Employee absenteeism costs SA up to R20bn a year

Johannesburg, 15 Apr 2011
Read time 4min 40sec

Employee absenteeism is costing South African companies between R12 billion and R20 billion a year. This is the finding of a white paper compiled by Bytes Systems Integration, and US-headquartered Kronos, the world's leading provider of time and attendance systems.

“The problem for most companies, and for industry as a whole, is that it knows it is losing a great deal of money, but it is seen in many quarters as part of the cost of doing business,” says Julia Gilmour, sales manager at Bytes Systems Integration. The company is part of Bytes Technology Group, wholly owned by JSE-listed Altron.

“The problem,” says Gilmour, “is the difficulty of managing absenteeism, which is rife in South Africa. As your workforce grows, how do you check who is really ill? Who takes time off regularly on a Monday or a Friday to create a long weekend? Who is in need of counselling, and who is simply taking the company for a ride? And, most importantly, how do you reduce the financial implication of absenteeism, given its seeming pervasiveness?”

These questions, says Gilmour, become increasingly important the larger your workforce.

“Indications are that companies are losing many millions a year through direct losses.”

These include:

* Paying people for work they are not actually doing;
* Lost business opportunities, such as the inability of a restaurant franchise to open due to the absence of key staff;
* Demotivated staff who know their colleagues are taking a chance and resent it; and
* The cost of hiring replacement workers.

Figures indicate that 36% of payroll is linked to employee absence; and that World Cup-related absenteeism cost the South African economy as much as R750 million.

“The Chamber of Commerce has stated that it believes absenteeism is costing the economy R12 billion,” adds Gilmour. “But if we extrapolate the absenteeism figures as reported in the UK, the figure is likely to be closer to R20 billion.”

In South Africa it is hard to calculate the cost of absenteeism, which occurs through a variety of causes:

1) Illness, with particular reference to HIV and Aids in South Africa;
2) Holidays, of which there are many in South Africa;
3) Sick leave abuse - while the figure in Europe is that 20% of sick leave is abused, the figure in South Africa is believed to be much higher;
4) Maternity, paternity and parental leave;
5) Unreliable transport facilities: this is a particularly prevalent problem given the distances many people must travel to work, and the unreliability of minibus taxis, often associated with strikes;
6) Substance and alcohol abuse; and
7) Religious leave.

The above does not include consistent lateness and/or leaving early. “The figure of R20 billion reflects only the direct cost of paying absent workers, such as salary compensation, benefits payout and insurance premiums,” adds Gilmour. “The indirect costs of absenteeism can more than double that amount.”

Then there is the issue of HIV-related absenteeism. While figures are incomplete and generally inadequate for management purposes, HIV-related issues create major absence issues, a yawning skills shortage and a scheduling challenge for employers.

“The way to address these issues is with an enterprise approach to managing employee absenteeism. Such an approach, supported by the appropriate technology, provides real-time visibility into the workforce, while securely managing all absence information.”

It helps organisations control absenteeism and its associated costs by providing the decision support tools and business metrics managers need to better understand absence trends and take the right action.

It is not possible to eradicate absenteeism, Gilmour stresses, but it is eminently doable to gain a grip on what is taking place, where, when and how to deal with it.

There are four steps to this process:

1 Track: You can't manage what you can't measure, and you can't measure absence if you can't track it in the first instance. The three best practices here are to track all absence as it occurs; to be consistent and enforce time-off tracking through the organisation; and to maintain accurate records.

2 Manage: Managers must also efficiently control the myriad processes related to absence. They must automate and enforce policy rules and attendance policies; provide decision support tools to facilitate scheduling; and empower employees to manage their time off requests, and influence their schedules.

3 Comply: Before any issues end up with the CCMA, it is best to apply leave rules consistently from employee to employee. This stems from automating leave rules to full auditability and visibility.

4 Control: Key here is to have a central repository of data on all absences, which flows from the implementation of an automated solution. To ensure this, establish metrics to measure absenteeism and take corrective action to change employee behaviour.

Absenteeism has profound, measurable and always negative impacts on an organisation's ability to deliver high-quality products and services as customers expect them. It debilitates any organisation, and is best dealt with through automation, which reduces errors, costs and inefficiencies of manual processes while helping to boost consistency.

* To look at the overall picture of absence management holistically, download the white paper at http://www.bytessi.co.za/kronos_labour_management.php.

Bytes Systems Integration

Bytes Systems Integration is part of Bytes Technology Group, which is wholly owned by JSE-listed Altron. The company designs, implements and manages customised IT solutions through the integration of hardware and software systems from global technology leaders. It has five distinct business units, all providing clients with world-class solutions and services based on platforms, processes and methodologies from acknowledged industry leaders. They include SAP Business Objects, Kronos, Oracle, IBM, ICCM, Microsoft, MTN, Motorola, Cisco, Enterasys, Honeywell, Symantec, Wonderware, Juniper, HP, as well as the sole distributor for Teradata in South Africa. http://www.bytessi.co.za

Editorial contacts
Predictive Communications Karen Heydenrych (011) 452 2923 karen@predictive.co.za
Bytes Technology Group Julia Gilmour (011) 205 7000 Julia.gilmour@bytes.co.za
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