Absenteeism is costing South African businesses thousands of Rand every month. But how do you take on the challenge of mitigating this cost when employees don’t even have to pick up the phone anymore to call in sick? Today, skipping work can be as simple as sending a brief text or email message to your supervisor. This, and the costs associated with absenteeism, can be better managed says Ouch! Founder, Kevin Howell.
According to Kevin Howell, Founder of Time and Attendance firm, Ouch!, the simplicity of communication in today’s workplace, brought about by modern technology, offers numerous benefits, but that simplicity can come at a cost in the form of lost productivity and other consequences. Yet in an age of obsession with data, many companies still don’t track employee absences, nor do they address the reasons behind them.
Absenteeism is defined as an employee's intentional or habitual absence from work. This definition includes being away from work as well as taking sick days when well, arriving late and leaving early, taking extended tea or lunch breaks, attending to private business during working hours, or unexplained absences from the workstation or the employer's premises.
According to the most recent data on the cost of absenteeism, the Momentum Effective Employee Index published in September 2018, local companies lose an estimated R25bn per year to absenteeism. The index research estimated that around half of this can be considered as ‘excessive absenteeism’ meaning the amount of days employees are absent is over and above the reasonable amount expected for companies based on their size.
Despite the cost impact of absenteeism, many companies fail to track it and are therefore missing out on the opportunity to mitigate the amount of money they are losing. “In my experience, small- and medium-sized businesses, blame a lack of resources while the big corporations seem to think that they can carry the cost,” says Howell. He adds that companies also avoid following up on absences because it is rarely a pleasant exercise.
He stresses, however, that at some point, the conversation has to take place. “When looking at the cost of absenteeism in the broader sense, i.e. the overall effect on our economy, it becomes clear that this mindset needs to change. Given the current economic climate, few employers can afford to continue to overlook the direct and indirect costs of absenteeism.”
The direct costs of absent employees include wages paid to absent employees, the cost of replacement or temporary workers, and overtime pay for employees filling in. Most employers believe that indirect costs are limited to lost productivity but they also include reduced quality of goods and services due to ‘fill-in’ labour that is likely to be less productive or knowledgeable than the person they are filling in for and low morale among employees who have to witness continuous absenteeism and carry the slack for absent employees. Indirect costs also include the time that managers lose to find replacement workers and attending disciplinary measures for the habitually absent employee.
In the end, says Howell, day-to-day business operations are also affected. “The average rate of absenteeism is 4% to 5% which represents a two to three-week absence per employee on an annual basis, resulting in a substantial loss of productivity and efficiency.”
In tackling habitual absenteeism, you need to start with why there is an empty chair in your office in the first place. The causes of absenteeism are varied, says Howell, but he asserts that many absences aren’t due to illness, noting that personal commitments, family obligations, stress and lack of motivation play a greater role in absenteeism than the odd cold or sprained ankle. When looking at the broader definition of absenteeism that includes lost company time even when an employee has turned up for work, a lack of employee discipline can also be added as a cause.
To ensure best practices and effective monitoring, companies need to take a strategic approach to address absenteeism. “This typically starts in the HR department where we recommend putting a strategy in place to foster a culture of employee discipline within the workforce along with additional pro-active measures such as physical and mental wellness programmes for employees,” Howell explains. “Ultimately though, best practice would be to implement Time and Attendance tracking and management system. Day-to-day responsibility for managing Time and Attendance will usually fall to frontline managers. But they may not have the right tools at their disposal and as a result, may not take actions such as following up on why an employee was absent.”
Ouch! has developed innovative biometric and Time and Attendance management products, including a mobile app, that manage employee attendance. This provides your company with a structure that promotes employee discipline and ultimately will save you money on your salary expense.
“Why not harness modern technology to track Time and Attendance as we have for every other aspect of our business,” Howell questions. A biometric employee clocking system that is linked to payroll software and provides regular reports on attendance is the best place to start. These tools give frontline managers and team leaders a platform for collecting accurate Time and Attendance data that can provide them with an accurate measurement of the level of employee discipline within their workforce.
“From here they can start to tackle the causes of absenteeism and start to enforce employee discipline. It can take as little as a month to start seeing this reflected in payroll savings,” Howell concludes. “From there the benefits start to extend to better morale and increased productivity. It’s a no brainer – harnessing technology to better manage absenteeism is a win-win.”