Skip to main content

Kronos: Employee absence costs companies large percentage of base payroll


Orlando, Fla. Employee absence costs organizations the equivalent of 36% of their base payroll on average, according to a new survey of employers conducted by human-resource consulting firm Mercer and sponsored by Kronos.

This total includes both planned absences, such as vacations and holidays, as well as unplanned absences, such as sick days and disability leaves. Unplanned employee absences cost organizations the equivalent of 9% of their base payroll on average, more than half the cost of healthcare benefits, measured at 15.4% of payroll in Mercer's 2007 National Survey of Employer-Sponsored Health Plans.

This study aims to identify the total costs of absence, including both the direct costs -- wages paid to employees while absent -- and the indirect costs -- lost productivity and replacement costs of workers.

Unplanned incidental absences, such as casual sick days, result in the highest net lost productivity per day -- work that is missed or postponed by not being covered by others, the report sound. Survey respondents estimated that when employees are out on unplanned absences, they sustain a loss in productivity of 21%, compared with just 15% for planned absences.

"The cost of absenteeism is often misunderstood, seen as un-measurable or dismissed as negligible," said Toni Kellam, absence management consultant at Kronos. "While most other expenses for an organization have clearly defined costs, employee absence is loosely tracked, and the tracking is not thorough enough to reveal the full costs.”

This ad will auto-close in 10 seconds