Presenteeism: The Hidden Costs of Business

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Presenteeism, a relatively unknown concept, is the complement of Absenteeism. It is defined as the measure of the cost of lost productivity due to employees actually showing up for work, but not being fully engaged and productive, primarily due to distractions related to personal health and life. Presenteeism is currently estimated to be up to 7 ½ times more costly to employers than absenteeism. (1)

Statistically, presenteeism is rearing its ugly head and showing itself for what it really is… a costly and somewhat invisible threat to employers. It is considered a threat due to its stealthy nature. The term itself is new, just added to our language. Given the following alarming statistics, your business may be in jeopardy.

o Presenteeism accounts for 61% of an employee’s total loss of productivity and medical costs. (4)

o Presenteeism costs employers an estimated $2000/year/employee. (10)

o Employees working at reduced capacity cost employers $250 billion/year. (8)

o 42% of employees anticipate elder care issues in the next five years. (two)

o 37% of employees with current elder care issues have lost time from work per week, a total of (11) hours/week spent. (two)

o On average, employees spent about 8 hours during the past two weeks away from work related to caregiving. Some of it was paid, like sick or vacation leave, and some was not paid. (5)

o One of the most frequently requested resources from EAPs is legal services to cover estate planning, family law, divorce, real estate, bankruptcy, and other non-workplace matters, representing between 60% to 70% of all employee EAP requests. (two)

o 64% of unscheduled absences are due to family issues 22%, personal needs 18%, entitlement mentality 13% and stress 11%. (9)

o 30% of employees come to work at least 5 days when they are too distracted to be effective. 28% of workers took time off to care and 25% took at least 1 hour a day to deal with personal matters. (7)

o Absenteeism costs have increased from $610/employee/year in 2000 to an average of $789 per employee in 2002. (6)

o Of all absence-related expenses, unscheduled time off has the biggest impact on productivity, profitability, and morale. (9)

o 49% of employees lose productivity at the rate of 1 hour or more per day due to stress, 40% lose 1-2 days per year, 37% lose 3-6 days per year, and 23% lose more than 6 days a year. years of productivity due to stress. 44% of employees come to work 1-4 days a year when they are too stressed to be effective, 19% of employees come to work more than 6 days a year when they are too stressed to be effective . (3)

o 68% of employees take frequent “stress breaks” at work to talk to others. (7)

So what can be done? Some will argue “Do nothing” and it will take care of itself, after all, these issues have been a part of employee-employer relations for years. While that may be somewhat true, the actual associated costs of presenteeism are increasing, often without the conscious knowledge of the employer. Those “head in the sand” approaches to business operation usually spell ruin. Ignorance regarding any threatening, growing and unresolved operational problems will indeed be costly.

Potential Solutions: Employers should start encouraging sick or distressed workers to stay home and get proper medical or professional care before returning to work. Consider financing all or part of an on-site daycare. There are many successful models to emulate. Consider expanding or modifying personal leave policies to better assist employees. Expand EAP programs to offer additional assistance to employees with a wide range of emotional and family issues. This also has the hidden benefit of enhancing goodwill and showing employees that their employer cares about their concerns. While these actions may seem expensive, they are actually an investment in your business.

Consciousness is the key, the origin, the beginning of finding solutions. Study your trades in light of the above statistics. Take steps to prepare for these unavoidable situations and incorporate their associated costs into your business model, rather than being surprised at the end of the fiscal year with drastically reduced profit margins without reasonable explanation. Savvy business people will realize the costs of presenteeism and take steps in advance to protect their business.

Bibliography and References:

  1. 1999 study conducted by The Employers Health Coalition of Tampa, FL
  2. Risks and Insurance, March 2004
  3. Business Legal Resources, April 24, 2003
  4. New study from Cornell University, published April 2004 in the Journal of Occupational and Environmental Medicine. A study of 375,000 employees over a 3-year period
  5. Recent BankOne Employee Survey
  6. Dee W. Edington PhD, Director, Univ. of Michigan Health Management Research Center
  7. High Stress Levels Lead to Presenteeism, by Richard Chaifetz, CEO of ComPsych, provider of EAP programs
  8. Management Newsletter, 12/5/2002, BNA Professional Information Center
  9. Braun Consulting News, 2003 CCH Unscheduled Absence, Business Insurance July 2000 and the US Bureau of Labor Statistics.
  10. Cigna Behavioral Health, April 26, 2004

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