South African companies, reeling from the rising cost of absenteeism on employee productivity, will be shocked to discover that presenteeism actually costs them much more. New research by Momentum Corporate shows that presenteeism, the phenomenon when employees are at work but not being productive because they are distracted, could be costing South African businesses a staggering R89 billion, or 5% of Gross Operating Profits (GOP). This figure based on the total Gross Operating Profits published in Stats SA’s Gross Domestic Product release for Q4 2017, combined with absenteeism losses, results in a total cost of a R122 billion or 6.5% of GOP.
Katherine Barker, Head of Momentum FundsAtWork, says the research is the first of its kind in South Africa. She believes the results will be invaluable in helping employers and financial advisers to understand the main reasons employees become distracted at work. These insights are the first step towards quantifying the impact of presenteeism and proactively intervening to reduce its impact.
Using the South African average day rate of R405.05 based on Stats SA’s Gross Domestic Product release for Q4 2017, it is estimated that employers are losing an average R596 566 per 100 employees per annum due to presenteeism. The results show that, on average, 27% of employees go to work but don’t always work effectively because they are distracted at some point. Plus, 33% of employees that were absent indicated they had been distracted on days they were at work prior to being absent, suggesting presenteeism can be a lead indicator of absenteeism in some cases.
The research uncovered five key presenteeism drivers, which were ranked according to prevalence (number of employees impacted) as well as the average time that they were distracted per reason. The results are depicted below.
The top driver of presenteeism is personal reasons, including sick family members, bereavement and family/relationship problems. Financial matters, such as over-indebtedness and lack of savings for unplanned expenses, is the second most damaging driver of distraction in the workplace. Physical and mental health distractors, such as hypertension, headaches, flu as well as depression, burnout and mental exhaustion, are also serious distractors in the workplace.
Barker believes that there are a number of proactive measures employers can take to reduce the impact of these presenteeism drivers. For example, an effective Employee Assistance Programme can be instrumental in helping employees cope better with their personal issues.
Barker says: “Partnering with the right umbrella fund can also reduce the impact of financial and health stressors on employee productivity. For example, the right umbrella fund offers flexible insurance benefits that can adjust based on changing needs, which reduces over-insurance and facilitates the flow of more money to long-term savings.”
“The right umbrella fund also offers benefits and services such as a reward programme to encourage healthier lifestyles, free legal, funeral, trauma support and telehealth services, as well as financial education programmes. These benefits and services help employees to improve physical and mental health, save more and adopt better financial habits.”
Barker concludes: “Each company is unique. Solving for the presenteeism problem should be based on a good understanding of a company’s potential exposure based on their employee profile, industry and the related presenteeism drivers. Financial advisers, armed with intimate client knowledge and the valuable insights emerging from this research, can play a key role in solving their clients’ presenteeism problems.”