Absenteeism is costing your business more than you think
Workforce absenteeism is costing businesses millions, and the statistics are shocking. If left unchecked, it can have adverse impacts across a business, as well as signal wider problems, such as workplace health and safety, culture, or stress and mental ill-health to name a few.
‘Chucking a sickie’ is costing Aussie companies millions
Even prior to the pandemic, absenteeism was a costly problem. Recent DHS data shows:
Absenteeism costs, on average, $3,500 per employee per annum.
Employees are taking over 9 days of unplanned absence per annum, with some sectors experiencing absenteeism levels greater than 5% across the entire workforce.
Unplanned absenteeism’s real employer cost is rising since the pandemic and can account for 8% of total payroll costs when direct wages and indirect costs are factored in.
Historically in Australian workplaces, there has been a general culture of ‘entitlement’ when it comes to absenteeism. In fact, a recent DHS survey found that a worker with a 10-day annual entitlement will take around nine days each year, and between 80% to 90% of all absenteeism reported is for sick leave. Meanwhile, short-term absenteeism is the most problematic absence, accounting for 90% of all absence cases, the survey found.
This entitlement mentality has led to a wider, cultural belief across Australian workers that ‘chucking a sickie’ is the accepted practice – but it’s costing businesses millions in lost revenue.
On top of that, there are personal factors, including short- or long-term illness, carers leave and mental health problems. Organisational factors include increased workload, a toxic workplace culture, poor relationships, lack of flexibility, rigid workforce planning, poorly designed or mundane work, lack of management support, and a loss of sense of purpose.
How to flip the script on workforce absence management
On the flip side, research shows that every dollar spent on identifying, supporting and case managing employees with mental health issues yields close to a 500% return in improved productivity through increased work output and reduced absenteeism.
Evidence also suggests that using a centralised absence management program can reduce absenteeism by 25% – 40% a year and even more in some industry sectors. Centralised software not only saves a company money, but it also helps to monitor the health status of employees and assist in offering them extra support where it might be needed.
How this mining giant reclaimed almost 1,000 days a year normally lost to absenteeism
At DHS, we pride ourselves in creating a holistic approach to absence management that consistently delivers exceptional results for our clients, helping reduce absenteeism by 40%. Here are some examples of leading organisations we’ve worked with who have reaped significant cost savings and boosted the bottom line thanks to a robust absence management program.
South32 is a leading, globally diversified mining and metals company that recently turned to Direct Health Solutions (DHS) for a more efficient, accurate and scalable solution.
After leveraging DHS’s range of solutions, the days lost to absenteeism by year dropped by over 2 days per employee per year, with the company gaining ROI of over $8 for each dollar spent.
Workforce Absence Challenge
With a large number of employees to manage, South32 was finding it increasingly difficult to manage employee absenteeism manually from spreadsheets. It was:
Time-consuming and inefficient manual processing of real-time absenteeism data for all employees
Fragmented and difficult to track employee correspondence, emails and various phone calls to different parties
Caused more problems for the operation and site managers as they could not keep track of who was and was not present for their shift
Workforce Absence Solution
Critical to the success of the program design was to ensure:
Managers receive training and engage in proactively managing absence for their direct reports
Reduce the administrative and operational burden of dealing with absence
Provide managers with the tools and processes to support them
Key Program Elements
Centralise absence reporting and provision of early intervention advice on the first day of absence. Employees call a 24/7 healthline to receive health advice and report their absence with immediate notification to managers and rostering
South32 managers receive immediate notifications to easily inform managers before their shift started to give them a clear outlook of who was planned to work vs who was absent
Implementation of AbsenceTrack, a specialist absence reporting and management platform which provides real-time reports and tools for managers to monitor and manage absence
Analysis of absence patterns and trends to help optimise rosters and address lost productivity due to absence.
Training for managers on holding effective discussions with staff around their absenteeism
Absenteeism reduction of 20% in the first year, and further 8% in year two, sustained year on year
Days lost by year dropped by over 2 days per employee per year