Absenteeism: How it Impacts Your Business

In 2012, the direct cost of absenteeism on the Canadian economy was $16.6 billion. In other words, absenteeism is a big deal that deserves attention. 

 But every business is different. How are you supposed to figure out the financial impact of unforeseen work absences on your business? By asking the right questions. 

We have developed a simple 3-step strategy to help business owners and HR professionals assess the impact of employee absenteeism on their business.

Step 1: Define employee groups

Since not all employee absences are created equal, the first step is to define which employees were talking about. The impact on your organization will vary based on the role and the level of seniority of the employee. Think customer service rep vs. production manager.

This step is simple if your only concerned with a specific division (for example, finance managers); identify the group and go to the next step.

However, to determine the impact of absenteeism across the whole organization, we suggest splitting employees into groups by job function (sales, production, customer service, finance, etc.) and by seniority (manager, manager, assistant, etc.), and completing steps 2 and 3 for each group individually.

Step 2: Determine the impact of an absence

Now that you have identified relevant employee groups, the next step is to determine the direct and indirect impact of employee absences.

Ask yourself 3 questions:

  1. When an employee is absent, what happens to their workload
  2. How does this affect the company’s customers?
  3. How does this affect colleagues?

To answer these questions, we recommend speaking with employees and their managers to gather information.


Stephanie is responsible for customer service at a small e-commerce company.

What happens when she is absent from work? Her co-workers have an increased workload

How does this affect affect customers? Wait times for customer service increase by 30%.

How are her co-workers affected? They feel overwhelmed and discouraged.

Step 3: Quantify the impact (optional)

Once you have determined the impact of an employee absence, you have two choices: stop here or estimate the financial cost of this absence to your business.

In the example above, knowing that customer service wait times increase by 30% may be enough info for you to decide to act. Alternatively, you may feel the need to estimate the lost sales resulting from the increase in wait times.

To perform these calculations, you can gather information from multiple sources, including internal data, external benchmarks, or estimates from industry experts.

What to do next?

After you’re completed this exercise, the next critical step is to figure out what to do with the information gathered. Maybe, the cost of absenteeism is low enough that you are comfortable maintaining the status quo. Alternately, you might be driven to invest in strategies to reduce employee absences. 

For example, two leading causes of absenteeism are child care (e.g. daycare is closed, nanny cancellation) and doctors appointments. In both cases, affordable services such as Kiid (on-demand babysitting and Dialogue (telemedicine) are available to address the current challenges facing businesses.

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