How To Calculate the Cost of Employee Absenteeism

this is just a tool that's extremely effective so that you can calculate how much absenteeism is actually costing your business there are some numbers and some digging that you need to do but activity in itself is a good learning tool for you actually see how much you're spending in things like paramedical costs and obviously how much is costing you and with the numbers of six days that your employees are actually taking so step one is a the total number of employees lost times nine nine point three is the average in

Canada right now on sick days so we're going to use an example of a 20 employee company so super simple math we're just gonna do nine times 20 which is going to give us a hundred and eighty days of absenteeism now bees eight times two and the reason you're gonna double this is because studies have shown that there is an indirect costs associated with productivity laws increase of stress of being off sometimes even excess cost beyond this which isn't included in this number but just for you to think about if you need to bring in a replacement

staff so there's also that if you're paying people time and I have to come in on their days off to replace these employees so again sue a simple math we're going to times 180 by two which gives us three hundred and sixty days in loss now C is the percent of annual payroll costs for treatment so you're gonna look back into your benefits if you have benefits if not leave at zero but if you do have benefits you're gonna look at your paramedical drug and disability as a percentage of your total salary so with our 20 employees we're

going to make it up and say that they're making an average of fifty thousand dollars so we have a 1 million dollar payroll and we've looked at our costs are quite high and we're at 6% I shouldn't say quite that's quite manageable high when you look at the numbers it's quite significant so D is B our 360 days times our average salary per day so we figured it out you can see we've used it up here 52 weeks per year five business days because we're not working on the weekend so our average

that they're making per day is one hundred and ninety two dollars times C six percent times our annual wages so 6% over any wages at $60,000 that were played spending right now and paramedical drug and disability and be again our daily salary times how many days off which is B so 360 times 192 plus our 60,000 we get one hundred and twenty-nine thousand one hundred and twenty dollars is right now what we're paying that is what absenteeism is

costing an organization on average 20 people you know manageable benefit size average salary of $50,000 or losing 129 thousand dollars annually on absenteeism now the good news is let's jump down to e let's say that we could reduce that by 5% something as simple as reducing nine days absenteeism 28.5 really with a small step maybe through a health and wellness program maybe through other type of wellness promotions that were

running now that would save us six thousand four hundred and fifty six dollars that's just a five percent savings so again if we can get the nine days sick days down to eight point five so every half day we're going to save over six thousand dollars so pretty impressive so I hope you take this tool and use it do some digging and find out what's really going on in your organization and of course start incorporating some health and wellness initiatives so that you can help reducing this big giant scary number

significantly