HIDDEN COST4 min read
What absenteeism really costs, and how to calculate it
The cost of an absence is not the day of pay. It is the day of pay plus the cover, plus the productivity lost while the cover gets up to speed, plus the administrative time to manage it. Calculating only the first component understates the real figure by a wide margin.
The four components
Most absenteeism reports count days lost. A cost figure needs four inputs, and three of them are usually missing:
- Direct cost: pay for the absent day, where the employer bears it.
- Cover cost: overtime, surcharges or a temporary worker to hold the position.
- Productivity loss: the gap between the absent employee's output and the cover's during the ramp-up.
- Administrative cost: supervisor and HR time spent reallocating, documenting and following up.
The calculation
Take one month. Multiply absence days by the fully loaded daily cost of the role — salary plus employer contributions, not just salary. Add the cover cost for the days that had to be covered, and estimate the productivity gap as a percentage of the covered day. Add one to two hours of supervisory time per absence event.
Do the exercise per area rather than for the whole company. Absenteeism concentrates: a plant average hides the two shifts that carry most of it, and those two shifts are where an intervention pays back.
Where food service moves this number, and where it does not
It does not move absences caused by chronic illness, care duties or commuting. Claiming otherwise would be inventing a mechanism.
It does have a plausible effect on two fronts: gastrointestinal events attributable to what people eat during the shift, which a controlled operation reduces, and the time lost when staff leave the site for lunch and come back late. Both are measurable — but only if somebody records them before and after.
NoteMeasure the baseline before changing provider. Without three months of prior data, no improvement can be attributed to anything, and the discussion turns into opinion at renewal time.
CALCULATOR
Run it on your own numbers
The same arithmetic as above, with your company's figures. Nothing is sent anywhere: the calculation happens in your browser and nobody else sees it.
The headcount you want the figure for.
Salary and statutory benefits divided by working days.
ANDI · CESLA, EALI 2024
How much more the covering hour costs: overtime, shift premium or replacement. If the position can stay empty, leave it at 0.
What it costs you per year
—Annual total
- Days lost per year
- 540 days
- Direct cost of those days
- —
- Cost of covering them
- —
- Per employee, per year
- —
With the premium at 0 this figure is a floor, not an estimate: in shift operations the cover cost is usually the largest of the three components.
This does not tell you how much an operated canteen would save you, and be wary of anyone who promises that. It tells you what the problem is worth today.