FINANCIAL TOLL OF ABSENTEEISM ON A BUSINESS 

Absenteeism is the term generally used to refer to unscheduled employee absences from the workplace. Many causes of absenteeism are legitimate – personal illness or family issues, for example – but absenteeism also can often be traced to other factors such as a poor work environment or workers who are not committed to their jobs. If such absences become excessive, they can have a seriously adverse impact on a business’s operations and, ultimately, its profitability. 

Unscheduled absences hurt. Most sick leave policies foster a “use it or lose it” mindset and employees feel entitled to a certain number of sick days. Indeed, absences can take a financial toll on business in several different respects. The most obvious is in the area of sick leave benefits – provided that the company offers such benefits – but there are significant hidden costs as well. The following are notable hidden cost factors associated with absenteeism:

• Lost productivity of the absent employee
• Overtime for other employees to fill
• The decreased overall productivity of those employees
• Any temporary help costs incurred
• Possible loss of business or dissatisfied customers
• Problems with employee morale.

Excessive absenteeism, if left unchecked, can wear a company in numerous ways. Absenteeism forces managers to deal with problems of morale, discipline, job dissatisfaction, job stress, team spirit, productivity, turnover, production quality, additional administration, and overhead. To summarize: You don’t have an absence problem; you have a profit problem.

Absenteeism Policies

Most employees are conscientious workers with good attendance records (even if they are forced to miss significant amounts of work, the reasons are legitimate). But every company has a small number of abusers – about 3 percent of the workforce – who exploit the system by taking more than their allotted sick time or more days than they actually need. And when they begin calling in sick on too many Monday or Friday mornings, who picks up the slack and handles the extra work? More important, who responds to customer requests? 

To address absenteeism, then, many businesses that employ workers have established one of two absenteeism policies. The first of these is a traditional absenteeism policy that distinguishes between excused and unexcused absences. Under such policies, employees are provided with a set number of sick days (also sometimes called “personal” days in recognition that employees occasionally need to take time off to attend to personal/family matters) and a set number of vacation days.

Workers who are absent from work after exhausting their sick days are required to use vacation days under this system. Absences that take place after both sick and vacation days have been exhausted are subject to disciplinary action.

The second policy alternative, commonly known as a “no-fault” system, permits each employee a specified number of absences (either days or “occurrences,” in which multiple days of continuous absence are counted as a single occurrence) annually and does not consider the reason for the employee’s absence. As with traditional absence policies, once the employee’s days have been used up, he or she is subject to disciplinary action.

“USE IT OR LOSE IT” 

Some companies do not allow employees to carry sick days over from year-to-year. The benefits and disadvantages of this policy continue to be debated in businesses across the country. Some analysts contend that most employees do not require large numbers of sick days and that systems that allow carryovers are more likely to be abused by poor employees than appropriately utilized by good employees, who, if struck down by a long-term illness, often have disability alternatives.

Today, most employees feel entitled to a specified number of sick days. And if they don’t take those days, they feel they are losing a promised benefit. Your company may be inadvertently reinforcing this ‘use it or lose it’ attitude by establishing policies under which employees ‘lose’ their sick time if it is not used by the end of the year.

Establishing a System for Tracking Absences

Absenteeism policies are useless if the business does not also implement and maintain an effective system for tracking employee attendance. Some companies are able to track absenteeism through existing payroll systems, but for those who do not have this option, they need to make certain that they put together a system that can: 1) keep an accurate count of individual employee absences; 2) tabulate company-wide absenteeism totals; 3) calculate the financial impact that these absences have on the business; 4) detect periods when absences are particularly high; and 5) differentiate between various types of absences.

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