The True Cost of Absenteeism and How to Fix It

September 10, 2019

The True Cost of Absenteeism and How to Fix It

Absenteeism is a problem that affects all businesses and can sometimes slide under the radar as its impact is not understood. The fact is that the true cost of absenteeism is significant, and these lost working hours can have a major impact on your business’s bottom line.

Of course, there are a number of valid reasons an employee may be absent; including illness, medical appointments or care of a family member, but these are not the only reasons an employee may be absent from work. Some of the common causes of absenteeism include:

  • Bullying and harassment: Employees who are bullied or harassed at work are more likely to call in sick to avoid the situation.
  • Childcare commitments: Working parents may be forced to call in sick when childcare arrangements fall through.
  • Burnout, stress and low morale: Heavy workloads, increased pressure at work or feelings of unappreciation may leave employees wanting to avoid work.
  • Disengagement: When an employee feels disengaged from their work and/or their co-workers or the company itself, they are likely to miss work simply because they don’t have the motivation to go.
  • Partial shifts: Arriving late, leaving early or taking longer than allocated breaks are all forms of absenteeism, as even if the employee is partially present for the day, they are still being paid for more hours than they worked.


The Cost of Absenteeism

A report published by the Centers for Disease Control and Prevention states that “productivity losses linked to absenteeism cost employers $225.80 billion annually in the United States, or $1,685 per employee.” Absenteeism costs your business more than just the lost work hours of that employee:

Direct costs of absenteeism:

  • Wages paid to absent employee
  • Cost of replacement worker (often higher than typical wage for temporary/casual workers)
  • Administrative costs of managing absenteeism

Indirect costs of absenteeism:

  • Reduced employee productivity
  • Poor quality of goods or services resulting from understaffing or under-trained replacement employees
  • Excess manager time finding and working with replacement employee
  • Increased employee turnover
  • Lowered employee morale and employee fatigue from remaining staff feeling over-worked


How Do I Reduce Absenteeism?

There are a number of strategies and procedures that can be implemented into your workplace to help avoid unnecessary absence, increase employee productivity and save your business money and labour hours.

  • Incentivise attendance: Rewarding employees who are consistently logging great attendance is a great way to motivate staff to clock in and out on time each day.
  • Automate employee time and attendance tracking: Investing in time and attendance software to track employee work hours enables employers to easily and accurately track levels of absence and identify and trends in employee attendance.
  • Flexible working: Inflexibility in work hours and required on-site attendance can lead to reduced employee attendance. Everyone works best under different work hours and environments, and employees can be looking for flexible work hours for a number of reasons. They may be wanting to cut down on commute time or need to work around family or childcare commitments. Check out our blog article for more information on the realities and benefits of flexible working.
  • Create a positive work environment: When an employee feels valued, appreciated and part of a team and greater vision, they are going to be far more motivated to show up to work each day. You can read more about this in our article about engaging your workforce.
  • Create a formal policy: Clearly communicate a formal policy with your employees that outlines your expectations when it comes to regular and consistent attendance, absence notification procedures and attendance records.


In order for a business to be successful, it needs an engaged, motivated and present workforce, so it is important to track employee time and attendance as a means of reducing absenteeism. Contact the Aussie Time Sheets team today to discuss the right time and attendance solution for your business.

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