The Impact of Absenteeism on the Bottom Line of an Organization - Assignment Example

A Business Report on the Impact of Absenteeism on the Bottom Line of an Organisation Table of Contents Introduction 2 Research question 2 Research objectives 2 Literature review 3 Research methodology 4 Research method 4 Sampling method 4 Data collection 4 Discussion of findings 5 Demographics of the research participants 5 Common form of absenteeism 6 Direct impacts of absenteeism on the bottom line of your supermarket 7 Indirect impacts of absenteeism on the bottom line of your supermarket 7 Conclusion 8 References 9 Hacket, R. (1989). Work attitudes and employee absenteeism: A synthesis of the literature. Journal of Occupational Psychology. Volume 62, (3), pages 235–248, 10 Johnson, C. (2011). The impact of employees perceptions of the leadership characteristics of immediate supervisors on job-related absenteeism. ProQuest, UMI Dissertation Publishing 10 Kehinde, O. (2011). Impact of Job Satisfaction on Absenteeism: A Correlative Study. European Journal of Humanities and Social Sciences. Vol 1, (1) 2220-9425 10 Appendix 11 Sample questionnaire 11 Introduction This present business report is aimed at investigating the impact of absenteeism on the bottom line or the financial performance of an organisation. To be precise, primary empirical data will be gathered from a few selected local supermarkets in order to establish how absenteeism by employees affects the financial performance or the profitability of the local supermarkets. It is important to note that the primary empirical data will be used alongside secondary data, which will be gathered from a few selected sources that will be listed on the reference list. The motivation for selecting this topic is pegged on the fact that it has been reported that workplace managers are normally faced with the challenge of handling unscheduled absenteeism, which costs business organisations £2,300 per year for each employee paid on an hourly basis and £1700 per year for pensionable employees (Forbes, 2013). This therefore, means that the report will have a significant contribution to the existing body of knowledge on the impact of absenteeism. Research question How does absenteeism within organisations affect the oraganization’s bottom line or financial performance? Research objectives a) To establish the cause of absenteeism within organisations b) To establish the direct impact of absenteeism on the bottom line of an organisation c) To establish the indirect impact of absenteeism on the bottom line of an organisation Literature review To begin with, the studies conducted by Porter and Steers (1973), described absenteeism as the act through which an employee fails to show up at a designated post within the designated time. De Paola (2008) on his part described absenteeism as the occasional act of being away from school or work without a justified reason. In the studies conducted by Hacket (1989), it has been noted that absenteeism exists in three different categories that consist of scheduled absenteeism, unscheduled absenteeism, and partial shift absenteeism. Schedule absenteeism occurs when the employee is on vacation. Unscheduled absenteeism normally occurs during sick days, while partial shift absenteeism is when an employee leaves work early, arrives too late at work, or when he or she takes long breaks away from an assigned post (Hacket, 1989). An absent employee creates a gap within an organisational structure that will need to be filled in order for normal operations to resume. In case the position of the absent employee is crucial and certain specialized skills are required to manage the roles, then it means the operations within the organisation will have to come to a halt until the absent employee shows up (De Paola, 2008). According to Johnson (2011), absenteeism within an organisation has detrimental effects on the bottom line of an organisation and this is attributed to lost productivity on the absent member of staff. Additionally, absenteeism causes the organisation to operate in a lean manner, which makes it hard to achieve certain targets because of lack of contribution from the absent employee. Research methodology The research methodology spells out the methods and procedures that were used in order to attain the objective of the research study. Research method The research methods that was applied in this study include secondary research method and primary research method. Secondary research method entailed obtaining secondary data from the sources that have been listed on the references section. Primary research method entailed obtaining data from primary sources/ participants who comprised of ten store managers of a few selected supermarkets within the London area (McNeill, 1990). Sampling method The sampling method that was used in obtaining the ten participants was simple random sampling method. Through this method, the researcher selected participants from supermarkets that he opted to visit with no specific criteria of selection for the supermarkets. The only criterion perhaps that was used is selecting supermarkets where the store manager agreed to participate in the research study. Data collection The primary data was collected by the use of questionnaires of which a sample questionnaire that was used has been attached at the appendix section of this report. Discussion of findings The findings that will be discussed in this section were obtained from the responses that were given on the questionnaire by the ten store managers of the selected supermarkets, which included branches of large retail supermarkets that are located within London. Demographics of the research participants First, the participants of this research study were obtained from the supermarkets that are listed in the table below. Supermarket Number of branches sampled WholeFoods Market 2 Asda 1 The Co-operative Food 2 Morrisons 1 Nisa-Today’s 1 Ocado 1 Spar 1 Waitrose 1 Total 10 From each store, one store/ branch manager was selected to participate in the primary research study, thus, making the total participants to be ten. The researcher opted to use store managers only as the research participants since their position gives them adequate knowledge on the level of absenteeism in their supermarkets and the impact this has on the supermarket’s profitability. The researcher also opted to establish the duration at which the participants had worked as store / branch managers at the selected supermarkets. This information was considered to be crucial in determining the accuracy of the response, since managers who have served at the position for a longer duration like six months and above are in a better position to tell the relationship between absenteeism and the bottom line of the supermarket. The chart below indicates the feedback that was obtained in regards to this question and it is noted that majority of the participants