Get a handle on out-of-control employee absenteeism before it costs your business hundreds of thousands in payroll expenses. We list the costs, the causes, and the solutions to manage attendance issues in the workplace.
There are many valid reasons for your employees to be absent from work. Sick days, maternity leave, vacation, requested days off for errands — all are common examples.
Unscheduled and unsolicited absences from work, on the other hand, can squander your work environment and cause a lot of trouble both for your business and employees.
A few random, unplanned absences here and there is nothing to worry about. But, if you notice a pattern and absenteeism becomes a habit for some of your employees — it’s time to intervene and act.
So Why Is Absenteeism In The Workplace A Problem?
Unfortunately, employee absenteeism is not all that rare — in fact, it is the classic problem for employers and business owners.
For example, a study from The Workforce Institute conducted during the final season of Game of Thrones, showed that more than 34% of US employees (27.2 million) admitted they are more likely to call in sick and stay home, arrive late, or be less productive in the workplace, than normal.
When absenteeism in the workplace becomes a habit — it costs employers lots of money too — the average annual costs related to lost productivity due to absenteeism in the U.S. are believed to stand at $3,600 per hourly employee per year, and $2,650 per salaried employee per year, according to research by Circadian Technologies, Inc. And those are still conservative estimates, so if you have hundreds or thousands of employees, the cost adds up progressively.
If you want to substantially reduce the impact of employee absenteeism on your business’s bottom line — you have to create an employee attendance improvement plan, designing clear attendance policies, and have a robust solution for tracking and managing employee attendance.
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What Does Employee Absenteeism Cost Your Business?
The real cost of employee absenteeism in the workplace is frequently underestimated, or even ignored completely as “negligible”. As it’s a part of payroll expenses, it’s hard to measure.
- In fact, according to the Bureau of Labor Statistics in 2017 alone, almost 3% of all the U.S. employer’s workforce was absent on any given day.
- Back in 2013, the Gallup-Healthways wellbeing survey found the total costs related to lost productivity in the US to be just over $84 billion in one year.
- According to Kronos, the total cost of employee absences, unplanned, and planned, is more than twice the average employer’s cost for health care. See Total Financial Impact of Employee Absences in the U.S.
Let’s look at some specifics of what employee absenteeism costs your business.
The Direct Costs Of Absenteeism
- Losses in salary. According to the studies, each absent employee costs between 1x to 2x compared to the same person’s normal salary. On top of that, add money improperly paid to absent employees, overtime pay for replacement employees and/or temporary workers, etc.
- Losses in work hours. Another measure of absenteeism is to express cumulative lost time in terms of full-time equivalent positions.
Despite the significance of direct costs, indirect costs represent an even larger impact of employee absence. Indirect costs result when work is delayed or co-workers and supervisors are affected because of an employee’s absence.
The Indirect Costs Of Absenteeism
- Losses in productivity and quality. Employers can face losses, caused by reduced productivity, drop in the quality of goods/services,
- Administrative costs of managing absenteeism, such as excessive managers’ time spent on dealing with discipline and finding suitable employee replacements
- Safety issues, caused by inadequately trained employees filling in for others, rushing to catch up after arriving as a replacement, etc
- Poor morale among employees who have to “fill in” or do extra work to cover absent coworkers
Most Common Causes Of Absenteeism
The most common reasons for no-shows could be split into two major types: Technical and Moral.
Technical Causes of Employee Absenteeism
- Poor communication about availability
- Lack of understanding of the rules
- Inconsistent enforcement of the rules
- Problems with scheduling
- Childcare and other family obligations and home concerns
- Management and employee-relation concerns
- Lack of solid scheduling software and time tracking solutions
Moral Causes of Employee Absenteeism
- Harassment and bullying by the colleagues or managers
- Depression, stress, and burnout
- Lack of engagement and purpose
- Job hunting — yes, sometimes employees do call in sick to attend a job interview, or work on their resumes
By the way, if your employees do show up at work, but tend to round-up hours and cut corners here and there, there is a separate term for it, called “Time-Theft”, and we have a dedicated guide on it.
How to Deal with Employee Absenteeism
1. Create An Employee Attendance Policy
The first and most important tip is to create a clear attendance policy.
This should set the rules for absences from work and state what qualifies as an excusable absence and what doesn’t.
