Calculating absenteeism costs - RTW Matters
[Pages:3]Calculating absenteeism costs
By: Gabrielle Lis
Calculating the costs of absenteeism will help you make the case for better injury management systems and investment in health and wellbeing.
Absenteeism refers to the productivity lost when someone is absent from the workplace because of injury or illness. Research commissioned by Medibank Private in 2005 found that absenteeism costs the Australian economy $7 billion each year.
Medibank Private has also calculated that, of 3620 Australian corporate and small business employees surveyed, those with poor overall health status are nine times more likely to be absent from work than healthy workers (18 days, as compared to 2 days).
The link between health status and likelihood of absenteeism means that workplace initiatives that lead to better health--for example workplace health and wellbeing programs and improved disability management practices--also lead to reduced absenteeism.
In order to make the business case for these investments, you need to be able to estimate the costs of absenteeism.
When calculating the overall cost of absenteeism within a particular organisation (or team) there are many smaller costs to take into account, including:
Supervisor time spent dealing with absence; Temporary staff; Training time for temporary staff; Loss of production; Quality loss; Overtime for replacement of absenteeism; Costs of external agencies that provide support on absenteeism; and Costs of HR dealing with absenteeism.
There are various methods for calculating the costs of absenteeism. One simple approach is to double the daily wage of the employee.
Another approach (which may be of more use within a large organisation--and carry more weight in the finance department!) is to use a complex formula devised by Gijs Houtzagers in
This article and many other return to work articles and resources can be found at
? RTWMatters Ltd, ABN 31 647 765 491, All rights reserved.
Page 1/3
2003.
Houtzagers formula for calculating absenteeism
ACE = (ML (WH + EBC) + S (RH + SBC) + OC) / E
Where...
ACE - Total costs of absenteeism per employee for a defined period
ML - Total employee hours lost to absenteeism for a defined period, including illness, accidents, compassionate absences (e.g. funeral) and emergencies, but excluding annual leave
WH - Weighted average hourly pay for the various occupational groups in the organisation
EBC - Cost of employee benefits per hour per employee (= 35% of WH)
S - Supervisor hours lost in dealing with absenteeism for the defined period. To get this figure:
Estimate the average amount of hours lost per supervisor per day Determine the number of supervisors who have to deal with absenteeism Define the total of working days for the defined period Multiply these three figures
RH - Average hourly pay for supervisors
SBC - Costs of supervisor benefits per hour per supervisor (= 35% of RH)
OC - Estimation of other costs:
Temporary staff; Training time for temporary staff; Loss of production; Quality loss; Overtime for replacement of absenteeism; Costs of external agencies that provide support on absenteeism; and Costs of HR dealing with absenteeism.
Reprint rights, terms and conditions of use:
All material on is subject to copyright. You may use this material for your own personal reference only. The material may not otherwise be used, copied, reproduced,
This article and many other return to work articles and resources can be found at
? RTWMatters Ltd, ABN 31 647 765 491, All rights reserved.
Page 2/3
published, stored in a retrieval system, altered or transmitted in any form or by any means in whole or part (except where such use constitutes fair dealing under the Copyright Act) without our prior written approval.
Please email admin@ to seek permission to distribute or reprint this article.
Powered by TCPDF ()
This article and many other return to work articles and resources can be found at
? RTWMatters Ltd, ABN 31 647 765 491, All rights reserved.
Page 3/3
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related download
- lecture mit opencourseware
- costs of production and profit maximizing production 3 examples
- moving average diva portal
- analysis of manufacturing costs in pharmaceutical companies
- calculating absenteeism costs rtw matters
- chapter 8 cost functions done university of tennessee
- lecture 7 costs of production
- f x h f x f hf x
- basic cost concepts
- cost and returns analysis inflibnet
Related searches
- what matters in life
- quotes about what matters most in life
- quotes on what matters most
- what matters in life quotes
- what matters most in life
- do something that matters quotes
- what really matters in life
- your life matters quotes
- what you do matters quotes
- all that matters quotes
- what really matters quotes
- what you do matters quote