The true cost of sick leave: $3.4 million?

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You know how many absences your organization has in a year, but do you know what it’s costing? An Aon Hewitt survey found 70% of HR professionals could not estimate the total cost of ill health to their organization.

Absenteeism has almost doubled since 1997, according to Statistics Canada; the current rate is estimated at 8.2% of employees absent on any one day.

While most organizations track absenteeism, the survey found that few actually calculated what those absences were directly costing them throughout the year, despite this being a simple matter of applying each absent employee’s pay rate (plus benefits etc) to the amount of time they were absent and totaling everything up.

However, this does not include the cost of replacing them with a temp, which is necessary for many key administrative roles, or the administrative cost of managing their absence. There are of course also “soft costs” to consider – the effect on morale and the loss of productivity due to other employees having to take on extra work.

An American IT company with 800 workers and a 10.1% absenteeism rate, for example, calculated the annual cost of absenteeism at $3.4m, including loss of morale and productivity.

With absenteeism costs rising across the nation, Canadian companies are looking for new approaches to reducing unplanned absences.

Ways to combat unplanned absenteeism

  • Make allowance for flexible working arrangements and non-medical leave, to allow people to balance their personal life and work without resorting to sick leave. If you find that sick leave rises during school holidays, then consider allowing parents to work from home during these periods
  • Consider giving employees additional days off, as part of their annual benefits, that are specifically for "preventive health care"
  • Hire a nurse - it's easy for employees to call in sick when they can just leave a message with the receptionist. To combat this, some organizations use an outsource agency staffed by health professionals, mostly nurses, which ‘sick’ workers must report to, at which point they are asked questions to verify whether they are truly ill

Tell us your story: how to do you reduce unplanned absence in your workplace?  Leave your comments below…


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  • Anna Thompson on 2012-05-18 1:12:45 AM

    I love the "mental health day" idea, Steve. A friend works in mental health support and they offer up to five days leave for this. I think in a supportive workplace it should be an option because it encourages honesty instead of encouraging people to lie when they need some time to re-energize.

  • Steve Weeks on 2012-05-16 7:35:14 AM

    We give everyone a minimum of 3 weeks vacation for starters. We provide full Medical and Dental benefits. We offer specific days off for bereavement and allow employees to book time off for medical, dental or other important personal appointments (redoing their mortgage etc.). Then for sick days each employee earns 1 day off per month worked to a maximum of 7 days. If they get sick they use up these days. If they go longer than 7 days it either becomes a day off without pay or they eat into their vacation time. We think it is fair and since we implemented this a couple years ago the instances of people calling in sick randomly has gone down. One other thing we do. If someone has been working really hard and just needs a day off (mental health day) we just let them have it, no penalty. We think it helps us have happy productive employees.

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