From time to time, employees miss work. Expecting employees to come in every day throughout the year is likely unrealistic. But when employees make a habit of missing work unexpectedly, their absences can set your business back. Learn how to calculate your business’s absenteeism rate to reduce absenteeism in the workplace.
What is the absenteeism rate?
The absenteeism rate shows you the ratio of absences to workdays during a period, such as a month, quarter, or year. You can calculate your business’s absence rate to determine the percentage of days employees miss per period.
Absences are generally linked to days off from work that are unplanned and not approved ahead of time, like when an employee calls in sick. Absenteeism is when employees habitually miss work. Employees who request time off from work in advance for personal or vacation leave are typically not considered absent.
According to the Bureau of Labor Statistics (BLS), the absence rate for all full-time wage and salary workers is 2.8%. This means that, on average, 2.8% of the workforce is absent from work on regular workdays.
There are many reasons why employees are absent from work. Sometimes, employees are absent for legitimate reasons, like genuinely being ill. But other times, employees may make up an excuse to avoid work or even skip work without notifying you. Both legitimate and illegitimate absences contribute to your business’s absence rate.
An employee might be absent from work due to:
- Child care problems
- Family or personal obligations
If you feel like employees are frequently absent from work, you should calculate your absenteeism rate. So, how do you calculate employee absenteeism?
Use the absenteeism formula to calculate the percentage of absences in your small business:
Absenteeism Rate = (Average # of Employees X Missed Workdays) / (Average # of Employees X Total Workdays)
Seems like a pretty hefty formula, right? Let’s go over each part of the absenteeism formula to accurately calculate your absence rate.
1. If you hired or terminated employees during the period, you need to find your average number of employees. You can find the average by adding together the number of employees you had at the beginning and end of the period and divide the sum by two.
2. Next, you must calculate the number of total workdays during the period.
3. Now, determine how many workdays employees missed due to absenteeism. Although it’s easiest to calculate missed workdays by using full shifts, you can also calculate partially missed days by dividing the number of hours missed by total workday hours.
4. Now that you know how to calculate each part of the equation, plug your numbers into the formula.
Absenteeism rate example
Take a look at the following example to further help you understand absenteeism calculations.
Let’s say you want to calculate the absenteeism rate for your business during October (2018).
1. First, find the average number of employees. At the beginning of October, you had seven employees. At the end of the month, you had nine. Your average number of employees is 8 ([9 + 7] / 2).
2. Secondly, calculate your total workdays in the period. Your business is open Monday – Friday. There were no holidays in October. Your total number of workdays is 23.
3. Next, find the number of workdays lost to absenteeism. Workdays are eight hours long in your business. One employee missed one day and another employee missed one day. In total, your employees were absent for two full days. Another employee was gone for an additional four hours. First, divide the four-hour day by eight hours to get 0.5. Then, add 0.5 and 2 to get a total of 2.5 missed days.
4. Plug your numbers into the absenteeism rate formula:
Absenteeism Rate = (8 X 2.5) / (8 X 23)
Absenteeism Rate = 20 / 184
Absenteeism Rate = 0.11
To turn your absenteeism rate into a percentage, multiply it by 100. Your absenteeism rate during October was approximately 11%.
The lower your absenteeism rate, the better. Absenteeism rates can vary by industry. As a general rule of thumb, you want to avoid having an absenteeism rate in double digits.
4 ways to use your absenteeism rate
Your work isn’t done once you calculate your small business’s absence rate. Find out how to use your absenteeism rate to improve small business operations.
1. Change up business policies
If you notice absenteeism patterns from top employees, your current business policies might not be sufficient.
Consider offering paid time off or increasing the amount of paid time off you currently offer employees. With paid time off, employees might be more likely to schedule time off instead of skipping work.
Some employees might be absent because they feel their work schedules aren’t flexible. Improving your flexibility with time off requests can cut down on absenteeism. You might let employees work varying hours to accommodate their personal obligations.
To cut down on absences due to illness, determine whether you can let employees work from home. If your business can operate from time to time without employees physically being there, give employees the option to work remotely.
2. Absence management
Is your absenteeism rate thrown out of whack because you don’t know when employees are absent? For managing absenteeism, implement an easy-to-use and reliable timekeeping method.
You can use an employee time clock, software, or an employee to track absences.
Using an organized timekeeping method also makes it easier to calculate your absenteeism rate. For example, time and attendance software stores data like how many workers you employ and employee absences.
3. Decision making
You can also use your absenteeism rate to make decisions. High absenteeism rates can start affecting your small business processes. If your business is in an industry where absenteeism is commonly high, such as food processing, consider changing business operations to accommodate absences.
Sometimes, you may need to use your absenteeism rate to make decisions about employees. If an employee is continually absent, skewing your absenteeism rate, consider talking with them about their absence. You may need to think about terminating the employee if they don’t change their habits or if their absence begins significantly impacting your company’s bottom line.
4. Make comparisons
Although you should take the results with a grain of salt, you can compare your absenteeism rates to your profits. You can draw correlations, such as lower revenue when you have higher absenteeism rates. And, compare absenteeism rates between periods to determine if there are patterns when employees are absent (e.g., seasonal absences).
Looking for an easy way to track employee hours? Patriot’s online time and attendance software add-on pairs seamlessly with our easy-to-use payroll software. Monitor employee absences, track hours worked, then run payroll with our three-step process. Try both for free today!
This is not intended as legal advice; for more information, please click here.