ABSENTEEISM COSTING SMEs €1.1 BILLION ANNUALLY In association with ISME

Mark Fielding, CEO ISME, The Independent Business Organisation.

Eight million days are lost due to employees’ non-attendance at work, with over 60% of all absenteeism due to feigned illness and malingering, according to Mark Fielding

A major survey by ISME, the Independent Business Organisation, carried out in December 2007, has revealed that absenteeism, a major concern for SMEs, is on the increase and imposing significant costs on small business.

The survey of over 2,000 companies, employing in excess of 50,000 employees, highlights that, on average, employees are absent for eight additional days annually, excluding holidays and other authorised absences. With 1,000,000 individuals employed by SMEs, this equates to a significant eight million days lost to the small business sector. Owner/Managers also indicated that, in their opinion, 60% of this unauthorised time taken, or five days per annum, was due to feigned illness.

GEOGRAPHICALLY AND SECTORALLY

Sectorally, the Electrical/Precision Equipment sector and Transport recorded the highest average days lost per employee, with 15 days, in comparison to four days in General Retail which recorded the lowest. Geographically, the highest incidence of absenteeism was recorded in Munster, with an average ten days per employee, followed by an average eight days being taken in Dublin, with the rest of Leinster and Connaught both coming in at 6 days. The lowest levels were recorded in Ulster, with five days.

DIRECT AND INDIRECT COST

The direct cost of absenteeism in small and medium businesses is estimated at €1.1 billion, based on an average wage cost of €138 per day. This does not include the substantial indirect costs brought about through disruption, late deliveries, decline in employee morale, dissatisfied customers and deteriorating productivity. These indirect or ‘unseen’ costs often are greater than the direct ‘seen’ costs.

While absences occur for legitimate reasons, including genuine illness and family emergencies, it is also quite obvious, based on the survey results, that unauthorised absences for a variety of frivolous reasons are a huge area of concern for employers. It beggars belief that 42% of all “illnesses” occur at either side of the weekend and these “sickies” can be certified by our medical brethren who are afraid to ‘not certify’ for fear of a subsequent court case. Added to this is the irresponsible advertising by the soft drinks company Sprite, last year, who advocated making Friday so casual that you “don’t turn up’, which may be quirky but it certainly does not help the situation in condoning malingering and adding to the costs of small business.

ADDRESSING THE PROBLEM

The problem of unauthorised absenteeism has got to the stage where it is becoming increasingly impossible for small business owners to plan ahead with any certainty. It has now become completely unrealistic for a business to expect a full compliment of staff on a Monday morning. This problem is further compounded by the fact that small companies are extremely labour intensive. In a company of ten employees, two absent individuals representing 20% of the workforce, can be a significant loss.

Failure to introduce adequate measures to address this growing problem will impose a significant cost on a company, both financially and in human terms and will undermine its ability to compete, grow and flourish.

Published in the february/March 2008 Issue of Irish Entrepreneur