SME profits being hit by staff absenteeism

High rates of employee absenteeism within small businesses are damaging profitability, according to new research.

A poll of 400 business owners and senior decision-makers in UK SMEs, conducted by 3Gem Research on behalf of HR and payroll specialist Moorepay, has found that 71% say absenteeism is a significant problem that is hitting their profitability.

The findings also show that many small firms are experiencing higher than average absenteeism. According to the Office for National Statistics (ONS), the average number of sick days for a UK employee is 4.3 days a year. However, almost half (49%) of small business owners told researchers that their employees take more than five days off each year. For 14% this figure rises to seven days or more.

The vast majority of firms (91%) track staff absences such as sick leave and annual leave; however, other reasons for absence are less well tracked. These include: training, compassionate leave, medical appointments and sabbaticals.

Lisa Gillespie, director of HR services at Moorepay, said: "According to NICE, the National Institute for Healthcare Excellence, it is estimated that absenteeism costs the UK economy £15 billion a year. And yet many SMEs have inaccurate or incomplete data on staff absences and are unable to accurately assess how much it is costing their business."

The findings show that few SMEs have policies or processes in place to manage or reduce absenteeism in their business. For example, almost half of businesses don't offer flexibility around time off for medical appointments (46%) and family issues (53%). Yet 72% of those polled said that these types of policies could reduce absenteeism rates by 11% or more.

"Those that recognise the business and financial implications are often spurred on to take action," said Gillespie. "Having insights into absenteeism and taking positive steps to reduce it can have a huge impact on business productivity and therefore profitability - something no business can afford to ignore."

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