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How Time-Off Affects Your Bottom Line
- nettime solutions staff
Oftentimes managers overlook the importance of how employee time-off affects expenses. Tracking their attendance while they’re working is one thing, but tracking their time off is an entirely different approach.
When an employee requests time off, calls in due to illness, or has some form of an emergency the company suffers. Perhaps not literally – as shifts can be covered and deadlines can be rescheduled. But in the scheme of things:
Time = money
And every minute of every hour equates to some form of expense or gain.
In the financial realm where employees are concerned, an employer is going to have costs.
According to the Bureau of Labor Statistics, the average absence rate of an employee per year is 4.4 percent. Using this as a reference, let’s take that percentage and tally it up against the average amount you spend on payroll for an employee.
Do the math:
For simplicity sake, let’s say you spend an average of $50,000 per employee per year and you have 300 employees. From a cost perspective, you are spending $15,000,000 million on annual payroll, 4.4 percent of which is being allocated to employee absenteeism. In total, that’s $660,000 per year that attributes to overall employee absences.
So ask yourself again… How does time-off affect your bottom line?
I’m no CFO, but after reviewing those figures I’m having a hard time keeping my eyes from popping out of my head. Employee absences cost you money – and that’s just relating to figures in terms of attendance.
Employers can curb absences by establishing PTO banks, incentive programs and disciplinary policies. Interpreting, calculating and recording attendance is no small feat. Having a reliable time and attendance system to monitor your metrics is a great place to start and build a strategy from in order to track employee performance.