The majority of employees will appreciate preemptive measures, clear policies, and facilitative, rather than punitive programs. Punitive measures will force employees to come to work, but will result in employees becoming “absent while at work.” — doing as little as possible, bringing no effort, and “counting hours”.
2. Simplify Absence Requests And Approvals
Managers are able to know the answer to the below in real-time and with the click of a button.
- Who is clocked-in right now?
- How many employees clocked in today in total?
- Who is late and hasn’t started yet?
- Who is absent today? Was it requested and approved ahead of time?
- Who reached the daily work-time limit?
- Who worked overtime?
- Who requested a day-off and why?
Managers will get push notifications when a request is made and will be able to review and approve requests on the go. Your employees will be notified in real-time whether their requests have been approved or declined directly on their mobile!
3. Keep Good Track Of Employee Absences
The first step towards improving employee attendance is accurate time tracking. The way to track employee absences depends on what fits you or supervisors in charge of attendance control.
With an employee attendance app, that information is safely stored and always available for human resource managers or business owners.
With apps, like the Connecteam employee time clock app, you can even set automatic time-clock and attendance automatic reports which will send supervisors notifications every time an absence arises, or a request was inputted.
You can create various types of auto reports, such as:
- A morning report that shows a list of absent employees
- “Customer report” that will present the employees who worked for that customer
- Report that shows who started their day or who was yet to do so
- “End of day” report that includes users who are still clocked-in, reached the daily work limit, were automatically clocked out or worked overtime
It’s always worth noting that Connecteam’s integration with Quickbooks Online and Gusto ensures instant and 100% accurate payroll.
4. Recognize Your Employees
Sometimes absenteeism at work originates from employees feeling unnoticed and disengaged.
They assume that their accomplishments are not seen, they don’t feel their role is valued, so they decide they would rather stay home.
Implement proper employee recognition tactics for a job well done — this way you can motivate employees to show up and do their best.
Give shoutouts for personal milestones like birthdays or work anniversaries to reiterate your appreciation — it costs you nothing, but means a lot to your workforce and adds to the overall positive vibe in your team.
5. Improve Employee Morale
Talk to employees to understand your best options for boosting morale — whether that means setting up positive events like volunteer days or employee appreciation days, or investing in training and development opportunities.
It sounds surprising, but training is one of the most effective ways to keep employee morale up.
In fact, as much as 40% of employees who receive poor or very little on-the-job training will leave your company within their first year of employment. And whenever employees leave, it costs businesses even more, than absenteeism.
6. Stimulate High Attendance And Approved Absence Patterns.
One of the successful tactics of absence control involves the so-called “PTO banks”.
PTO or “Paid Time Off” plans provide employees with an amount of legitimate paid time off that employees can use for various purposes, and personal matters, not just typical sick leaves, and vacations.
Another example of a positive attendance habit tool is a flexible schedule policy if it applies to your type of business. By giving employees an opportunity to adapt the work schedule to their actual living conditions, you can substantially improve their quality of life, which always results in increased productivity and engagement.
Also, try to encourage employees to be present and reward attendance champions with prizes, incentives, or wellness programs.
7. Legal & Disciplinary Action
Sometimes, despite all our efforts, there are still employees that repeatedly “go missing” again and again, failing to show any improvement.
In that case, you probably should consider turning to disciplinary and legal actions, in order to minimize your own risks and losses.
Make sure to check up on the employees who fit the bill as soon as possible, and start with an informal chat to find out what’s happening and how you might help.
When that doesn’t work, you might move on to an informal warning, before a first written warning.
If their absenteeism persists, you might want to consider a final warning, a formal review, suspension from work, or even termination of employment. Sometimes it’s cheaper to hire and train a new employee, that will be the right fit.
Bottom Line On Dealing With Absenteeism
Absenteeism in the workplace is a huge problem for many businesses, from local small businesses to international enterprises, but the backbone of it is always the same — it happens when employees are not happy or lack purpose, while managers and supervisors don’t have a robust time-tracking and time-management solutions in place.
The efforts to reduce absenteeism within your workforce are really important and may have surprising effects on revenue.
Before implementing any of these measures, it’s important to consider the reasons for absenteeism in your workplace and try to address that problem. But, your first step should be a detailed absence/attendance policy, and bulletproof time tracking software.
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