How To (And Why) Calculate The Cost Of Absenteeism

The challenge in absenteeism in the workplace is not to convince employers that the phenomenon is costly. After all, 90% of them have already admitted that absenteeism was "very costly" for their organizations, according to 2015 report by Morneau Shepell.

So, why do so few companies decide to put tools in place for measuring and controlling absences? Only 36% of them do, according to a new study.

Companies mistakenly believe that absenteeism is due solely to illness and they therefore cannot do much.

This is false for two important reasons. On the one hand, the 2015 report indicates that 52% of absences are not medical. Benoit Lavigne, director of absentee management solutions at Morneau Shepell, gives the example of hunting, which causes employees to be absent in certain regions of Quebec. “It has nothing to do with a disease!”

On the other hand, a close follow-up of an employee’s absences makes it possible to see that they may be facing some difficulty. “Early intervention is the key to reducing short-term and long-term disability,” says the director.

Direct and indirect costs

To take full account of the cost of absenteeism at work, one must first calculate it for his or her company. This will include both direct and indirect costs.

Direct costs are simple: payroll for absent employees, paid overtime, insurance premiums and other administrative costs related to absences.

Indirect costs are more difficult to quantify, but they are no less important. Morneau Shepell estimates that they can represent 50 to 500% of direct costs.

“If we cannot replace employees, customer service suffers,” states Lavigne. “It is also difficult on those employees who are asked to put in double the effort.”

In addition, management costs to replace the absentees and train new personnel must be considered.

Best Practices

To combat absenteeism at work, it is not a matter of calculating simply to calculate. We want to set up a system that collects and analyzes data in real time so that we can intervene quickly when necessary. 

“Ideally, this system could identify patterns of absences and send a notification to an HR manager so that they can intervene,” explains Benoit Lavigne. 

“Not in a disciplinary approach,” he says. “The goal is to open a conversation with the employee. We want to understand the real reasons for their absenteeism. And we want to do something before the problem gets worse.”

 

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