Employees miss work for a variety of reasons, mostly because of pre-planned vacation time or personal days. While unplanned absences for sickness and other reasons may occur less frequently than planned absences, the impact is often felt in lost productivity, lower employee morale, and drooping profits.
When unplanned absences become chronic, they pose a serious risk to a business’ ability to succeed. There are many things employers can do to decrease the number of sick days or days missed for other reasons, starting with watching for signs of burnout and disengagement. If you believe that employee absences are having a negative impact on your business, it’s a good idea to calculate your employee absence rate to measure the amount of time lost to sickness absence or other absenteeism and get to the root causes of the problem.
How to Calculate your Employee Absence Rate
Below is the formula that is commonly used to measure the amount of time that is being lost to absences in a business:
- Add up the total number of days that should have been worked (or hours for part-time or variable hour employees)
- Add up the total number of days/hours lost to absences
- Divide the number of days/hours lost by the number that should have been worked
- Multiply the answer by 100 to get the sickness absence percentage
Depending on where your concerns lie, this formula can be used for an individual employee, for a team or department, or for all employees within the business. Employers may wish to do a separate calculation for sickness related absences versus family leave, short-term disability leave, etc. but it can also be helpful to understand the combined employee absence percentage.
What is the impact of absenteeism at work?
According to the Bureau of Labor Statistics (BLS), the average absence rate for full-time employees is 2.9 percent. Absenteeism can get in the way of overall organizational performance for three main reasons:
- Loss of individual productivity
Absenteeism affects individual productivity for a very simple reason: when an employee works less hours on a regular basis, they are likely to be less productive. Managers should watch for signs of employee burnout and low morale that can lead to chronic absenteeism.
2. Lost team productivity
When individual team members miss a lot of time at work, their teammates are left to either wait on the missing work or try to make up for it themselves. Either way, this results in lost team productivity. While many managers attempt to make up for employee absences by offering overtime to other employees or supervisors, on average, co-workers are 29.5 percent less productive when covering for absent employees and supervisors are 15.7% less productive (SHRM).
3. Decreased profits
Employee absences can reduce profit margins in two ways:
-Increased costs for overtime pay or contract workers
-Decreased revenue when employees who generate revenue are out. For example, sales representatives and workers who provide services for a fee or who build or deliver products.
The bottom line is that absences directly affect individual performance, team productivity, and overall productivity and profitability. HR leaders can improve organizational performance and employee morale by identifying and addressing the root causes of absenteeism and creating a strategy to address those issues.
Not excited about employer laws? That’s okay; we’ve got you covered through HR outsourcing! When you partner with Makai HR you can get on with the business you are trying to grow while we take care of your employee needs from payroll to taxes, health insurance/benefits and worker’s compensation. You also gain peace of mind that you are compliant with all of Hawaii’s employer laws (if you’ve ever looked you know that the list is very long and changes happen). When choosing a PEO to partner with, there are many things to consider including cost, services, and technology solutions.
With the cost of doing business in Hawaii at record highs, we know how important it is to keep labor costs in line with revenue. Our plans are priced competitively and include value-added services like time-in/time-out systems. Our three tiers of PEO service plans are tailored to the size of your business and specific needs. We offer a 100% paperless solution which means that your employees can manage their needs through a computer, tablet, or phone. We can truly improve your employees’ work benefits while freeing you up to operate your business.
What are you waiting for? Companies that partner with a PEO benefit from 7-9% faster growth, 10-14% lower employee turnover; and they are 50% less likely to go out of business. Contact us today to get started!