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How much does absence cost you?

By rotide
Created 24/07/2008 - 01:00
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A quarter of companies see measuring absence as unimportant and the vast majority of organisations fail to measure the cost to their business beyond the wage bill for those who are sick, according to a survey.

The Absence Management - 10 years on poll, which was undertaken 10 years after the initial survey commissioned by Midland HR back in 1998, found that just 10% of companies went beyond this simple measure, despite the fact that three-quarters agreed the real cost should be measured in terms of lost revenue. One third (33%) failed to assess sickness costs at all, the poll found.

In 1998 just 7% measured sickness in terms of lost revenue while 61% thought this was the ideal method.

"The CBI this year estimated the average annual cost of sickness at £517 per employee, based on the numbers of days of sick leave," said Lawrence Knowles at Midland HR.

"However, when indirect costs such as reduced client satisfaction and productivity losses were taken into account the CBI estimated that this rose by another £263 per employee to £780.

"In the commercial sector, this has a huge impact on profitability and the bottom line, while in the public sector, it inflates the cost of delivering services," he added.

"A big problem is that the vast majority of UK business leaders are still very much in the dark over the real cost to their organisations of absenteeism."

The research also discovered that business leaders believe half of all absence is bogus - contrasting with the CBI's more conservative estimate of 13% - with 69% saying they thought some people used paid sick leave as an extension to holiday allowance. This was up by 1% from 1998.

A big problem is that the vast majority of UK business leaders are still very much in the dark over the real cost to their organisations of absenteeism

But the vast majority of companies believed it was in the interests of staff that absence was recorded and 87% said tracking sickness was important when evaluating workplace efficiency.

And 30% monitored sickness levels all the time - compared to 21% in 1998 - and a further 43% do so either quite or very frequently.

"Organisations must be careful not to become complacent about absence monitoring and underestimate the effect it can have on a business' productivity and profitability," said Aaron Ross, managing director at people solutions provider FirstCare, which commissioned the research along with Midland HR.

"The value of accurate, real-time reports should not be underestimated and are the solid foundation necessary to gain a true picture of the root causes of absence within an organisation."


Source URL:
https://www.newbusiness.co.uk/articles/hrpayroll-advice/how-much-does-absence-cost-you