Talent Acquisition

Why employee absenteeism hurts your bottom line

November 26, 2019

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Why employee absenteeism hurts your bottom line

Is your organization plagued by employee absenteeism? Or maybe specific departments that are prone to unannounced absence? There will always be a degree of unplanned absence because life happens to people, but it shouldn’t be a recurring trend.

Experience has taught me that when a company has a high absenteeism rate, there’s usually an internal trigger. There are always going to be people who are tardy, lazy or hoping to coast along at the expense of others, but they are the exception rather than the rule.

Unauthorized absences have more impact than you think

In the rush and buzz of a busy workplace, it’s easy to feel irritated by another no-show for the day, but we often don’t realize the long-term damage. Absence from work affects productivity, not only of the person who doesn’t patch-up, but direct and indirect colleagues as well as customers.

For example, if a warehouse employee who picks and packs doesn’t come into work the warehouse manager has to find a substitute very quickly. If the absence is planned, authorized steps can be taken in advance. If it’s an unauthorized absenteeism, there’ll be panic as colleagues double over to fill orders while drivers sit and wait, losing valuable time leading to late delivery and brand damage.

And it doesn’t come cheap:

Unplanned absences in the US cost around $3,600 per annum for each hourly paid worker and $2,650 for each salaried staff member. That’s according to a publication by Circadian called Absenteeism: The Bottom-Line Killer. Apply those numbers to every employee in the country.  Annual costs due to lost productivity are estimated at $84 billion!

It’s about more than not coming in for the day

Unannounced absence is about more than staying off. Employees who repeatedly arrive late, leave early and take extended lunch breaks impact productivity too. Their colleagues regularly have to step in to get the job done.

Many people will do this without complaining to their manager because they don’t want to cause trouble. That doesn’t mean that it doesn’t hurt their work or that they don’t feel frustrated and unmotivated.

Regular unauthorized absence from work, be it for a day, a few days, or people who regularly go MIA throughout the day, leads to mistrust within a team. Effective teams start to break down. Before long resentment sets in, productivity drops and soon other employees start taking time off as well.

What contributes to employee absenteeism?

Employees who are inclined to absence mostly show this trait very early in their tenure. It’s also usually a trend throughout their working history, and they change jobs often. (That’s why doing reference checks is crucial before you hire someone.)

When previously reliable employees suddenly start making unannounced absences from work, however, it’s a sign that something is wrong. It’s essential that you address the issue before it becomes a problem. There could be valid reasons, but in that case, you want to know why the employee isn’t open and upfront, asking for planned leave. In these instances, employee absenteeism in mostly caused by social or domestic challenges.

Causes of unannounced absence

  • Burnout

If stress within the workplace is steady and unrelenting, or an employee has too much work, they can suffer from exhaustion or burnout. Symptoms of burnout is an inability to function properly and inclination to illness because of a compromised immune system. Employees can, however, be reluctant to discuss the problem with their manager or HR. Many people fear losing their job or to be seen as weak.

  • Depression

According to the National Institute of Mental Health, depression affected 16.2 million adults in the US in 2016. Many people with depression feel ashamed to speak openly about it, but with access to the right help, they would be able to cope and return to productivity.

  • Toxic work environment

Being surrounded by toxic workers is mentally and physically draining. A company culture of bullying, setting unrealistic standards or weak management, will eventually cause employees to cave under pressure. In these instances, do you have channels of communication to address these kinds of issues?

  • Disengagement

A disengaged employee doesn’t care very much about their job and often with good reason. If management is disengaged, shows no appreciation, procedures are erratic, and the pay is low, employees can lose interest. Active employee engagement, performance appraisals and quality feedback will turn the situation around.

  • Domestic problems

Domestic problems can arise suddenly and turn a star employee into an unproductive wreck. Financial and relationship issues, childcare, chronic illness of a child or partner or divorce and separation have a significant impact on overall wellness. An employee wellness program or confidential counselling with a trusted HR professional can help someone cope better.

These are only a few of the more common reasons why previously productive employees start taking unauthorized absences. Showing care and understanding can have a positive impact, allow for remedial action to be taken and improve staff retention. 

How to curb employee absenteeism

If you don’t have absenteeism policies in place, make that your starting point. They must be included in your HR policies and procedures. Application must be universal throughout the entire company, across departments, states and continents. Having the best HR practices in place improves your employer branding and ensures fairness and transparency across the board.

Ensure that all managers, supervisors and team leaders are brought up to speed on absenteeism policies. Make the details available to all existing staff in writing and through HR. Be sure to include the absenteeism policies in all future employment contracts. Employees must understand that unauthorized absences can lead to disciplinary action and if continued, eventual dismissal.

Have clear lines of communication between employees and management as well as HR. Encourage staff to report toxic behaviors, weak managers and other issues to HR. There are many internal communication tools that you can integrate with your HR systems to improve employee engagement. Make sure that each issue raised is addressed in confidence and that no employee goes unheard or is punished for speaking up.

Implement an employee wellness program that includes confidential counselling (online or face to face) so that people can discuss mental health issues like anxiety, burnout and depression. Also, review your remuneration and benefits policies to ensure that you offer market-related salaries and access to quality assistance.

Why employee absenteeism mustn’t be ignored

If you haven’t paid much attention to the absence rate in your organization it’s time to sit up and take note. Loss of productivity doesn’t only affect big corporations. Startups and small to medium-sized companies are equally as vulnerable.

Many people will quickly take advantage of weak policies or managers who give too many chances. Also, you might not realize that your working environment could be the trigger of absenteeism.

Regular workplace audits and inspections are essential to ensure that health and safety measures are in place. Management must also be assessed, particularly in departments that are prone to high levels of unannounced absence. Gather data from employee communication systems as well as performance appraisal tools. Take note of trends and give regular feedback to staff and management.

That way, you will identify triggers of unannounced absence and can implement steps to curb absenteeism so that it doesn’t become the norm.

The bottom line

Whether unauthorized or approved for valid reasons, the absenteeism rate in your company will harm staff morale, productivity and your bottom line. No business can afford to repeatedly have an incomplete staff complement onboard.

Apart from the impact on colleagues, it will quickly filter down to your customers when deliveries are late, deadlines aren’t met, or key staff are often unavailable. Bad service is a brand killer, and your customers will soon migrate to greener pastures. Employee retention of top performers will begin to suffer too as your competitors poach them with better working conditions.

Take some time out to do an absenteeism calculation over the past year and see how it has affected your bottom line. There’s no fixed ratio to how many unauthorized absences are too many. That is something that you’ll have to gauge based on whether your company meets targets and reaches expected growth levels.

How to calculate absence rate

Calculated manually, divide the total hours and days of absence within a week, month, quarter or year. Divide the result by the expected full hours in the same period and multiply by 100. That will give you the total time lost. The calculation becomes more complicated when you bring actual costs as well as rates of pay into the picture. And don’t forget hidden costs like penalties for late delivery, interest charged or business lost.

If you’re unsure how to calculate the absenteeism rate, there are plenty of absence management software platforms available that can be integrated with your existing systems. You’ll have access to reliable data, metrics and analytics in real-time so that you can identify problem areas and address them right away. 

Bev has enthusiastically worked to match top employers and candidates for almost twenty years. An endless curiosity of the human mind, HR tech development, how to help people reach their goals and the ever-evolving hiring landscape is what keeps her fired up.