How to Reduce the True Cost of Absenteeism

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Empty office due to absent employeesThe cost of absences is often seen as immeasurable or simply dismissed as a negligible amount.  However, they are not immeasurable or inconsequential.  They are costly, and they can affect a company in three areas:

  • Customer service
  • Staffing
  • Productivity

They also impact a company’s financials in several areas, mainly through:

  • Direct costs – for the benefits and wages that are paid to absent employees
  • Indirect costs – consist of two specific types of costs
    • lost productivity
    • expense for replacement workers (either temporary workers or other employees) to “cover” the absent worker’s workload

These direct and indirect costs of employee absences are much higher than previously thought, often amounting to (on average) 35% of payroll.

Incidental unplanned absences are the most costly.  These are absences of five (or less) work days where the occurrence was not known and approved ahead of time by the employee’s supervisor (i.e. sick days ).  The average total costs of these types of absences equals 5.8% of payroll and result in a 19% net loss in productivity.    

Lost productivity is a huge cost that needs to be quantified. There is a much higher total cost of absences for nonunion hourly workers (at 39.1%) than there is for exempt workers (at 28.5%).

This is because exempt employees seem to make up an average of 42% of their work from unplanned incidental absences and 39% of their work from planned absences by working longer hours before or after the absence (or even during the absence).  However, their indirect costs are still fairly high because their time off still has an effect on co-worker productivity since someone needs to cover for them.

A recent study conducted by Circadian turned these percentages into dollars; it found that unscheduled absenteeism costs roughly $3,600 per year for each hourly worker and $2,650 each year for each salaried employee.

Absenteeism is an especially difficult problem to tackle, because there are both legitimate and poor excuses for missing work – and it can be challenging for employers to effectively monitor, control and reduce absenteeism.

To address problems like this, some companies, have

  • instituted absence policies
  • introduced return-to-work interviews
  • implemented new preventative care programs
  • trained front-line managers to better manage absenteeism
  • worked to improve employee morale, motivation and engagement.

However, employees will get sick.  Cold and flu season is right around the corner, and no one wants to establish an environment where sick employees feel that they must come to work.  Once they do, they spread their illness to the entire company.

To prevent the next flu bug from negatively impacting your workplace, call Snelling today to see how our experienced temporary workforce can help you cost-effectively navigate this period of time.  Locate your closest Snelling office today to find out how we can help you devise a workforce planning solution that will reduce costs, maintain productivity, keep your office and/or department humming along, while allowing your employees to stay home and get well.