Monday, March 24, 2014

Presenteeism and Sick Time Math

A doctor checks the health of a workplace while sick employees line up outside.
Which is More Costly?  Sickness Absenteeism or
Sickness Presenteeism?

The issues related to raising the minimum wage have been hotly debated in recent months.   Closely related to that hot-button topic is paid sick leave and presenteeism, and President Obama's proposal for a required 7 days of paid sick-leave for workers has taken the debate all the way to Congress.


Luckily, many of us already benefit from paid sick leave throughout the year;  however, many others do not.  An employer's refusal to pay for sick leave leaves an employee's coworkers at risk from contagious viruses and the company at risk from low morale and a lingering loss of productivity.

What follows is a simple example of how the math works, comparatively, when an employer pays sick leave and when an employer does not.  Please note that these numbers are neither arbitrary or made up: They are based on common sense (the flu lasts 3 days), countless conversations  and research about low morale (10 - 20% reduction in productivity when morale is low), and a review of the literature pertaining to the issue of sick leave (20% decrease in productivity when sick).

A Hypothetical, But Realistic Case Study: WidgetMakers

WidgetMakers is a company owned by Scroogie MacBottom.  Mr. MacBottom has 5 full-time, hourly employees.  He pays his employees $10.00 an hour, but he does not pay for sick leave.    

Happy and Healthy Employees

When MacBottom's employees are happy and healthy, they can each produce 10 widgets per day for a total of 250 widgets per week.  He sells those widgets for $50.00 each, leaving the company with a revenue of $12,500 per week. His weekly payroll, when everyone is happy and healthy, is $1750.

Four Sick and Sad Employees

When one of MacBottoms's employees is sick, say with a mild case of the flu, that flu will last about about 2 - 3 days.  That employee, perhaps because he is afraid of losing his job or because he needs the $70.00 per day just to make ends meet, will come to work all 3 days; it will last the full 3 days because the person is getting no extra rest.  That flu will spread to other employees.  They, too, will come to work.  All of them will work more slowly, spend more time in the bathroom, and spread even more germs.

There's no question about it: Sick employees do not demonstrate full productivity.  They lose about 20%, or 12 minutes per hour.  On top of that, however, they are resentful, and that resentment turns into low morale.  They know coming to work with the flu is not in the best interest of their own health, their co-workers' health, or the company, but they feel they have no choice but to be there - well, at least until they can jump ship and find another place to work, which generally occurs as soon as possible when morale is low and employees are highly dissatisfied. That turnover just adds to the problem . . . and potential costs.

Employees can lose up to another 20% productivity when morale is low.  Just because MacBottom has hired responsible people, however, his employees will only lose another 10% productivity, or 6 additional minutes per hour, because of their low morale.  All told, then, 4 of his employees get sick, each for 3 days, each at a loss of 30% productivity.  At the end of the week, MacBottom is 36 widgets short and only makes $10,700.  Payroll remain the same, $1750.


One Sick, Not So Sad, Employee

On the other hand, if MacBottom paid sick leave, that same employee would probably stay home, get lots of rest, and only be sick for 2 days.  He would not be resentful or demonstrate low morale.  He would not pass the flu to his co-workers.  

Because that person is home for 2 days, instead of sick at work for three days, the loss of widgets at the end of the week is only 20 widgets, not 36.  The weekly revenue is $11,500, $800 more than if the employee had come to work.  The $1750 payroll remains the same.


In Conclusion

Scroogie MacBottom has a real sickness at his company, WidgetMakers.  That sickness is called presenteeism, and he brought it on himself.  His employees, for one reason or another, feel they must come to work when ill.  The number one reason is that they need the money, followed closely by the fear of losing their jobs.  This, in turn, makes everyone sicker, reducing productivity by 10% - 30% at any given time; either from illness or low morale.  That loss of productivity, in the end, costs more than simply paying for sick leave.

There is, of course, a formula for when sick time becomes excessive, and employers can work out for themselves that number of days or hours for sick leave or personal time, as many already do.  There is not such an easy formula for low morale, though.  Not paying for sick time at all is a costly risk.


Want to read more about presenteeism?  Try

Irvine, A. (2011). Fit for Work? The Influence of Sick Pay and Job Flexibility on Sickness Absence and Implications for Presenteeism. Social Policy & Administration, 45(7), 752-769. doi:10.1111/j.1467-9515.2011.00795.x

Leslie, K. E. (2006, Dec 09). Dedicated or dangerous -- why do people come to work sick? McClatchy - Tribune Business News. Retrieved from http://search.proquest.com/docview/459656119?accountid=158586

Noguchi, Y. (2014). Obama's Big Bid to Change Sick-Leave Laws May Hinge on Small Business.  Retrieved from http://www.npr.org/blogs/health/2015/01/22/379102675/obamas-big-bid-to-change-sick-leave-laws-may-hinge-on-small-business

SG, Geuskens, G., Hooftman, W., Koppes, L., & SNJ. (2010). Productivity Loss at Work; Health-Related and Work-Related Factors. Journal Of Occupational Rehabilitation, 20(3), 331-339. doi:10.1007/s10926-009-9219-7



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Copyright Amy Lynn Hess.  Please contact the author for permission to republish.


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