Absenteeism

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Absenteeism is the term generally used to refer to unscheduled employee absences from the workplace. Many causes of absenteeism are legitimate—personal illness or family issues, for example—but absenteeism can also be traced to factors such as a poor work environment or workers who lack commitment to their jobs. If such absences become excessive, they can adversely impact the operations and, ultimately, the profitability of a business.

COSTS OF ABSENTEEISM

Unscheduled absences are costly to business. According to the U.S. Department of Labor, companies lose approximately 2.8 million workdays a year because of employee injuries and illnesses. The inability to plan for these unexpected absences means that companies hire last minute temporary workers, or pay overtime to their regular workers, to cover labor shortfalls; they may also maintain a higher staffing level regularly in anticipation of absences. According to Matt Lewis, in an article entitled "Sickened by the Cost of Absenteeism," which appeared in Workforce in the fall of 2003, "Three to 6 percent of any given workforce is absent every day due to unscheduled issues or disability claims … To compensate, most companies continually overstaff by 10 to 20 percent to mask lost productivity. That's a colossal cost."

Small businesses are, of course, not immune to such "expenses." There are obvious costs associated with an absent employee, including consequences difficult to measure. The most obvious cost is in the area of sick leave benefits—provided that the business offers such benefits—but there are significant hidden costs as well. The SOHO Guidebook cites the following as notable hidden cost factors associated with absenteeism:

Lost productivity of the absent employee

Overtime for other employees to fill in

Decreased overall productivity of those employees

Costs incurred to secure temporary help

Possible loss of business or dissatisfied customers

Problems with employee morale

The costs associated with absenteeism can be controlled. While scheduled time off for vacations and illnesses is an inevitable cost of doing business, managing things in such a way as to discourage excessive absenteeism is well worth the effort.

DEVELOPING AN ABSENCE POLICY

Many small business owners do not establish...