Unexpected absenteeism is not cheap for businesses. In fact, unplanned absence is estimated to cost businesses $2,741 per employee, per annum and, with an average of 8.8 days of absence per employee per year, this is a cost that no business wants to wear.
The direct costs of absenteeism such as paid wages, replacement workers and overtime pay are obvious. However, indirect costs can also add up and include reduced productivity, poor morale among other employees who have to do extra work to cover co-workers or poor quality of services due to understaffing.
Across the board, it’s estimated that the economy loses $33 billion a year in payroll costs and lost productivity due to absenteeism.
On the other end of the spectrum, presenteeism is causing its own issues for businesses. This phenomenon is where workers come in to work even though they are clearly sick or unfit for work, which presents its own range of problems.
Although employees are present in the workplace, presenteeism can cost businesses money through lost productivity and affect rates of absenteeism as sick staff infect their colleagues. It’s estimated that presenteeism costs the economy $34 billion a year.
Why is this occurring?
In the Australian Human Resources Institute (AHRI) HR Pulse report, 29% of respondents believed presenteeism had increased in their workplace and 41% believed unscheduled absences had also increased. With rates of absenteeism and presenteeism on the rise, it’s important to understand reasons why employees are absent from work, or continuing to work when they shouldn’t, in order to combat it and reduce costs.
In the AHRI HR Report, the top reasons for short term absence included minor illnesses, family responsibilities, recurring medical conditions, injuries/accidents not related to work and stress.
While these may be common excuses for absences, Australia’s high rate of absenteeism is often attributed to ‘entitlement culture’, where employees feel entitled to use all their leave each year. Another underlying cause is lack of engagement in the workplace. Research by Gallup outlines how highly engaged business units see a 41% reduction in absenteeism and a 17% increase in productivity.
On the other hand, presenteeism is often attributed to high workload/work related stress, not considering illness serious enough to take time off, having no one to cover workload when away and self-pressure.
How do we manage this?
With the cost of unexpected absenteeism and presenteeism so high, it’s important to implement clear strategies that are good for business as well as employees. Fairwork recommends following the below steps in order to manage employee performance.
- Identify the problem
Understanding the key drivers of absenteeism and presenteeism within your workplace is important in implementing strategies to reduce it. Ask yourself: are employees genuinely sick? Are they experiencing lack of motivation? Are they disengaged at work? Are clear and comprehensive policies in place?
In assessing the problem, we need to determine how serious it is as well as how long it has existed. At this point it’s worth exploring possible strategies for job redesign, job fit, changes to working arrangements or management of health issues (depending on the underlying problems) so that the issue can be dealt with.
- Meet with employee and jointly create a solution
This meeting should leave the employee with an understanding of what the problem is, why it’s a problem, how it impacts the workplace and why there is a concern. This is a chance to confirm what the underlying cause behind the absenteeism or presenteeism is and work out strategies to improve attendance. Together, a clear plan of action should be developed.
Ai Group’s Absenteeism and Presenteeism Report found that one out of five businesses do not have a system of measuring and reporting their employee’s absences however, measurement of absence is key in identifying problems, creating solutions and assessing the success of absence programs.
It’s important to monitor employee performance and provide support and feedback to ensure they are staying on track or to implement more serious action.