employer is generally a
reasonably productive, reliable employee who costs marginally less to
maintain in employment. Employee maintenance costs have not been
included in previous studies. Results reported here, although not
statistically significant, consistently favoured the employees with a
disability, suggesting the importance of considering such effects in
future studies of benefits and costs to employers.
In addition to consideration of individual performance, the impact of
employing a person with a disability on organization performance
was also considered. In this study, workplace modifications and changes
to staff training and supervision were each reported, by employers, to
result in benefit advantages to productivity, staff skills and
practices, and workplace and customer relations. Indeed, 70% of more
than 3,500 reports referring to those aspects of organization
performance were benefit reports. Financial effects were most frequently
reported as cost neutral, with more financial benefits than costs
reported. Previous studies of workplace accommodations suggest that
approximately half of all employees with a disability require no
accommodations, and most accommodations are inexpensive [1,7]. Workplace
accommodations have also been shown to produce significant
financial benefits to the employer [4].
Results of this study indicate cost neutral effects for most workplace
accommodations, with
financial benefits outnumbering costs. There was a clear performance
benefit advantage resulting from workplace modifications and changes to
staff training and supervision associated with all aspects of
organization performance except profit. These results suggest that
employers have experienced material and non-material benefits to their
organizations from employing a person with a disability, with
those benefits being financially cost neutral or cost beneficial in a
large proportion of cases. There are at least three possible
reasons for the widespread reporting by employers of such
significant benefit advantages to the organization as a whole.
Integrating an employee with a disability into a work environment may
raise awareness of previously less than optimal conditions in that work
environment including training and supervisory practices, basic
work practices, and health and safety issues. This heightened awareness
may lead to improved practices by workplace trainers, supervisors,
health and safety representatives, and all employees. Another possible
reason for the generally positive reported effect that an employee
with a disability has had on overall organization performance relates to
improved co-worker and customer relations. Improved relations may
contribute to improved performance within the work group or
organization as a whole, since high morale has often been associated
with high performance within organizations. A third possible explanation
is that the individual performance of an employee with a
disability, in terms of reliability and productivity measures,
especially those who are average or above average performers, may raise
expectations and standards for performance for all employees, thereby
improving work group or organization performance. In any case, an
employee with a disability can be seen as a catalyst for positive
change, a catalyst for improved organization performance.
Research on financial incentives to the employer has found that
subsidies have little impact on an employer’s decision to employ a
person with a disability [13]. Factors such as ability to perform
the job and a low risk of absenteeism are more powerful determinants for
employers than financial incentives [6,21]. This study likewise
found that, although more than half of employers had received a subsidy
and/or incentive, receipt of a subsidy and/or incentive was associated
with somewhat poorer employee working conditions and resulted in
no difference to benefit-cost outcome.
When considering benefits and costs of employing a person with a
disability, an additional
consideration is that the costs of employing a person with a disability
are not constant over time. Initial costs such as modifications to the
workplace, specialized equipment and training can give a skewed
indication of the costs involved, as these tend to be one-off costs. It
is important to not only consider the impact of costs in relation to
other factors such as job retention, lower maintenance costs
(occupational health and safety, worker compensation, etc), and any
further potential advantages to staff and customers resulting from
accommodations and adjustments. In considering costs related to
the employment of people with a disability, it should also be kept in
mind that certain costs are associated with the employment of any new
employee.
Results of this study show that employer outcomes associated with
employing a person with a disability provide examples of positive
effects, particularly in organization performance, of employing a
person whose “difference” is in some way apparent. It provides some
evidence of employers acknowledging and accepting diversity in the
workplace/organization. The managing diversity approach [2,3,8,10,11,17]
involves flexibility and accommodation to individual differences
in accomplishing workplace and organization objectives. This approach
recognizes, accepts, and values diversity among workers, and
indeed values diversity as a source of organization development. This is
relevant to employers who employ a person with a disability because with
such an approach to management, the person is no longer an
extra-ordinary or special case, but simply part of a natural
diversity within the workplace. Employers who employ a person
with a disability are demonstrating at least implicit commitment to the
managing diversity approach described in the literature. In doing
so, they are in the forefront of emerging management practices. On a
practical level, as described above, these employers are already
experiencing benefits of this approach to managing a workforce.
Other potential benefit outcomes for employers when employing a person
with a disability relate to community values and compliance with
the law. Internationally, there is a strong and prolonged trend away
from considering employment for people with a disability as a
welfare issue toward treating it as an equal opportunity and human
rights issue. The United Nations, the International Labor
Organization, and several employer bodies have endorsed employment as an
equal opportunity issue for people with a disability. Australia is
among many nations that have passed equal opportunity legislation with
direct reference to employment for people with a disability. Australia
is also a signatory of several international covenants and rules
endorsing equal opportunity in employment for people with a disability.
Many benefits resulting from the employment of a person with a
disability are intangible and not easily quantifiable. Examples of
intangible benefits for the new employee include improved
self-esteem, self affirmation, social contact, and personal
satisfaction, as well as a shift from being the recipient of
services to a provider of services. The availability of a wider range of
workers for an employer, improved equity in the workplace, various
outcomes for a society that supports equality of opportunity, and
the changes in societal attitudes that result from the inclusion
of people with a disability in labor market activities are additional
intangible benefits. The value of these benefits to society, although
not easily quantifiable, is none-the-less very important.
Whenever considering employer benefits and costs of employing a person
with a disability, it is important to take into account more than the
productivity and reliability of the individual employee, which is
generally good. It is also important to take into account more than the
effects on workplace conditions, staff training, and supervision,
which are typically quite positive. It is important to take into account
the “big picture”, the importance of increasing workplace
diversity to continuing organization development, the importance of
compliance with the law and community standards, and the
importance to good business of relationships within the organization and
the community.
Acknowledgement
We would like to thank the Australian Commonwealth Department of Family
and Community Services for funding this project and for providing advice
and other support during its conduct. References
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