The True Causes & Costs of Absenteeism in the Workplace

What is Absenteeism?

Absenteeism refers to the habitual non-presence of an employee at their job. Habitual non-presence extends beyond what is deemed to be within an acceptable number of days or time away from the office for legitimate causes. These include scheduled appointments, rare illnesses, and family emergencies.

In other words, absenteeism is a strain on your bottom line. In the age of remote work, employers are experiencing increasing levels of absenteeism, and they are paying the price. When you take a deep look at how it affects your organization, you will see how it impacts productivity, efficiency, and, most importantly, profitability. By the time you’ve finished reading this, you’ll understand the causes and costs of absenteeism in the workplace and even how to prevent it.

Causes of Absenteeism

There are countless causes of absenteeism or reasons that an employee could miss work frequently. We’ve looked at the most common responses and broken them down into eight main categories;

• Illness & Injury
• Bullying & Harassment
• Burnout/Stress
• Depression/Mental Health
• Family Reasons
• Disengagement
• Job Hunting
• Punctuality

Illness & Injury

“Employees covered for sick time, workers’ compensation, disability, and family and medical leave benefits are absent about 978 million days due to illness”. According to The Integrated Benefits Institute, poor health costs the U.S. Economy $227 billion yearly from “lost productivity” alone. Absenteeism related to illness or injury is often the most expensive cause. Employers may have to cover sick leave and often have to pay someone else to do the absent employee’s job.

Bullying/Harassment

Bullying/Harassment is one cause that is not as obvious. As you can imagine, employees who experience workplace bullying or harassment are more likely to engage in absenteeism & miss work frequently. According to the Workplace Bullying Institute, workplace bullying is defined as “repeated mistreatment: abusive conduct that is threatening, intimidating, or humiliating; work sabotage or verbal abuse.” Their 2021 study shed some light on recent trends in workplace harassment that the ongoing global pandemic has shaped. Overall, workplace bullying incidents are on the rise. 30% of workers in 2021 claim to be victims of workplace bullying, compared to 19% in 2017. In general, remote workers are bullied at a higher rate than others. When we dive deeper into the study, it’s easy to see how workplace bullying & harassment contribute to absenteeism among employees.

Stress & Burnout

A study recently highlighted that 1 in 6 employees who falsely called in sick to work said they did so because they were tired or stressed. There are a lot of factors that create stress & burnout for employees in the workplace; heavy workloads, poor communication, and feelings of lack of appreciation, to name a few. As you can imagine, the pandemic has only contributed to these, with increased personal stress also leaking into the workplace.

Depression/Mental Health

Although they fall under illness in the eyes of many, depression and mental health are such significant contributors to workplace absenteeism that they have their category. Annually, depression is responsible for $44 billion lost in productivity, according to the Centre for Workplace Mental Health. Absenteeism from depression & mental health can be very costly, as it often leads to prolonged periods out of work or reduced productivity. It also varies by occupation and industry.

Family Reasons

The obvious case of absenteeism here is the employee who doesn’t have sufficient childcare or possibly even eldercare. Employees will need time off if their child or parent is sick and needs care. Paid time off or not, at the end of the day, will impact productivity. A 2018 report by Child Care Aware shows that U.S. businesses lose approximately $4.4 billion annually due to employee absenteeism due to childcare breakdowns. You’ve probably heard of the age-old debate around paid maternity/paternity leave, but it will cost you either way.

Disengagement

This is another category that has seen increased instances of absenteeism due to the pandemic. Employers are finding it harder & harder to keep their employees engaged, now more than ever. Without in-person events or collaboration, it’s hard to blame employees for becoming disengaged. According to the CHRC, statistics show that disengaged workers cost the North American business economy over $350 billion annually in lost productivity. Throw a pandemic into the mix and fewer social interactions, and that figure probably looks modest.

Job Hunting

As a result of disengagement or work-related stress/burnout, employees may start to look elsewhere for a job. This can result in lost time & productivity due to job hunting and absenteeism due to interviews. It’s also worth noting that employees who are missing work due to job hunting have probably already gone through phases of absenteeism due to one or many of the other causes mentioned above. The reality is that they are job hunting because they are unhappy at work. The employer takes the hit of lost productivity due to absenteeism and the cost of replacing the employee.

Punctuality

Finally, it’s vital to factor poor punctuality into your research when it comes to absenteeism. Reverting to our definition of absenteeism, we mention “habitual non-presence.” Technically, employees who frequently clock in late, leave early or take longer lunch breaks than permitted are engaging in absenteeism. In fact, poor punctuality in the workplace costs the U.S. Economy over $3 billion annually. It just goes to show those minutes “here and there” add up pretty fast.

