Presenteeism: The Hidden Cost of Business

(prez.un.TEE.iz.um) n

Presenteeism, a relatively unknown concept, is the complement of absenteeism. It is defined as the measure of lost productivity costs resulting from employees actually showing up for work but not being fully engaged and productive, primarily due to distractions from personal health and life issues. Presenteeism is currently estimated to be up to 7½ times more expensive for employers than absenteeism. (1)

Statistically, presenteeism is rearing its ugly face and showing itself for what it really is…a costly, somewhat invisible threat to employers. It is considered a threat due to its stealthy nature. The term itself is new, having only recently entered our language. Considering the following alarming statistics, your business may be at risk.

o Presenteeism accounts for 61% of an employee’s total lost productivity and medical costs. (4)

o Presenteeism is estimated to cost employers $2000/year/employee. (10)

o Employees working at reduced capacity cost employers $250 billion per year. (8th)

o 42% of employees anticipate elder care issues in the next five years. (2)

o 37% of workers with current elder care issues lost work time per week, total (11) hours/week. (2)

o On average, staff spent around 8 hours caring in the previous two weeks. Some of it was paid, such as B. Sick leave or vacation time, and some was unpaid. (5)

o One of the most requested resources from EAPs is legal services covering estate planning, family law, divorce, real estate, bankruptcy and other non-employment related matters, accounting for 60-70% of all EAP requests from employees. (2)

o 64% of unplanned absences are due to family issues (22%), personal needs (18%), entitlement (13%) and stress (11%). (9)

o 30% of employees come into work at least 5 days when they are too distracted to be effective. 28% of workers took time off for caring and 25% took at least 1 hour/day to deal with personal issues. (7)

o The cost of absenteeism has increased from $610/employee/year in 2000 to an average of $789 per employee in 2002. (6)

o Of all the expenses related to absence, unplanned time off has the greatest impact on productivity, profitability and morale. (9)

o 49% of employees lose productivity at a rate of 1 hour or more/day due to stress, 40% lose 1-2 days/year, 37% lose 3-6 days/year and 23% lose more than 6 days/ Year of productivity due to stress. 44% of employees come into work 1-4 days/year when too stressed to be effective, 19% of employees come into work more than 6 days/year when too stressed to be effective. (3)

o 68% of employees often take “stress breaks” from work to talk to others. (7)

So what can you do? Some will argue “do nothing” and it will take care of itself, after all these issues have been part of labor relations for years. That may be partially true, but the true costs of presenteeism are increasing, mostly without the conscious knowledge of the employer. These “bury your head in the sand” approaches to doing business usually spell doom. Ignorance of looming, growing, unrealized operational problems is indeed costly.

Possible solutions: Employers need to start encouraging sick or distressed workers to stay at home and seek appropriate medical or professional care before returning to work. Consider funding or part-funding a local daycare. There are many successful models that one can emulate. Consider expanding or changing personal leave policies to better support employees. Expand EAP programs to offer additional employee support for a variety of emotional and family issues. This also has the invisible benefit of increasing goodwill and showing employees that their employer cares about their concerns. Although these measures may seem costly, they are actually an investment in your business.

Awareness is the key, the source, the beginning of finding a solution. Examine your operations in light of previous statistics. Take steps to prepare for these inevitable situations and build the associated costs into your business model, rather than being surprised by drastically reduced profit margins at the end of the fiscal year without any reasonable explanation. Smart businesspeople are waking up to the costs of presenteeism and taking steps ahead to protect their business.

Literature and references:

  1. 1999 Employers Health Coalition study of Tampa, FL
  2. Risk and Insurance, March 2004
  3. Corporate Legal Resources, April 24, 2003
  4. New Cornell University study published April 2004 in the Journal of Occupational and Environmental Medicine. A study of 375,000 employees over a 3-year period
  5. BankOne’s latest employee survey
  6. Dee W. Edington PhD, Director, Univ. from the Michigan Health Mgmt Research Center
  7. Increased Stress Levels Lead to Presenteeism, by Richard Chaifetz, CEO of ComPsych, provider of EAP programs
  8. Bulletin to Management, 12/5/2002, BNA Professional Information Center
  9. Braun Consulting News, 2003 CCH Unscheduled Absence, Business Insurance, July 2000 and the US Bureau of Labor Statistics
  10. Cigna Behavioral Health, April 26, 2004

Thanks to Daniel Sitter | #Presenteeism #Hidden #Cost #Business

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