What does absenteeism cost a company? Well…and presenteeism?

Business Management

Published: 2019/1/31 | Updated: 2023/5/19 | Carlos Quintana Workforce management Employee cost

What does absenteeism cost a company? And presenteeism?

Table of Contents

The large scale costs of absenteeism and presenteeism

Measuring the costs of absenteeism and presenteeism is a challenging task. In fact, there’s no magic formula to do so. As far as absenteeism goes, many people have tried to simplify the process by adding together the wages and administrative expenses associated with the behavior. Along those lines, several companies and experts use the ‘absence rate’ as the ideal variable to identify and measure absenteeism.

While this approach has been useful, it is also incomplete, as it doesn’t take into consideration important indirect costs that often are directly connected to presenteeism, such as reduced productivity, low morale among employees who have to work more, and management time wasted on disciplinary actions and finding replacements.

Considering the above, it is easy to find significant differences among some of the data on the costs of absenteeism and presenteeism. For instance, a recent report elaborated by the Employer Assistance and Resource Network (EARN) states that “each year workers in the U.S. miss more than half a billion work days,” which according to the Bureau of Labor Statistics results in financial losses of 40 billion USD per year.

More comprehensive approaches that dig deeper into the costs generated by absenteeism and presenteeism reflect higher numbers. The Centers for Disease Control and Prevention (CDC) reports that “productivity losses linked to absenteeism cost employers 225.8 billion USD annually in the United States, or 1,685 USD per employee.”

In spite of the fluctuations seen in available data, there is one thing everyone seems to agree on: the costs of presenteeism are much higher than the costs posed by absenteeism. According to Karen Higginbottom, a freelance journalist who covers workplace topics, the cost of presenteeism can be ten times greater than the cost of absenteeism. Similarly, Professor Cary Cooper, President of the Chartered Institute of Personnel and Development (CIPD) states that in the UK “presenteeism has an impact on organizations with a cost per employer per annum of £605 (presenteeism) and £335 (absenteeism).”

Needless to say, the price to pay for presenteeism is extremely high. From Professor Hesan’s book on the subject, the following are the annual costs that companies have to bear in the US, Australia, and Singapore as a result of sickness presenteeism:

US: Over 150 billion USD a year
Australia: 18 billion USD a year
Singapore: 2.7 billion USD a year

Along those lines, one of the surveys carried out by Professor Hesan found that in Singapore, an employee (50 years old or under) earning an annual salary of 27,000 SGD would cost the employer nearly 920 SGD per year if he or she reported to work despite having a headache. “This means that approximately 3.4% of the employee’s annual salary will be unearned due to this health condition.”

Similarly, a survey carried out in 2017 by VitalityHealth, a UK-based medical insurance company, highlighted the growing concern over presenteeism in the workplace. The survey estimates the average rate of presenteeism at 27.7 days per year, arguing that “the combined economic impact of this ill-health related absence and presenteeism currently sits at a £77.5 billion a year for the UK economy.”

What is absenteeism in the workplace and why does presenteeism occur? What does “assiduity at work” mean?

When Neo meets Morpheus for the first time in the movie The Matrix, he needs to make a crucial choice: he either stays in his fake world and believes whatever he wants, or he takes a ride to wonderland to find out how deep the rabbit hole goes. Choosing to stay at home or attend work when feeling ill isn’t that dramatic, of course. However, once your alarm is off, you need to deal with the matrix of assiduity.

Taking the definition from Eric Gosselin, assiduity is a person’s desire and ability to go to a location where he/she is expected to be. When applied to the work environment, that concept traditionally involves going to a workstation according to an established schedule. However, the idea that presence ensures performance is as fake as Neo’s world.

According to Gosselin, management of assiduity at work would not force presence at all costs, but rather the worker’s presence or absence when the parameters of the situation call for it. And what are those parameters? Let’s take a look at some of the variables that cause absenteeism and presenteeism in the workplace.

What are the costs of absenteeism at the workplace?

What causes employee absenteeism in the US or in the UK?