Even looking at all of these causes separately highlights the financial impact of absenteeism. When we start to add them all up, it gets pretty scary. The easiest way to portray the cost of absenteeism and its impact on your bottom line is to break it down per employee. According to existing research, absenteeism costs employers between $2,660 & $3,600 per employee every year. In 2020, the number of people who had jobs or were seeking employment amounted to about 160.74 million. That means absenteeism cost the U.S. economy between $427.5 billion and $578.5 billion in 2020 alone.

Presenteeism

It’s hard to talk about absenteeism without discussing the idea of presenteeism. Growing research indicates that the problem of workers being on the job but not producing their usual output can cut individual productivity by one-third or more. Until recently, presenteeism was only used to describe employees who were working while sick. However, with growing research into the topic, we see presenteeism being linked to disengagement and stress/burnout. Presenteeism and absenteeism severely strain your bottom line, and you may not even realize it’s happening.

Impact of Absenteeism on Productivity, Efficiency & Profitability.

Productivity & Efficiency

When an employee is absent, it can have various effects on company output. Coworkers take on the responsibility of making up for the lost productivity of the absent employee. In turn, they run the risk of falling victim to stress/burnout and engaging in absenteeism, making it a vicious circle. Managers take on the burden of improving time management and have less time to focus on other essential business functions.

For specific industries, absenteeism can also cause an increase in workplace accidents. Employees may need to operate machinery or carry out tasks that they do not feel comfortable or qualified to do. There is also a risk of overworked employees creating workplace safety issues. A nurse may be forced to work two shifts back to back to cover for a sick colleague. Regardless of how well-trained and competent that nurse is, asking them to work when they are physically and mentally overloaded can result in poor judgment and mistakes. (Check out our recent Nurse Scheduling blog post if you’d like to see how you can avoid this issue!) When employees are forced to deal with increased labour, it impacts the entire organization. Coordination problems increase, and productivity will likely decline if replacement workers are less skilled than the absent employees.

Profitability

Absenteeism can directly impact profitability in two ways;

1 – Increased Costs

When absenteeism is a problem for an organization, they typically see an increase in overall labour costs. These costs may come from increased overtime pay or the need to hire contractors to fill the gap of absent employees. At the same time, they may be experiencing decreased productivity, as mentioned above. Revenue fails to increase, and increased costs reduce profit margins unless revenues increase.

2 – Reduced Output

Absenteeism can decrease profitability if employees with specific roles aren’t present. Employees who sell services or build/deliver a product — such as manufacturing, software engineering, consulting, or sales workers — have less time to hit their goals when absent, potentially decreasing revenue.

We know how important your bottom line is. We’ve developed a Cost-Benefit Analyzer that you can use to see how much money you’re losing from scheduling issues like absenteeism, as well as overtime, payroll errors and staff turnover.

How to Reduce Absenteeism

So, you know what absenteeism is, what causes it, and its impact on your business. Now what?

The impact of absenteeism is felt directly by the entire organization, putting pressure on productivity and profitability. Managers can directly impact organizational performance and employee morale by discovering and addressing the root causes of absenteeism and making strides to address those issues.

Here are some of the things you can do:

Develop an Absence or Absenteeism Policy

The first step is to develop and implement an airtight absence policy to get a grasp on the problem of absenteeism and take control. This sets companywide standards and gives employees a clear understanding of what is expected of them. When establishing your policy, clarity is the golden rule. There should be no ambiguity or loopholes that employees could take advantage of, and employees should know precisely what constitutes absenteeism.

Your absenteeism policy should include:

• Definition & examples of absenteeism
• The method used for tracking attendance (if you have one, which you certainly should)
• An overview of the disciplinary action toward attendance infractions
• Standards on punctuality, breaks and check-in/check-out
• Examples of excused, unpaid absences such as bereavement & unavoidable emergencies
• Difference between approved, paid absence vs. unexcused absence
• Details on paid leave, and a straightforward procedure for requesting time off

Once your policy is in place, ensure you communicate it with your employees. Also, check with them that they understand everything. It is also important to continually review and update your absence policy in line with business needs. In fact, you may even want to consider implementing positive reinforcement of attendance. Something as simple as recognizing excellent attendance creates ideas of what is good behaviour before absenteeism becomes an issue.

Invest in Communication, Motivation & Leadership

Without a doubt, the best way to keep employees motivated at work is to put time into employee communication, motivation, and leadership. Communication is critical, particularly in the world of remote working. Employees can feel alone and unsupported without enough communication from management. Everything from how you communicate to how often you communicate is essential and should be considered.

