Week 2 Discussion

Employee Absence, Productivity Loss, and Costs

There are various reasons an employee may take a leave of absence. The absence could be unintentional, intentional, or habitual. In addition to recognizing the normal reasons for employee absence, it is also important to understand how low employee morale or disengaged employees can impact the absenteeism rate and whether this should be considered a part of the analysis.

The HR professional should strive to accomplish four important objectives:

Determine the reason for the high absenteeism rate.

Evaluate the loss of productivity.

Assess the costs.

Develop an action plan.

Below is an explanation and chart of how to calculate the absenteeism rate and costs.

Absenteeism rate = [Absence days/Average work force size] × working days, or

Absenteeism rate = [Hours missed/Average work force size] × working hours

1. Compute total employee hours lost to absenteeism for the period.

2. Compute weighted average wage or salary/hour/absent employee.

3. Compute cost of employee bene�ts/hour/employee.

5. Compute total compensation lost to absent employees (1. X 4a. or 4b. as applicable).

6. Estimate total supervisory hours lost to employee absenteeism.

7. Compare average hourly supervisory salary + bene�ts.

8. Estimate total supervisory salaries lost to managing absenteeism problems (6. x 7.).

9. Compute the costs of substitute employees.

10. Estimate the costs of reduced quantity or quality of work outputs.

11. Estimate total costs of absenteeism (∑ items 5, 8, 9, and 10).

12. Estimate the total cost of absenteeism/employee (item 11, 4 total number of employees).

There are direct costs and indirect costs associated with each employee absence that negatively impact the organization such as paid time off, overtime, the use of temporary or contingent workers (replacement costs), and departmental and organizational productivity loss, especially if the employee absence is not expected or planned. It is the responsibility of the HR professional to have a sophisticated way of tracking employee absence, loss of productivity, and the cost to the organization.

Additional Materials

From your course textbook, Process Metrics and Measurement Complete Self-Assessment Guide, review the following chapters:

Criterion #4: Analyze

Criterion #5: Improve

Criterion #6: Control

From the South University Online Library, review the following articles:

The Relationship between Chronic Conditions and Absenteeism and Associated Costs in Canada (https://www.thecampuscommon.com/library/ezproxy/ticketdemocs.asp? sch=suo&turl=http://search.ebscohost.com/login.aspx?direct=true&db=psyh&AN=2016- 42743-006&site=eds-live)

Employee Absence Affects Costs, Productivity (https://www.thecampuscommon.com/library/ezproxy/ticketdemocs.asp? sch=suo&turl=http://search.ebscohost.com/login.aspx? direct=true&db=bth&AN=100539046&site=eds-live)

Minimizing Costs from Employee Absences (https://www.thecampuscommon.com/library/ezproxy/ticketdemocs.asp? sch=suo&turl=http://search.ebscohost.com/login.aspx? direct=true&db=edb&AN=102010689&site=eds-live)

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