Absenteeism is one of the biggest killers of corporate profitability, costing Canadian companies over $16 billion per year. When companies think about saving money, and cutting costs from here and there, they often miss the huge issue of absenteeism, and how it ultimately affects their bottom line.

When employees are absent, companies may consider the cost of replacing the absent staff member, as well as the “cost” of reduction in productivity and quality when staff regularly trying to cover for the absentee also have to still perform their own job. The unseen “true” costs of absenteeism are often overlooked, but by digging deep to find the leakage, the savings can be tremendous.

When a typical Human Resources department evaluates case management costs, they may end up nickel-and-diming by shopping around to save some percentage off the cost of the solution. The “cost of the cost” now becomes the issue. For example, if the cost of an absent employee is determined by how much it costs the company per case, then that tends to be the focus. It’s like comparing prices of different sizes of bandages when we don’t know anything about the wound. The questions remain as to how often staff members are absent, how long they are off work, and the real reason they are absent. When we find the root causes, we can find appropriate solutions.

When the financial impact on the business is calculated, too often companies fail to realize that absenteeism may be a significant reason their business is losing money. Have you considered adding absenteeism to your profit and loss statement? Let’s face it: if absenteeism appears to be a reason for large profit loss within your company, absence management should be considered a C-level initiative. Absence management costs should therefore be undertaken by the CFO. Once absenteeism is put on the CFO’s agenda, it can be more appropriately targeted and reduced within your company.

It is unfortunate that absenteeism remains a hidden cost within so many companies, especially when it can easily be lowered. It simply comes down to developing a better understanding of the costs through an absence management audit to uncover the data, which often can produce surprising results. Once laid bare, the frequency, duration and reasons for absences can be addressed and reduced through the implementation of a successful absence management plan.

Have you had an absence management audit? Were you surprised by the results?