The Cost of Absenteeism in the Workplace and How to Control It

There are three different absence types that have an impact in any company: scheduled, unscheduled, and partial shift absences. Scheduled absences consist of vacation or personal time, such as PTO. Unscheduled absences include sick days, disability, and Worker’s Compensation leave. Lastly, partial shift absences are when a worker arrives late at work, takes longer breaks than allowed, or leaves early. Employers expect their employees to miss a certain number of days every year-it is inevitable- but when employees start taking advantage of that and start missing more days than they are allowed, it can decrease productivity and eventually have an effect on the company’s finances. According to a 2005 study, unscheduled absenteeism costs $3,600 per year for each hourly worker and $2,650 for each salary employee. Despite the large costs of absenteeism, some employers don’t measure its impact on a regular basis. As a matter of fact, a 2014 survey revealed that only 36% of 1,200 employers measure the impact of absenteeism on their bottom line. Employers should be aware of how often their employees are absent from work without a valid reason. Being proactive about managing attendance and talking to those employees that miss work often is a good start. 

Causes for Absenteeism

There are many different reasons employees may be absent from work. Sickness, death in the family, accident, jury duty, etc. All these are valid excuses that should not get employees in trouble with their managers. Even though these are valid excuses for absenteeism, they should be communicated to managers as soon as possible, allowing the manager to find a replacement or prepare for the days the employee will miss accordingly. 

The following are some of the causes of absenteeism. Even though these may not seem as serious as the ones mentioned before, they should be addressed to avoid unnecessary absenteeism . 

  • Bullying/Harassment

Bullying and harassment don’t necessarily stay in high school, and can sometimes follow on to the workplace. Recent studies show that workplace bullying costs employers 18 million work days every year, which in return has a big impact on the company’s finances. When employees feel bullied or harassed at work, they are more likely to call in sick or not show up to their shift in order to avoid contact with the person who is making them uncomfortable at work. There are many forms of bullying in the workplace, and employers should do whatever they can to prevent this issue. Having an open door policy and incorporating free counseling services can be very helpful.

  • Burnout

Every employee will feel stressed or burnt out at work at some point. Heavy workloads, tight deadlines, stressful meetings, presentations, or even problems outside of work can be the cause of this. When employees feel stressed, they tend to be less productive, they lack focus, and they can even get sick. If a manager notices that an employee is too stressed, he or she should talk to the person and try to help them figure something out. Although it is hard, avoiding burnout at work is possible. Work with your employees to create a healthy and relaxed environment. Employees should feel comfortable in the place they spend most of their time in. Although work is a responsibility, it shouldn’t cause employees too much stress to the point they don’t show up to work. 

  • Childcare

Not everyone is able to afford a babysitter or daycare, so sometimes employees may be forced to stay at home to take care of their children. Snow days are a good example for this situation because schools are closed, which means one of the parents will have to call in to work to look after their kids. According to a recent study, each childcare crisis takes an average of 16 hours to resolve, and about 80% of it is usually done during work hours. Most of these instances are inevitable, but some organizations have introduced childcare options for their employees, such as daycare vouchers or even onsite help, in order to increase productivity. 

  •  Weather

If you live in Michigan, or anywhere where there is snow, you know winter is the time where most road accidents occur. During the winter months most of us have learned that it’s important to leave for work way earlier if you’re going to get there on time. Unfortunately, no matter how cautious and careful you are with your morning routine and drive to work, there will always be other drivers out there who are not as cautious as you are. They wake up late and end up speeding to work, putting everyone else’s lives at risk. If an employee is involved in a vehicle accident in the morning, they will be forced to call off work at least until the police show up and everything gets resolved. If they are not involved in the accident, they may still be late due to traffic. There really isn’t much employers can do to avoid this, except advise their employees to drive safely, be aware of their surroundings, and leave their homes earlier than usual.

  • Job Hunting

Employees may “call in sick” to search for other jobs or even attend job interviews. If employees aren’t happy at their current job, whether it is because of pay, culture, or coworkers, they will start looking elsewhere. Although this is inevitable, employers can meet regularly with their employees to make sure they are happy. Ask everyone how they are feeling and if they have any complaints or suggestions about how management is doing. If you want real, honest answers, sending out an anonymous survey will motivate employees to be blunt and honest. This will help managers know how well they are managing their employees and will allow them to make any changes that are needed. 

 Cost of Absenteeism

As mentioned before, when employees are absent from work it has an effect on the company’s productivity and in the long run, its finances. Studies show that the cost associated with absenteeism varies by industry, with the greatest loss being in professional occupations. Forbes shared a table that shows the annual cost of lost productivity due to absenteeism and it is shocking.

  • According to the table, the annual cost of lost productivity due to absenteeism in professional occupations (excluding nurses, physicians, and teachers) is around $24.2 billion, while for farmers and fishers in only $0.16. 

The costs associated with absenteeism can be direct or indirect. The direct financial cost comes from replacement of workers, wages for unreported PTO, overtime pay for employees who get scheduled when others don’t show up, and from lack of productivity when no replacement is found. The indirect costs include poor quality of products or services, low productivity, stress by other employees who need to overwork, safety issues due to employees who are poorly trained to cover for those who don’t show up, higher turnover, etc.

Reducing Costs by Tracking Absences

In order to reduce the excess costs associated with absenteeism, employers must first reduce the rate of absenteeism. While employers cannot completely eliminate absenteeism, they can control it by tracking their employees’ hours. Employers should have a system for managers and employees to see how much PTO they have used and how many hours they have left. An online, cloud based solution such as Dominion’s Time & Attendance software is perfect for tracking absences. Our time card authorization screen alerts managers and supervisors of abnormal punches such as clocking in late, leaving early, or no punches on scheduled days. Our software also has a “Points and Incidents” feature that automatically assigns point when employees have irregular punches. Once a threshold is reached, it alerts the manager or supervisor that they need to address the employee’s behavior. This will help ensure that employees don’t abuse their PTO, sick days, or number of approved absences. By tracking absences, managers will be able to see which employees are taking too much time off and they will notice certain patterns that will help them address the problem in a more effective way. Studies show that by implementing technology into tracking absences, cost savings can be found in areas such as the following:

  • Reduced Payroll Expense

Attendance trackers provide more accurate reports, patterns, and root causes for managers. They also reduce instances where PTO is not reported and they are able to reduce overtime costs. Some attendance tracking softwares are able to select employees to cover shifts based on their training, availability, and hours worked during the week. Studies have shown that companies that use specialized software to track their employees’ hours have lower rates of absenteeism.

  • Increased Productivity

By tracking absences, managers are able to forecast and make better schedules, resulting in more motivated and productive employees. Tracking employees hours also ensures that overtime limits are not surpassed, reducing burnout and improving productivity.

Although there are many other ways to control and reduce absenteeism, having a cloud-based attendance tracker is the best way to start. To find out what Dominion’s Time & Attendance Software can do for you, click below.