A recent report from the Institute for Public Policy Research (IPPR) shows that for smaller businesses of 50 or fewer employees, absenteeism costs £547 per employee annually. And that is just in sick pay. It does not include other hidden costs.
What are the hidden costs for employers when people are off sick?
When an employee is absent, the employer has to pay their sick pay. But there are less obvious costs as well and you should not ignore these.
- Admin costs for HR or managers to monitor and record absence figures and to handle absence-related tasks (collecting the certification; holding return to work interviews, etc)
- Training costs to support colleagues or temporary staff to be able to pick up the absent employee’s work;
- Cost of temporary replacement (either direct recruitment/agency costs, or “lost opportunity” costs for colleagues who are taken off other work;
- Lost productivity – not just loss of the absent employee’s productivity, but also the effect on the morale of the rest of the team;
- Customer impact – particularly if the absent employee is in a customer facing role, there may be a decrease in the service given to clients
- Overtime payments – if you have to pay overtime to colleagues to get the work done (or if you allow them to accrue further holiday via a Time Off In Lieu scheme).
This might all add up to a considerable proportion of your annual salary bill.
What about the costs when sick people continue at work?
Where an employer only pays Statutory Sick Pay (which many small employers feel is all they can afford to pay), then employees may be reluctant to take time off sick, for financial reasons. You might think this is a benefit for your business, but the result of this “presenteeism” (employees continuing to work whilst unwell) is that they are probably not being very productive while they are showing up. That will have a knock-on effect on quality of work; ability to meet deadlines; team morale; customer experience.
And this assumes that their presence does not mean they pass on their germs to all their colleagues around them. If an employee is contagious and passes it on to others, you could be facing a tranche of sickness absence which can have a hugely detrimental impact on your business.
This has become a real issue for UK employers. The potential Employment Rights Act which the Government is proposing to bring in will address this in part by requiring payment for sick pay from Day 1 of sickness (currently SSP only kicks in from Day 4). This helps with the issue of presenteeism, but will increase costs for employers.
How does this affect your business performance and growth?
The financial impact of absenteeism on your business is the easy bit to calculate, but what about other indirect consequences?
Some of the other impacts of any employee absence are:
- Lower productivity (as discussed already);
- Projects delayed, or deadlines missed and customer response times extended;
- Loss of expertise, particularly in a smaller organisation which might only employ limited knowledge of a specific skill, project or client;
- Team morale due to increased workloads or restructuring (even just temporarily);
- Customer service (and relationships) may suffer;
- Your managers may have to focus on managing the fall-out from the absence, rather than proactive strategic initiatives.
What can staff absence tell you about your organisational culture?
It is always worth spending time analyzing absence and the reasons. Some of the potential issues you might want to investigate include:
- Is there higher absence in one particular team? This might indicate poor management, or conflict within the team, or high workloads.
- Is absence higher at a particular time, or season? This might indicate that there is a problem with meeting deadlines; or lack of resources; or higher workloads due to too many people on holiday all at once.
- Are there any specific issues causing low morale? Have you got some hidden bullying, or harassment going on? Or is a team overloaded, or understaffed?
- Do you need to think about the environment – allergens; outdated equipment; temperature control; safety.
What can businesses do to tackle high absenteeism?
First advice might be to start to record and monitor absence figures and to analyse them in more detail to uncover potential areas that might be contributing factors.
Secondly, it is always helpful to have clear, understandable policies and processes around absence. Your employees need to know how and when to report absence; what the financial impact will be; the support available to them. Your managers need to understand what the rules are and how they can implement them.
Leading on from this, your managers also need guidance and training on how to manage staff issues arising from absence and how to communicate with and support sick staff (and colleagues who need to pick up the work).
It helps if you can provide clear signposting to help and support available for a whole range of issues, from mental health to financial concerns; wellbeing and how to keep well; safety from stigma and finger-pointing, discrimination and bullying for perceptions around sickness.
For further information, read my earlier blog about managing long-term sickness absence or contact me to arrange a free, no-obligation discovery call.
