A CCH study on unexcused absenteeism indicates that 83% of employers feel that unexcused absenteeism will continue to rise. The problem is that absenteeism costs have been growing which now range around $800 per employee per year. It doesn't seem like much but when this cost is multiplied by 10 or 20 employees the numbers speak for themselves.
Absenteeism and Punctuality Policies
Having an absenteeism and punctuality policy is important for any business with employees. Such policies help keep records on missed work time, encourage employees to attend work, and set a case for dismissal when an employee fails to follow the obligation of his/her work terms. The right kind of policy can save your company tons of money as the years go by.
The first thing an owner has to determine is what status his employees fall into. Salaried and professional employees are typically considered “exempt” while hourly workers are “non-exempt”. Exempt means that the employees are not based upon their time at work but on the function of their job. They can work longer hours without paying overtime. Non-exempt employees are paid for each minute they are at work and are entitled to overtime pay.
Hourly or non-exempt workers can have their pay reduced for anytime they miss from work while salaried or except workers cannot. For example, if a salaried worker misses 4 hours a day but work any part of that day their pay cannot be affected. The only time a salaried worker can have his/her pay adjusted is when on a leave of absence or when an entire day is missed for personal reasons. To punish the lateness of a salaried worker by adjusting pay creates a risk of entitling them to overtime.
Attendance policies vary from company to company and from state to state. However, the best attendance policies usually have a progressive component to them. For example, verbal warning, written warning, suspension and termination would be part of a progressive discipline policy. The other method that could be used is the point system. As the worker receives points for attendance he/she will incur increase discipline. Once he/she has reached the threshold he/she will be terminated.
The use of an absenteeism policy that is progressive ensures that all workers are treated fairly. They are warned each time they are disciplined and cannot claim ignorance. Furthermore, the documentation provided at each level of the discipline gives an appearance of professionalism on behalf of the organization and a sense of fairness to the employee.
Salaried workers can be under the same progressive attendance system as an hourly worker. The difference is that they cannot have their pay deducted. Once must also consider that salaried workers should be given notes-to-file instead of employee counseling reports (discipline) so that their “at-will” status is not in jeopardy.
According to the U.S. Bureau of Labor Statistics a total of 2.8 million workdays a year are lost due to illness or injury. Assuming that the average worker made around 40K per year we would add 35% for benefits to come to a total compensation cost of 54K per year per employee. If we divide this 54K by 2080 worked in a year we come to $25.96/hour labor cost. A single employee absence for a day would cost the average company around $207.68 per day. Thus if you have 10 absences a year your cost would be around $2000. This figure doesn't include the cost of the actual profit you would have lost due to not getting your products or services finished.
Methods of Reducing Absenteeism
- No-fault attendance policy
- Progressive discipline
- Incentives for good attendance.
- Make the workplace more fun.
- Pre-employment physicals and drug tests.
- Conduct employment history investigations before hiring.
- Value the attendance and contribution of each worker.
- Attendance should be included as one of the criteria for raises/promotions.
- Request medical documentation for all unexcused absences.
