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Is employee absence hurting your business?

In the first of a series of insights into running an efficient dealership, Thurlby Motors managing director Chris Roberts looks at absenteeism

We all know that alongside property, employees are one of the biggest overheads in the business.

In terms of monetary cost, when looking at employees, the normal addition of salary, holiday pay and national insurance totals up to what seems like the national debt; well maybe not quite.

It is easy however, to miss some of the hidden costs associated with employees; costs which have a mass-ive impact on the bottom line, but in many cases remain unaddressed.

One classic example of this is absentee compensation.
Take a second to do a crude calculation.

Work out how many hours you lost to sickness and ad hoc appointments last month, then multiply that by £10 (a rough hourly cost) and that figure by 12 months. I have no doubt you’ll be shocked by the answer.

However, it is worth bearing in mind that the cost of absence is not simply the employee’s pay.

You also need to factor in the lost income if the employee is productive and the disruption caused to the business by colleagues having to absorb the absentee’s daily workload.

To put this in perspective, our absentee compensation for the year 2006 was £100,600. That’s almost £1,000 per employee, per annum.

This has been reduced over time to less than £18,000 in the last 12 months.

Here’s how this was achieved

Firstly the employees were made aware of the overall costs involved in supporting the current absence level and its impact on the business.

Managers received training in absence management techniques.

This included how to conduct return to work interviews, the use of appropriate questions to gain information about the absence and most importantly, how to use this information to assist the company in pinpointing actions to help the employee reduce their levels of absence.

Absence must be authorised by a manager and evidenced to prove that the absence is required, ie, doctors/ dentists appointment card etc.

Wherever possible, appointments should be booked at the beginning or the end of the day to cause minimal disruption to the business.

For all unauthorised absence such as sickness, then a back-to-work interview is carried out by a manager within the first hour of return.

If an illness related absence occurs three times in a rolling 12 months then a review is carried out with the employee which may result in a referral to the company doctor or even suspension from the company sick pay scheme.

Statistics are gathered to measure absences by employee, department and type to highlight out of line areas.

These figures are discussed at monthly management meetings and action agreed where necessary.

In addition, in 2008, an extra incentive was offered to employees if absence levels were held below a certain level.

Buy in from employees

It is worth noting that if you can get buy- in from all employees then absence begins to control itself as the regular offenders will feel peer pressure if they are letting the others down, especially if a company-wide incentive is running.

Absence can be crippling to a business, not only in terms of cost, but also in relation to customer satisfaction.

Taking action similar to that suggested will reduce your cost base, improve your attendance and subsequently make your business stronger, giving employees greater job security and customers a better experience through a fully staffed workforce. 

Take a look at your absence costs. I am sure you will find it worthwhile.

 

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