Incorporating motivation into the workplace is pretty straightforward and effective in improving productivity. Find out what motivates your employees, show appreciation for them and their work, and encourage stress relievers such as vacation days. By promoting vacation days, you can effectively make absenteeism something you can control. You get a notice for when employees will be absent and can manage your employees effectively to cover their workload.

Address Workplace Bullying

Similar to how important it is to establish an Absence Policy, it is also vital to develop a code of conduct around workplace bullying & harassment. Here are actions you as an employer can take to discourage workplace bullying actively and, in turn, reduce absenteeism:

• Educate your staff on all aspects of bullying; (what constitutes bullying, what to do if they are the victim, what to do if they witness it, etc.)
• Ensure your anti-bullying policy is up to date and that all staff are aware of and familiar with it
• Train H.R. managers to deal with bullying complaints.
• Educate managers & employees on how to recognize bullying in the workplace
• Provide information on support groups, counselling, and other helpful resources
• Once bullying has been brought to your attention, acknowledge and act upon it ASAP

The last point here about acknowledging and acting on bullying incidents is undoubtedly the most important. As an employer, you can have all the policies and procedures you want, but they are useless unless you enforce them correctly. Employees become aware of what they can and cannot get away with in the workplace, so if you don’t act on all bullying complaints, they will begin to exploit the system. Not only that, but when victims see managers and employers ignoring the signs of workplace bullying, they feel unsupported. They will likely continue to engage in absenteeism at an increasing rate.

Be Flexible

As an employer, it’s essential to recognize that employees have a life outside of work. In today’s world of work, employees are calling for a better work/life balance, and the days of a strict 9-5 are slowly dying out. There are many ways to be a more flexible employer, and your employees and bottom line will thank you.

Flexible Work Locations

Although it will differ for different roles & industries, giving your employees a choice to work from home is a big step in the right direction. There are lots of studies that back up the idea that working from home improves productivity. The global pandemic has highlighted this idea, and a recent survey from Prodoscore Research shows 47% year-on-year productivity growth in 2020 when working from home became the norm.

Finally, let’s discuss how flexible scheduling can positively impact absenteeism rates. Flexible scheduling can look very different across industries and organizations. Various industries will allow for much more employee autonomy than others, but we have the research to back up that some form of flexible scheduling will give you results.

Flexible Hours

For some, flexible scheduling might mean that employees work set days (Mon-Fri) but have no rigid/set daily hours. By allowing your staff some freedom and flexibility with their hours, you are showing them that you trust them and support a move towards a better work/life balance. Giving employees this little freedom to adapt their work around their personal life reduces absenteeism and employee turnover. A study from the International Workplace Group found that 80% of workers would choose a job that offers a flexible schedule over those that did not.   

For others, flexible scheduling needs to be more structured than we’ve described above. You can achieve this with shift scheduling software features such as self-scheduling or shift bidding. Celayix software also includes the powerful Find Replacement feature, which can help you manage no-shows in minutes.

Self-Scheduling

Self-scheduling is where a scheduler creates open shifts and lets employees select which shifts they can work. Depending on your industry, self-scheduling is a very effective way to put the power in the hands of the employee while still making sure business needs are met. It allows employees to choose their shifts based on their availability on a first-come, first-served basis, allowing them to achieve that work/life balance. For employers, self-scheduling also saves time in creating shift schedules, as all that needs to be done once all shifts are filled is to confirm everything with everyone. Any shift scheduling software worth its salt will also allow you to automate this. You save time, and absenteeism will decline as employees can “opt-out” of shifts that don’t suit them. It is a win-win situation.  

Shift Bidding

Shift bidding is a process whereby one or more employees can express interest in working an open shift. It is slightly different from self-scheduling in that employers can select available shifts they want employees to “bid” on. The scheduler chooses which employees will be invited to bid, reviews the bid result and assigns the shift to the best-fit employee. Although the process differs from self-scheduling, the effects on absenteeism will likely be similar due to employees feeling that sense of autonomy when choosing their shifts.

Disassociate your company from absenteeism

Absenteeism is a minefield of different causes, costs, and effects. Whether you know it or not, you are likely throwing money away by not addressing it upfront in your organization. It is unlikely that you will ever completely eliminate absenteeism, but enforcing some tips above will help you reduce it. If you’d like to speak to one of our Solution Advisors on how Celayix Software can help drastically reduce absenteeism through Shift Scheduling, Time, and attendance, get in touch today!