Almost every organization relies on teamwork to achieve its goals, but one issue keeps rearing its ugly head: absenteeism. Workers are like the incredibly important components of a well-functioning machine; however, no matter how well-oiled the machine is, it won’t run without its working parts. Since all businesses experience worker absences for a variety of reasons, how do you tell if you’re suffering from excessive absenteeism or if your numbers are in line with industry standards?
By collecting data and calculating your absenteeism rate, you can determine what challenges your business may face and how to improve employee attendance and engagement. But what if you are just getting started to understand the effects of absenteeism and what it means for your business?
In this employer’s guide, we’ll explain what the absenteeism rate is, how it’s calculated, and why it makes sense for companies to be familiar with this metric.
What is absenteeism rate?
Also known as the absence rate or absence percentage, this rate shows how often your workers are absent. It is expressed as a percentage of time and can be calculated for an individual, a team, or an entire organization.
Absences typically result from injury, medical problems, or other personal reasons, such as a parent staying home to care for a sick child. If you are wondering, holidays, paid time off (PTO), and lateness are not factored into this rate.
The benchmark average absenteeism rate across all industries in 2023 was 3.1%, according to the Bureau of Labor Statistics (BLS). In short, an average of 3.1% of the workforce is absent from workat any given time. If your rate of absenteeism exceeds this benchmark, it may be pointing toward underlying issues within your business or workforce.
Difference between absence rate and absence frequency
The absence rate shows the severity of employee absences, while the absence frequency highlights patterns in those absences. Frequency rates track the number of separate absences.
For instance, an individual with a 4.3% annual absence rate means the employee was absent for 10 days out of the year. If the reason provided was illness, the absence rate does not indicate if the employee was sick for 10 consecutive days or 10 one-day absences throughout the year. This is where the absence frequency comes in handy.
If the employee’s absences are spread out, it’s unlikely that they were severely ill. Instead, they may be dealing with more minor or chronic issues that a day off alleviates. Tracking such patterns reveals different concerns and can guide you toward the appropriate interventions.
Now that we better understand what absenteeism rate is and some of the numbers behind it, let’s talk more about how you can figure out your organization’s rate.
How to calculate absenteeism rates
To calculate the rate for your business, start by collecting data on the total number of days of absences and the total number of work hours or days during the period under consideration. You can do this by analyzing timecard data, like clock ins, clock outs, etc. If you use a payroll software provider, this data should be available there too.
Formula for calculating the rate of absenteeism
The absenteeism rate formula for an individual involves dividing the number of unexcused absences by the total working period and multiplying by 100:
- Individual worker absence rate = (number of days absent / total number of working days) X 100
To work out the absence rate for all employees, use this formula:
- All employees absenteeism rate = (average number of employees X missed workdays) / (average number of employees X total workdays) X 100
You can calculate the average number of employees by taking the sum of the number of workers you had at the start and at the end of the year and dividing the answer by two.
Example of absenteeism calculations
Let’s say you have an employee named George who worked full-time in 2023 and was absent for 10 days during the year. Not counting 20 vacation days, his total number of workdays is 231. Therefore:
- George’s absenteeism rate = (10 / 231) × 100 = 4.33%
You can apply the same formula to calculate the absenteeism rate for teams, departments, or the entire organization using their collective absence data and total workdays.
Moving on, let’s find out more about what this can mean for your company’s bottom line.
High absenteeism rates and the implications
High absence rates can have some less-than-ideal effects on your business’s productivity, profitability, and other areas.
Productivity
- Project delays: Excessive employee absences can stall projects and lead to missed deadlines.
- Decreased quality: Absences force other team members to shoulder the weight of the work of missing colleagues. This can reduce work quality.
- Reduced morale: Constantly covering for absent co-workers can frustrate employees and may increase employee turnover rates over time.
Finances
- Overtime costs: Payroll expenses will rise as you are forced to pay overtime to cover for absent employees.
