Absenteeism from work costs businesses billions of dollars each year, but having an effective time and labor management system can help you keep these expenses under control. An analysis by the Integrated Benefits Institute (IBI) discovered that $227 billion is lost due to employee absenteeism each year from illness or underperformance while at work. Cornell University economist Sean Nicholson also found that “employers can save an average of $3.00 for every $1.00 they invest in improving their workers’ health.” Besides having a health and wellness plan in place at your business (which pays an average of $5.81 for each dollar spent), employers can also put the following tips to work to save on Time & Labor costs:
Keeping track of employee absences can get complicated when you manage locations that employ large numbers of people who work multiple shifts. Restaurants and the hospitality business are two common examples. It can become quite difficult to track all the vacation days earned, sick days used, and personal days spent for each employee. That’s why an integrated time and attendance system is so important for a small business. An integrated time tracking system will automatically track employee absences, and feed that data into the payroll processing system. Companies that accurately track absences may discover they can save significant amounts of money through cuts in unplanned absences.
For employers with fewer than 100 employees, unscheduled absences can cost between $100 and $500 per employee, per day. That's according to a U.S. Chamber of Commerce survey on the costs of absenteeism to small businesses. The cost of an employee sick day is calculated as the employee’s salary plus 30% employer costs divided by 240 working days (in a calendar year). For example, if the average salary in Orange County is $65,000 per year, that would result in an average sick day per employee cost of $352 per day ($65,000 + $12,000 = $84,500 / 240 = $352). Offering incentives to employees for completing health assessments or achieving desired health outcomes, such as weight loss, has shown to have desirable outcomes, as well as cost savings from reduced employee absences.
A typical time and attendance policy addresses the issue of attendance in terms of attendance impacts to the organization, as well as an employee’s peers, colleagues and customers. An effective time and attendance policy also clearly explains the consequences of excessive absences and the penalties that could result from time theft (the falsification of attendance records). Having an established time and attendance policy helps protects the business, and ensures that every employee is on the same page with respect to related rules and regulations. Providing clear examples of what is and is not acceptable in your time and attendance policy will also help new employees understand exactly what is expected of them.
In many office environments, employees learn what's acceptable or what isn’t based on the behavior they observe in others. They interpret their employers' time and attendance policies based on the culture in which they work and interact with on a daily basis. This can often lead to a skewed understanding of corporate policy from one employee to the next. That's why providing regular time-tracking training programs or videos during employee orientations is so important. Employees need to know their roles in protecting the financial health of the organization, and that keeping accurate time-tracking records is an essential part of their jobs. Thankfully, time-tracking systems are becoming easier to use and more advanced every day. Clear guidelines and let employees know what is expected of them through a clear time and attendance policies.
Once your company begins using a time and labor management system, such as those offered by PAYDAY Workforce Solutions, you can offer training on the use of those time-tracking systems and fully integrate the process of time tracking for your business.
PAYDAY Workforce Solutions provides a single database SAAS solution for Human Capital Management (HCM) including payroll, human resources, time management, benefits administration and onboarding to companies of all sizes and in various industries.
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