New Methodology Helps Organizations Better Measure the Impact of Absenteeism

Madison Agee

New studies have shown some of the positive outcomes associated with well-being improvement programs among employers, such as improvements in overall well-being and individual well-being elements, higher productivity, lower rates of absenteeism, and gains in job performance. And now, recently published research helps organizations that are looking to better measure the impact of these programs. A new study authored by the Healthways Center for Health Research expands upon existing, widely accepted methodologies and provides organizations with a more comprehensive and robust way to gauge the impact of their well-being improvement programs.

The study “Regional Economic Activity and Absenteeism: A New Approach to Estimating the Indirect Costs of Employee Productivity Loss”, was published in Population Health Management and introduces a new method for measuring the economic impact of work-related absences. Called the Regional Productivity Loss (RPL) method, the new method expands upon the most commonly used and widely accepted method, the Human Capital Approach (HCA). The study showed that measuring the impact of workplace absenteeism using the RPL method resulted in materially higher cost estimates than would have been found via the HCA method (34 percent higher for two smaller employers and 51 percent higher for a larger employer).

For decades, the HCA method has been the most widely accepted measure for helping employers quantify the economic impact of workplace absenteeism, but the method has some significant weaknesses. To address these deficiencies, Healthways researchers developed the RPL model, which has three significant advantages over the HCA method:

  • Measures lost output and not simply lost wages. The RPL method recognizes that employees are expected to generate value for an employer above and beyond their hourly wage — otherwise, how would an organization be profitable?
  • Accounts for labor replacement for the absent employee. The RPL method acknowledges that when an employee is absent, a co-worker often steps in to cover the workload.
  • Extends the impact of lost productivity to the regional level. The RPL method takes into account the “ripple” effect of workplace absenteeism, by measuring the impact of a single employer’s workplace absenteeism on businesses that interact with that employer, such as vendors and customers, as well as organizations that interact with those businesses.

Because of these advantages over the HCA method, the RPL method more comprehensively calculates the economic impact of workplace absenteeism and thus better conveys the value of programs aimed at reducing absences, such as well-being improvement programs. This is especially true in industries where employees are highly skilled or trained and not easily replaced if they are absent.

In an upcoming article, we’ll take a look at another study authored by the Healthways Center for Health Research that also makes an important contribution to the science of well-being improvement program measurement.

Topics: Science and Research