- Replacements: Hiring temporary staff to fill gaps adds recruitment and training costs.
- Lost productivity: Unscheduled absences disrupt operations and lead to lower output.
Other consequences
- Increased turnover: Absenteeism can overburden remaining employees and cause burnout and higher turnover rates.
- Reduced customer satisfaction: Service delays or quality issues caused by absenteeism can harm customer experience and satisfaction.
What causes absenteeism to rise?
Absenteeism may be due to multiple factors, many of which an organization can counter:
Personal issues
- Financial problems: Financial stress impacts worker focus. Companies can offer employee assistance programs (EAP) to help employees manage financial challenges.
- Job-hunting: Employees might call in sick to attend interviews or meet headhunters. Utilizing strategies to increase worker satisfaction can help counter this.
- Substance use: Alcohol and drug use can cause unplanned absences and increase risks in the workplace that lead to injury.
- Childcare/eldercare: Illnesses of dependents and a lack of arrangements to relieve workers in case of such eventualities often force employees to miss work.
Workplace dissatisfaction
- Disengagement: Employees lacking motivation or control over their work are more likely to skip work. Flexible schedules and likable tasks can improve employee engagement.
- Bullying/harassment: A hostile work environment often pushes employees to avoid the workplace. Addressing such issues promptly is critical.
- High workload: Prolonged stress from excessive workloads can lead to burnout and frequent absences. Regular check-ins, an open-door HR policy, and workload adjustments can help.
Health-related factors
- Poor working conditions: Unsafe or poorly-designed workplaces can lead to stress or anxiety and increase absenteeism.
- Illness: Sickness can be another cause of absences. Some cases result from seasonal spikes in disease, such as during cold and flu season, while others are random and unpredictable.
- Chronic conditions: Managing long-term health issues often require time off.
- Injuries: Acute injuries or chronic conditions like back pain often result in missed work.
- Depression: A leading cause of absenteeism in itself, depression can cause other issues, such as drug abuse, that lead to further absences.
Monitoring and managing absenteeism
Effective absence monitoring and management are crucial for maintaining your business’s productivity. Employees may take both authorized and unauthorized time off for various reasons, but implementing strong absence monitoring and management strategies helps address these issues and reduce absenteeism.
One common strategy is to allot specific amounts of pre-approved time off for various reasons, such as two weeks of paid time-off and seven pre-approved sick days, for example. This can help you set and manage both you and your employees’ expectations accordingly.
Benefits of tracking absenteeism
If you haven’t already automated this process, then you stand to benefit massively from monitoring absenteeism using tracking tools with the most useful features:
- Improved record-keeping and time management: Streamlines the tracking of employee attendance and absence patterns, and enhances time management by identifying trends and areas for improvement
- Efficient calculation of attendance rates: Simplifies the process of calculating attendance and absenteeism rates for the business
- Time-saving payroll management: Automates payroll tracking, recording, and processing
- Prevention of time theft: Reduces instances of buddy punching/clocking in for a friend and other forms of time fraud
- Error-free bookkeeping: Eliminates human errors in attendance records and payroll calculations
- Reduced paperwork: Minimizes time and resources spent on manual paperwork by digitizing processes
- Centralized database: Creates a single database that can be used across departments for better coordination and transparency
It makes good business sense to understand absenteeism
Tracking your employee absenteeism rate is a must for understanding how to keep it from getting out of control — and figuring out how to prevent it from becoming a problem altogether. With a clear picture of unplanned absences, your business can identify patterns, address underlying causes, and make sure employees are getting everything they need to be the best they can be. Monitoring absenteeism rates helps improve productivity and promote a healthier workplace environment, which enhances your overall success.
As you keep an eye out for excessive absenteeism, you may also be looking for a way to take your human resource efforts up a notch. OnPay’s HR software makes it simple to set up new hire onboarding, create company org charts and pay your employees, all in one platform. Contact us to learn more about how our team can help your business. We are ready to help!
This article is for informational purposes only and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors for formal consultation.