GoodShape unveils financial impact of employee ill health for all sectors, with Impact of Absence Calculator

Organisations in the Transport industry spend more on employee absence than organisations in any other sector, according to data from wellbeing and performance experts GoodShape. An organisation[1] of 1,000 employees in the Transport industry spends an average of £2.62 million per year on employee absence. Employers in the Education and Oil & Gas sectors follow closely behind, spending £1.98 million[2] per year for an organisation of the same size.

Taking an average across all sectors, the annual cost of absence for a 1,000-employee organisation is £1.75 million. Organisations in Transport, Education, Oil and Gas, Healthcare, and Retail sectors all spend above average on their employee absence costs. Conversely, organisations in the Government, Construction & Civil Engineering, Utilities, Manufacturing, and Hospitality sectors all spend below the UK average.

Hidden costs revealed

The figures come from GoodShape’s new Impact of Absence Calculator, which reveals not only the direct costs of absence to organisations, such as lost working time and replacement worker fees, but also the hidden costs of poor workforce wellbeing that organisations often overlook. Its ‘lost productivity’ costing, for example, factors in time spent by managers administering absence, and the typical reduction in output from inexperienced replacement workers.

All data is taken from GoodShape’s proprietary database of workplace absences which covers more than 750,000 employee records. Each industry sector included features a minimum of 4,900 employees. The figures represented in this article are based on an organisation size of 1,000 employees providing a 50% combination of statutory sick pay and company paid sick pay. Other values such as average length of absence are based on default sector averages derived from GoodShape’s database with over a million data points. Average salaries are calculated using data from Statista.

What the data means

Alun Baker, CEO of GoodShape comments:

“Absence, productivity, and effective wellbeing management are intrinsically linked, and the true financial cost of absence is not fully understood by most employers. It goes far beyond the direct costs of providing temporary cover and sick pay. In fact, most employers fail to record employee absences accurately, and on average, 18.9% of absences are missed. So, in today’s challenging economic environment, with the focus on improving productivity and driving sustainable business growth, addressing employee ill health and correctly capturing and addressing absence has never been more important. Without a ‘cost-benefit’ analysis though, it’s difficult for leaders to make the case for investment strategies to improve employee wellbeing and organisational performance.”

GoodShape’s Impact of Absence Calculator draws on two decades of real absence data collated from UK employers. It calculates results for specific industries and sectors and can be tailored to specific headcount, salary, duration of absence, and other factors. It reveals the direct and indirect costs of absence specific to an organisation, including lost management time, and provides separate estimates for mental health-related absences. Users also receive information on the cost of unreported absence and non-compliance risks related to ‘Return To work’ processes.

Baker concludes:

“Our Impact of Absence Calculator illustrates the potential value to be gained by accurately identifying the causes of absence, then taking targeted steps to make a measurable improvement. It provides leaders with the compelling case they need to confidently inform their board about where to invest.”

[1]  An organisation in the Transport sector of 1,000 employees

[2] An organisation of 1,000 employees