Unplanned absenteeism is a behavior attributed to two main factors: the ability to attend and the motivation to attend. With that in mind, let’s take a look at some of the most common causes of absenteeism, taking the U.S. as an example according to the EARN report mentioned above:

Fatigue.
Overall weakness.
Doctor or therapist appointments.
Medical treatments.
Transportations problems.
Caregiving responsibilities for spouses, child or parent with a disability.
Low morale.
Problems performing job tasks to supervisor’s satisfaction.
Communication problems with coworkers and/or supervisors.
Difficulties arising from activities of daily living such as using the toilet or eating.
Excessively authoritarian management styles.

In the UK, the following are the findings of the 2018 CIPD’s Health and well-being report regarding short and long-term absences in the workplace:

The most common causes of short-term absences are:

Minor illness (81%).
Stress (8%).
Musculoskeletal injuries (6%).
Mental health (2%).

The most common causes of long-term absences are:

Acute medical conditions (23%).
Mental health (22%).
Stress (22%).
Musculoskeletal injuries (19%).

While minor illnesses and acute medical conditions remain leading causes of absenteeism, the impact that common mental health conditions and stress is having on this phenomenon has significantly increased in the last years. In fact, 55% of companies in the UK reported common mental health conditions in 2018 (compared to 41% in 2016). Likewise, 37% of companies have seen an increase in stress-related absences (compared to 31%).

What causes presenteeism?

To understand the causes of presenteeism one should ask a very simple question: why do employees choose to go work when they don’t feel well? Part of the answer to that question is simple: people are fearful and feel insecurity and uncertainty about the future. The other part is a bit more complex, and is “continually being shaped by individual and organizational factors such as peak periods, pressure from colleagues and managers, and an individual’s own motivation and assessments of the impact of their absence on clients and colleagues.”

According to Professor Cary Cooper, presenteeism arises from a feeling of fear and uncertainty about the future. While from 2010 to 2016, that fear was produced by the economic recession, nowadays people are constantly asking questions like “will I have a job?” or “will Brexit lead to job loss?”

All of those questions and fears, as well as the individual and organizational factors mentioned, push people to a behavior defined by the following logic: “I better turn up, it’s better that my HR record shows that I am there, I am present… whether I am delivering or not, that’s irrelevant, I’m there,” explains Professor Cooper.

While fear and uncertainty can be considered the main drives behind presenteeism, the following are some of the most common reasons and excuses people use to go to work when they are unwell:

A sense of duty or acting as a ‘good soldier’ who always has to be present.
Fear of being stigmatized as someone ill.
Fear of compromising job security.
Feeling irreplaceable or essential for the company.
Can’t stand staying at home.
Complying with the limits of time off allowed by the company.
An imperious need to catch up and take care of unfinished tasks.

Even though these reasons are quite different, all of them flourish under the same roof: an unhealthy corporate culture. This topic is more prevalent than ever, especially as a focus on workplace health and safety continues to grow. As stated by Dr. Roxane L. Gervais, a Senior Psychologist at the Health & Safety Laboratory in the UK, the choice that unfit employees make of going to work “would be reduced or eliminated if they knew that the required support from the organizations and their managers/supervisors was available in managing not only their workload, but their health and wellbeing.”

This infographic illustrates the real damage absenteeism and presenteeism can cause within an organization.

Feel free to use this infographic on your own site. Please use the following code:

<a href="https://beebole.com/blog/cost-absenteeism-presenteeism/"><img style="width:100%;" src="https://beebole.com/blog/wp-content/uploads/2023/02/Absenteeism_infographic-new-logo.png"></a><br>Infographic on Employee Absenteeism By Beebole <a href="https://beebole.com/blog/cost-absenteeism-presenteeism/">Employee Absenteeism and Presenteeism Costs</a>

How can absenteeism be prevented? A focus on motivation

As mentioned before, absenteeism takes place when an employee doesn’t have either the ability or the motivation to attend work. While companies have limited influence on the employee’s ability to attend, they can certainly have a tremendous impact in the motivation of their employees. Kaiser Permanente argues that companies can still minimize absenteeism by implementing a health-related strategy with the following variables:

Prevention – Setting up timely screenings of employees.
Condition management – Adding plans that allow employees to stay on top of chronic conditions.
Employee health engagement – Providing health plans that give employees tools and wellness programs that allow them to take an active role in their well-being.

