Are You Measuring the Cost of Worker Absences?

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Most employers don’t measure the cost of worker absences, but are beginning to learn that they should.

An an employer, you must often deal with worker absences, but the majority of employers don’t actually measure the cost of worker absences according to an Aon Hewitt 2014 Health Care Survey released earlier this year. The survey polled 1,234 company representatives during December and January concerning their United States health care benefits.

On average, worker absences costs about 8% of payroll, but only 22% of employers will coordinate health and absence management with compensation this year. Though so few employees are doing this now, more than half are considering doing it in three to five years.

Of the 36% of employers that use data and metrics to measure the costs of absences, they primarily focus on the duration of absences and the frequency but other metrics include benefit costs, salary replacement costs, indirect costs, and absence costs as a percentage of payroll or sales, like temporary employee costs and overtime. We’ve seen a trend in employers of the desire to improve the health and wellness of employees, and this should continue in coming years as health is a key element of workers compensation, safety, absence management and wellness. These four areas drive financial results in terms of quality, productivity and risk control.

So as an employer what does this mean for you? It’s important to understand the connections between absence and results, and ensure that goals are properly aligned. More and more employers are placing focus on workers not only being present, but also energetic, creative and productive. To learn about how to properly insure your business and ensure that you and your workers are protected, click here.