The HR Metrics Service has just reported Q2 2011 results. We have gone through the time-consuming and detailed process of auditing all of our submissions—think thousands of pieces of data—and are now in the process of letting folks know what happened in Q2 2011 on a range of metrics.
One measure that we have been keeping a close eye on is absenteeism. Absenteeism keeps going up and the Q2 results are continuing that trend. There is a cycle to absenteeism that has repeated for the last 3 years. It is high in quarters 1 and 4 and lower in quarters 2 and 3. Since our start point of Q1 2009, when you compare the same quarter each year, the increases have ranged from 7% to 35%. You can see the upward trend and the seasonal cycle in the chart below.
(Copyright: HR Metrics Service 2011)
The numbers above are the median for our database, a cross-section of public and private organizations representing over 150,000 employees. What this means is that 50% of organizations lost 1.5 days per full-time equivalent (FTE) to absence (not including folks on long-term disability or maternity leave) in Q2, 2011. Based on the median labour cost per FTE this equals spending of approximately $450 per FTE per quarter for absence. If you have one hundred FTE that is a cost of $45,000 per quarter. What is also significant is that this cost is rising year over year. Based on the same median labour cost’s an organization of 100 FTE is losing $9,000 more in Q2 of 2011 than it did in Q2 of 2009, an increase of 25%.
So what does this picture mean? Why is absenteeism on the rise?
There are a number of factors that are driving up absenteeism. This recent article sheds some light onto the causes. The other factors relate to the aging workforce and the increase in opportunity in the labour market. The older your workforce, the more often they are likely to be absent due to health reasons. A lot of comment has been made about the aging workforce and the likely impacts. What we are seeing in the data is that the impacts are here and they are bringing real costs to Canadian organizations.
Absenteeism is often linked to voluntary turnover; the logic goes that as people disengage from their workplace and start looking for work, they are absent more often. Based on our data, voluntary turnover has increased by 23% between Q2 of 2009 and Q2 of 2011. Despite the high unemployment rate there has been a significant amount of job movement. This has led to more employment opportunities and more people choosing to move employers. Losing key employees is another source of cost to organizations that is often not counted effectively. Increasing absenteeism can be an indicator that more people are planning to leave.
Overall what this means is that absence is an important area of focus for HR groups. The costs in this area are increasing, on average, by over 10% per annum. The solutions to this challenge are organization-specific, due to the many factors that drive absence. The value that comes from our evidence-based view is that the challenge is clearly identified and the financial repercussions are clearly detailed, making it straightforward to determine what you can spend in order create a positive return for your organization.
Ian J. Cook
HR Metrics Service