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Chapter 3. The Hidden Costs of Absenteeism > The Cost Versus Expense Conundrum

Exercises

Software that calculates answers to one or more of the following exercises can be found at http://hrcosting.com/hr/.

  1. Consolidated Industries, an 1,800-employee firm, is faced with a serious—and growing—absenteeism problem. Last year, total employee-hours lost to absenteeism came to 119,808. Of the total employees absent, 65 percent were blue collar (average wage of $25.15 per hour), 25 percent were clerical (average wage of $19.80 per hour), and the remainder were management and professional (average salary $37.60 per hour). On average, the firm spends 38 percent more of each employee’s salary on benefits and, as company policy, pays workers even if they are absent.

    The 45 supervisors (average salary of $29.35 per hour) involved in employee absenteeism problems estimate that they lose 40 minutes per day for each of the 245 days per work year just dealing with the extra problems imposed by those who fail to show up for work. Finally, the company estimates that it loses $729,500 in additional overtime premiums, in extra help that must be hired, and in lost productivity from the more highly skilled absentees. As HR director for Consolidated Industries, your job is to estimate the cost of employee absenteeism so that management can better understand the dimensions of the problem.


  

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