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How much is employee absence really costing your business?

Neil Pickering, Marketing Manager at Kronos, discusses the cost of absenteeism in the UK, its impact on the economy, business and workforce implications, and the role of technology in tackling the issue.

The first Monday in February (known colloquially as 'National Sickie Day') is the day that has traditionally seen the highest number of workers calling in sick; while according to a recent survey, as many as a quarter of workers ‘throw a sickie’ on their first day back from holiday. But although one-off events tend to make the headlines, employee absence is a constant problem that’s important for every organisation to monitor and control.

It was interesting, for example, to see the results of CBI/Pfizer’s recent Absence and Workplace Health Survey, which found that absenteeism is costing the UK economy a staggering £14 billion a year. Further research released by business advisers PwC shows sick days alone cost British business almost £29 billion a year, because workers are taking more than four times as many days off work as their counterparts across the globe.

Implications for business and the workforce

While well aware of the headaches of absenteeism, many managers do not have a clear understanding of the full costs of employee absence. But factors such as the cost of compensating employees who are absent, the additional expense to fill the gaps with overtime or temporary staff, the drain on managers’ time and lost productivity can average 35% of base payroll.

Employee absence can take many forms including holidays, sick time, late arrivals and early departures, extended breaks, statutory leave (e.g. paternity/maternity) and union-negotiated leave. And each of these absence types – whether planned, incidental or extended – carries its own costs, management headaches, risks and productivity hits.

Worse still, senior managers often do not have visibility to absence trends and reasons, making it difficult to address the underlying causes. But without visibility of these trends in absenteeism, UK businesses will continue to struggle to contain costs.

It’s also worth remembering that the impact of absenteeism extends beyond simple financial implications. As well as putting extra pressure on other members of the workforce, employee absence significantly – and negatively – affects both productivity and employee engagement. Further implications include low morale, overtime and additional HR costs. And, when there is an unscheduled absence, HR must act on this immediately, by trying to find a temporary replacement for the day, or work with departmental managers to reassign existing employees to cover the workload.

Implications for management

Patterns of behaviour such as extending weekends with sick days, arriving late, leaving early, or taking long breaks, cannot easily be monitored or tracked manually, and so are often ignored by busy managers. This also makes it more difficult for managers to actually manage their employees who are working, as they have to manage absence across the workforce as a priority. 

Without the systematic means to manage all forms of employee absence, businesses are failing to comply with government regulations, collective bargaining agreements and corporate social responsibility targets. This can lead to serious consequences, such as working time directive non-compliance, and employee relations problems that can result in low morale, poor employee engagement and staff turnover.

The CBI/Pfizer study highlights the fact that employee absence kills productivity, and research by Proudfoot Consulting has found that absence can account for 20-40% of net lost productivity per day. Businesses therefore need to be able to shine a light on workers with attendance issues so they can react quickly and reduce the toll employee absence takes on their organisation.

So what to do?

In today’s fast-paced environment, it’s important for managers to be able to manage all absence-related policies comprehensively, and minimise the impact these risks can have on the bottom line. Businesses should therefore be looking towards workforce management solutions that not only help them manage time and attendance, but also provide both the visibility and control over employee absence they so clearly need.

Absence management solutions help businesses to better control the cost of absenteeism, and automate and streamline the application of their attendance and leave policies. They help businesses reduce the administrative headaches and compliance risk associated with leave laws – not to mention sick time, late arrivals, early departures and extended breaks. They can also help organisations enforce their rules consistently, control their costs, and minimise the productivity impacts associated with employee absence.

The new whitepaper from Kronos, Out Sick: The True Cost of Employee Absence, summarises all these issues and more. It gives you all the answers to how absence is affecting your business, and what you can do to minimise its impact. Download it now to find out more.

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