Regarding the motivational factor, The Encyclopedia of Business in Today’s World states that “there is an important link between absence and factors such as poor interpersonal communication, job boredom, and poor supervisory skills.” Because of that, the following are some of the strategies that companies have been implementing to reduce absenteeism in the workplace:

Adopting measures to improve employees’ quality work of life and job satisfaction that allow employees to meet their physical and emotional needs.
Establishing a high performance work culture aimed at creating an adequate fit of the employee within the organization.
Flexible work practices aimed at fixing the inadequacies associated with existing arrangements.

how manage absenteeism presenteeism — Our piece of advice for managers.

You can also prevent absenteeism by encouraging attendance. According to HR and management consultant Susan M. Heathfield, companies can implement the following steps to encourage attendance:

Adopt employee time reports that allow you to effectively track the time of your employees and ensure policies across your organization. “You must have a way to track the time people take off from work so that the integrity of your Paid Time Off (PTO) policy, your sick leave policy, and/or your paid vacation policy is ensured,” argues Heathfield.
Commit yourself to managing absenteeism, starting with consistently tracking time.
Enable workplace flexibility whenever possible.
Create rewards and recognition for positive employee attendance.
Provide consequences if an employee fails to attend work in a timely manner.

And how can presenteeism be reduced? A focus on well-being

According to the 2018 CIPD report, 86% of respondents in the UK report observing presenteeism in their organizations. In spite of that, only 25% of companies were taking steps to discourage presenteeism in the workplace (a drop from 48% in 2016). Considering the costs previously mentioned, that 25% difference is alarming to say the least.

To fix this, it is crucial that companies nurture their corporate culture and the well-being of their employees with a management strategy that empowers employees in the workplace. As stated by Professor Cooper,

“gym membership and ping-pong tables aren’t sufficient in terms of developing a well-being culture. A well-being culture is where your line manager gives you control and autonomy over your role and makes you feel valued.”

In line with the above, the book Missing Pieces: 7 Ways to Improve Employee Well-Being and Organizational Effectiveness suggest the following organizational tips for managers willing to forge a well-being culture:

Let your appreciation be known.
Offer support to your employees.
Communicate with respect.
Be open to ways to balance work and personal life.
Avoid work overload.
Encourage participation in decision making as much as possible.
Clarify the roles.

In her article for Raconteur, Karen Higginbottom highlights some successful cases regarding the management of presenteeism. For instance, the law firm Fletchers Solicitors has been able to reduce days lost to sickness by offering flexible working policies and personal resilience workshops that allow employees to identify and manage stress.

Finally, make sure you choose a strategy with a holistic approach that allows you to tackle all the concurrent realities that arise from absenteeism and presenteeism. Likewise, make sure your approach is flexible. As suggested by case studies carried out by Baker-McLearn, organizations should “tailor their solutions for different people, teams and settings and use multiple ways of assessing productivity and efficiency.”

Nobody says that building a well-being culture is an easy task. However, the price of making that effort is nothing when compared to the price a company pays for having high levels of absenteeism and presenteeism.

Tracking employees absences is a must for profitable companies.

Easily manage absences…

All of this probably has you wondering if absenteeism and presenteeism are problems for your business. How would you even know if they were? As noted at the beginning of this post, there is no single formula for measuring these behaviors and their costs, but simply keeping track of absenteeism and productivity can still provide valuable insights.

With Beebole’s absence features you can set quotas and view used and available days off per employee. What’s more, you can track and compare absences for vacations, illnesses, public holidays, or custom classifications in visual reports.

BeeBole Timesheet's absence reports show used and available days per employee, as well as comparisons between vacation, illness, public holidays, etc. — *Absence reports in Beebole*

Is workload balanced? Can tasks be redistributed to ease pressure on employees who need it? Those who don’t use vacation time risk getting burned out, and those who are frequently sick might already be burned out.

If you are looking to track costs of absenteeism and presenteeism, and to work to implement a well-being culture and other initiatives, start by setting clear goals and establishing a baseline of KPIS to evaluate progress.