Why you need to track the costs of absence
You’d think it would be simple enough to track the cost of absence: take the total number of days your employees aren’t at work, then multiply by your organization’s average daily compensation rate and there you have it.
But calculating the cost of absenteeism involves much more than knowing how much you are paying people while they are away from work. You have to account for the cost of lost productivity, replacement labor, overtime, administration costs, and management time.
And believe me it can add up – averaging 5% or more of payroll in the private and public sectors.
So the big question is: why do only 36% of employers actually track absence today? As I see it, there are a variety of related reasons:
- A lack of understanding of the complexity of the issue while being more focused on longer-term absences and workers’ compensation.
- Viewing absence too narrowly as a “medical issue,” not an indicator of other problems in your workforce culture – like bullying and team conflicts, weak morale, poor policies for employee downtime and engagement
- In some organizations, the people who are or should be responsible for tracking absence are just too busy. Many managers are forced to wing it by tracking absences manually after the fact
- Insufficient or outdated technology and systems that make tracking absence a nightmare process that can’t easily adapt to workforce needs
- Confusion or lack of coordination around roles and responsibilities in absence reporting and process. The troubling question in many organizations is: why aren’t employees more accountable to report and track their own absences
- And then there’s this excuse: “We’ve always done it this way” and changing will mean additional time and effort
Let me put it this way: if you identify with any of the reasons above, it’s time for a reality check. Because there are real organizational and employee health risks in not tracking and managing absences more progressively:
- Absence is a source of rising costs due to factors like changing demographics, the increase in complex health issues and understanding how to accommodate
- It’s a serious drag on productivity however you define it
- Absence can erode your workforce culture. If it’s acceptable to take 15-20 days from the “sick leave bank” even if you’re not really sick, can you really foster a culture of accountability?
- You will never be able to manage an issue that is not consistently measured. Important employment decisions may also pose legal risks if your organization arbitrarily manages without consistent tracking.
- Finally, and maybe the most important risk of all: you may not be identifying individuals who need support in the form of early intervention and prevention strategies. How do you know who to help if you don’t have a proper absence tracking and management strategy?
So if you’re not tracking the cost of absence it’s time to seriously ask yourself why. There are plenty of cost effective absence reporting solutions on the market today for businesses of all shapes and sizes.
Absenteeism is not just a cost of doing business. It’s a risk factor that you can control, manage and ultimately mitigate for the benefit of your organization and your people.