By better understanding the real cost of workplace absence, you have a better chance of reducing that cost.

UK workplace sickness absence is at an all-time low. The average employee now misses 4.3 days per year, according to official Government statistics (opens a new window).

What is the cost of these missed days to your company?

The real cost of employee absences can be very complex and difficult to quantify.

Companies sometimes calculate the cost of workplace absence quite simply. Yet the real cost of employee absences can be very complex and difficult to quantify.

Multiplying the total number of days lost by average labour costs neglects the often-systemic impact of absences. In truth, one day missed is often a lot more than just one day.

Some companies will also factor in knock-on effects – such as lower morale among staff that have to take on additional work and the consequently increased risk of human error and lower productivity.

But even the consideration of these factors is not enough.

Variable factors

Let’s take a look at some of the other factors you may wish to consider:

Employee’s role

It could be presumed that the more senior the absent employee, the more costly that absence to the employer. But it’s not always that simple. Take, for example, the absences of a receptionist and a senior manager. If the receptionist is absent for a day, the doors of the office might not open – causing immediate disruption. Conversely, if the senior manager – who might be largely paid to think – is absent for a day, they may be able to largely carry on working from home.

Employee’s department

The maturity of the department incurring the absence can also make a big difference. The absence of an employee within a well-organised department with established structures, protocols and settled staff will often be less disruptive than the absence of an employee working in a newer, more emerging department.

Five one-day absences will typically have more of an adverse effect on workplace productivity than a single five-day absence.

Timing of absence

Usually the most significant day of absence is day one, because it is wholly unexpected and, as a result, can be hardest to plan for. Short-term absences make resource-planning challenging – there isn’t time to draft in temporary assistance so workloads get spread among colleagues. Five one-day absences will typically have more of an adverse effect on workplace productivity than a single five-day absence.

Cause of absence

While a senior manager might be able to continue working from home if they, for instance, have a broken ankle, psychological ill health could impair their productivity far more.

The team

Different employee absences will affect team activities to different extents. For example, a two-person ambulance crew is immediately unavailable with the absence of one crew member. A bus driver not being available means the bus cannot leave the depot.

Penalties

This could be a monetary penalty imposed on the company for failure to deliver the service required. There are also implicit penalties – such as lower customer satisfaction and compromised reputation, with a consequential loss of customers.

Loss of tacit knowledge can make a material difference to the productivity of a department.

Perishability of product or service

Some products and services are lost or spoilt by absence. For example, a strawberry farmer’s crop needs picking/packing/distributing in a short time window. A city trader can only make the deals when they’re needed – they won’t wait until tomorrow.

Replacement costs

Sometimes when calculating replacement costs, the focus is on temporary or alternative employee costs, and doesn’t include training and lack of experience costs. There is also the loss of tacit knowledge – though hard to quantify, this can make a material difference to the productivity of a department.

Taking action

It may never be possible to calculate the exact cost of an employee absence. For example, it’s near impossible to entirely quantify how one person’s absence might increase the risk of human error among colleagues.

However, the more factors considered when calculating the cost of workplace absence, the more targeted and effective your interventions to address the challenges of workplace absence can be.

As a matter course, employers should take the following steps to manage absence levels:

• Interrogate historic absence data, and look for consistent recording that allows for comparisons.

• Cut absence data by duration/location/cause/age/gender and type of job to identify hot spots.

• Review company’s absence policies and application.

Short term absence management should include:

• Early notification,

• Centralised recording,

• Standard return to work interventions.

Long-term absence management should include:

• Early intervention,

• Regular communication with employee,

• Tailored rehabilitation programme for each absentee,

• Phased return-to-work process – typically over a period of up to three months.

So, average reported absence levels may be at an all-time low – but do you know how absence is impacting your enterprise, and the effectiveness of your interventions? 

For more information, please contact Mike Tyler on:

Tel: +44 (0)20 7933 2773 | Email: Mike.Tyler@uk.lockton.com (opens a new window)