had served at the position between 1 and 2 years, meaning that the feedback obtained was from experienced managers and hence it was highly accurate. Common form of absenteeism In regards to this question, majority of the participants indicated that partial-shift absenteeism is the most common at their supermarket. Just as a recap, this form of absenteeism is whereby employees report to work late, leave early, or they extend their breaks beyond the allowed limit. The other common form of absenteeism is unscheduled absenteeism in the form of sick-off. The feedback obtained on this question has been illustrated on the chart below. Direct impacts of absenteeism on the bottom line of your supermarket The managers stated that the key direct impact of absenteeism on the bottom line of the supermarket is low sales. The managers who provided explanation to this point stated that low sales arise from the fact that when a sale assistant is absent from his or her post then it means customers will not get guidance when seeking to make a purchase among the varieties that are available. Secondly, there will no one to persuade the customers to make a purchase among the varieties that are available in case they are undecided. Indirect impacts of absenteeism on the bottom line of your supermarket The key indirect impact of absenteeism on the bottom line of the supermarkets is that it causes the employees who are present to have excess workload since they will be equally undertaking the roles of the absent employee. This means that their level of productivity will be low, which indirectly affects the financial performance of the supermarket owing to the fact that customers will not be served properly and there will be poor coordination amongst the staff. Conclusion One of the objectives of this study was to establish the causes of absenteeism within organisations. It was noted in the literature review sections as well as from the findings in the primary research that the main causes of absenteeism include poor health condition of the employee, which in turn forces the employee to take unscheduled absenteeism in order to undergo treatment or take medication until he or she recovers back to perfect health. Another cause of absenteeism that can be extracted from the findings of this study is poor time management by the employees, which result in partial-shift absenteeism in the form of reporting late to work, leaving early than expected and taking longer breaks. According to Johnson (2011), the existence of partial-shift absenteeism within an organisation points out to the existence of poor employee management structures or lack of stringent rules that can effectively discourage employees from voluntarily failing to be at their workstation when it is required. Lastly, it was noted that the other cause of absenteeism within organisations is scheduled leave or vacation break. According to Mullins (2007), this form of absenteeism does not have a negative impact on the organisation at large since it is planned, which means that another person is normally prepared to take up the roles of the one going on leave or vacation. The second objective of this study was to establish the direct impact of absenteeism on the bottom line of an organisation. From the primary data that has been obtained it is noted that absenteeism at the supermarket leads to low sales since there is no one present to persuade the customer to make a purchase or assist the customer with his or her purchase decision. Another example is extracted from the studies conducted by Mullins (2007) it is stated that when a cashier at the supermarket is absent, it means there will be long queues at the counters, which will be in operation and this will push away potential customers who would not have time to make long queues to other supermarkets. The third objective of this study was to establish the indirect cause of absenteeism on the bottom line of an organisation. The results obtained from the primary data indicated that absenteeism indirectly affects the bottom line of the supermarket since they generate less revenue owing to the fact that employees are not fully productive as they are overloaded with duties that were previously assigned to the absent employee (Kehinde, 2011). Absenteeism also indirectly affects the bottom line of an organisation since there will be disorganisation arising from the fact that certain functions are not being performed since the person responsible is absent. This disorganisation result in the organisation failing to tap or take advantage of possible opportunities or maximizing their potential. For example, a customer may fail to make a purchase if the sales assistant with specialty in electronics is not around to explain why a particular brand of Fridge is the best to buy. In conclusion, it is correct to state that these research objectives have collectively answered the research question that was spelt out in the introduction section. References De Paola, M. (2008). Absenteeism and Peer Interaction Effects: Evidence from an Italian Public Institute. Munich: Munich Personal RePEc Archive Forbes (2013). The Causes and Costs of Absenteeism in the Workplace. Retrieved from: http://www.forbes.com/sites/investopedia/2013/07/10/the-causes-and-costs-of- absenteeism-in-the-workplace/. Accessed on [3rd November, 2014] Hacket, R. (1989). Work attitudes and employee absenteeism: A synthesis of the literature. Journal of Occupational Psychology. Volume 62, (3), pages 235–248, Johnson, C. (2011). The impact of employees perceptions of the leadership characteristics of immediate supervisors on job-related absenteeism. ProQuest, UMI Dissertation Publishing Kehinde, O. (2011). Impact of Job Satisfaction on Absenteeism: A Correlative Study. European Journal of Humanities and Social Sciences. Vol 1, (1) 2220-9425 McNeill, P. (1990). Research Methods. Hove, UK: Psychology Press Mullins, L. (2007). ‘Management and Organisational Behavior (8th Edition). Harlow: FT/Prentice Hall. Porter, W. and Steers, M. (1973). Organisational, work, and personal factors in employee turnover and absenteeism. Psychological Bulletin, Vol 80(2), 151-176 Appendix Sample questionnaire Participants’ details a) Kindly state which supermarket you work for ………………………………………………………………………………………. b) Kindly state your position at the supermarket ………………………………………………………………………………………. c) Kindly state the duration that you have worked at this position …………………………………………………………………………………….. Research questions 1. What is the common form of absenteeism at your store/ supermarket? (kindly tick or circle the correct answer) a) Scheduled absenteeism b) Unscheduled absenteeism c) Partial-shift absenteeism 2. What are the direct impacts of absenteeism on the bottom line of your supermarket? (kindly elaborate on your answer) 3. What are the indirect impact of absenteeism on the bottom line of your supermarket? (kindly elaborate on your answer) Read More