News You Can Use: Absent employees cost companies more than one-third of payroll each year

It’s no secret that missing workers cost companies millions of dollars in lost revenue each year. But exactly how much does the combined cost of absenteeism affect your business?

According to a new survey by Mercer, “The Total Financial Impact of Employee Absences,” the total cost of absence can equal as much as 36% of payroll. Of that 36%, nine percent accounts for unplanned absences. Planned absences, like vacations and holidays, average 26.6%.

For even a mid-sized business, this unplanned absence can account for as much as $4.5 million dollars per year.

“Employers tend to focus their energies on managing healthcare costs because the dollars are easily measured,” said George Faulkner, principal and absence management specialist at Mercer. “But this new survey suggests that absences cost employers more than half the cost of healthcare, a startling number and a call to action for all organizations to get a better handle on this often unchecked cost.”

Unplanned absences like casual sick days result in the highest per-day productivity loss, 21% versus just 15% for planned absences like vacation days. On average, employees have 5.3 unplanned absence days per year.

“The cost of absenteeism is often misunderstood, seen as un-measurable, or dismissed as negligible,” said Toni Kellam, absence management consultant at Kronos, the company that commissioned Mercer’s survey. “[T]his new survey shows is that employers can control labor costs and increase productivity by better tracking and controlling their absence-related expenses and minimizing unplanned absences.”

In order to help manage unplanned absences, 36% of survey participants use a PTO bank rather than a tradition TTO plan for nonunion hourly workers. In contrast, only 29% use PTO banks for salaried workers.

Fourteen percent of employers don’t provide paid sick leave for non-union hourly workers (excepting disability claims).

Nearly 500 employers participated in the survey.