Measuring the cost of staff absence

Measuring the cost of staff absence

Sick note for staff absence employee absence

Staff absence costs the UK over £14 billion each year. That’s £554 per employee!*

Staff absence or employee absence is more than just an empty chair. It has a significant cost to any business, can have a huge impact on the competitive advantage too in terms of being able to acquire, serve and meet the needs of customers . And when above a certain ‘acceptable’ level, it’s a critical issue that must be addressed through good robust measurement and appropriate change and engagement programmes.

Measuring, rather then purely managing employee absence has many positive contributions to your business. By improving the lives of sick employees as well as those covering for them, it can directly add to the bottom line by improving productivity as you reduce staff and employee absenteeism and better understand your workforce needs and issues.

Don’t focus on staff absence alone

It’s risky to focus in on absence on it’s own without first also considering the wider context of employee engagement and the significant part this has in whether employees want to be at work or not depending on the level of illness of course.

Focusing on making sure employees are present and at work as much as possible, without considering why they’d rather actually be absent, (if it’s not down to genuine illness of course), can certainly lead to more staff attending work more often, but conversely reduce the quality of their work when there.

So, first, identify and diagnose the types of absence your company is experiencing. Differentiate between long and short term absences in order to identify their underlying causes. Implement a genuinely positive return to work interview process, that’s more focused on and supportive in finding out how to support the employee and if indeed they are well enough to be back at work, as well as using it as a real opportunity to assess if there is anything else underlying in or out of work that may be impacting the employees ability or motivation to be at work.

One way to achieve accurate absentee rates measurements is through the Clock-in systems which provides a  top level measure. However, these systems aren’t the norm nowadays and so if you wish to gain a more in-depth understanding of your company’s absenteeism, more complex measures do exist and are worth exploring.

  • The crude employee absence rate – This is the time lost due to sickness absence as a percentage of contracted working time. Its advantage is that it tells you what proportion of time you get from your employees. It is also quite simple to calculate and can help with costing. Absence rates can be measured by staff group, department or function, which can help pinpoint problem areas or even people. Its major drawback is that absenteeism may be because a small number of employees are absent for long periods or because a large number are absent for short periods. Absence rates can look stable while absent employees may be increasing and the length of absence may be falling, giving rise to false conclusions.
  • Summary measures – Summaries can be calculated for individual workers, groups of workers, age groups, gender – or for the entire workforce. These can then be used to identify the most frequently reported causes of absence, identify patterns; identify individual levels and give trigger points for management intervention, as well as providing comparison between departments, staff levels or benchmarks against other companies. Both frequency and length of absence are measured.
  • Bradford Scores – When most staff work shifts, the disruption of frequent short term absences is usually greater than that of intermittent long term absence. Bradford combines measurement of absence frequency and duration to measure whether an individual’s sickness absence record comprises few, or many, spells of short or long term. They can indicate trends in sickness absence and are another way to provide trigger points.
  • Online employee absence management systems – These vary but, in general, all help identify employee absenteeism patterns and trends; some automatically calculating absentee rates for individuals, as well as highlighting commonly reported causes and trigger points.

However you do the calculations about how many employees are absent, it’s worth noting the difficulties are in actually finding out exactly why. How many were genuinely ill? Asking directly obviously won’t work. Another idea would be to hold an anonymous survey in which you ask if respondents have ever called in sick for reasons other than being ill?

Next, ascertain the reasons. If it is made clear that the point of this survey is to improve the work place, employees are usually happy to confess. They want change for the better just as badly as you. Exit interviews are another useful tool to uncover unpalatable truths about your working environment as well as the already suggested return to work interviews.

The sheer cost of employee sick days has such an impact on a company’s ability to serve its customers and its overall competitiveness, it’s critical that you review and manage how you measure, analyse and improve it.

A simple tick or a cross in a column will no longer suffice. Effective employee absence reporting and measurement means you know exactly what you’re up against. This knowledge can lead you to early interventions on health, bullying or engagement issues, which in turn will dramatically reduce employee absenteeism levels – and give you a healthier bottom line.

It helps to understand if you have an unusually high or low rate as a businesss and some sectors and industries can differ significantly. PWC ran a research project in 2011/13 and have kindly agreed to let us share this excerpt on number of days abscence per sector and you can access the full article here.

If you know some headline figures of your companies current staff absence rates and what it costs you when they are not there, as well as the cost of temporary replacement cover, you can work out what the total annual cost impact is and how much you can save by improving it, using our free Cost of Absence Calculator. Check out the Cost of Attrition/Turnover Calculator one too if you have time or want to see how much your turn over rate is costing you at its current level.

*Source CIPD, 2015 Absence Management survey

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Engage & Prosper is a UK based privately owned Employee Engagement Consultancy and Social Enterprise, on a mission to help organisations develop a highly productive and fulfilling workplace culture, with their people, through enhanced employee engagement strategies, fabulous and effective internal communications platforms and tailored reward and recognition programmes.

For more information on Engage & Prosper or to discover how we can help you achieve your organisational and people goals please call +44 (0) 330 223 0464 or find out more at www.engageandprosper.com