Weighing the costs of presenteeism: CEOs may be burning out their work forces

Chief Executive, The, June, 2005 by Keith Dixon

Woody Allen once said that 80 percent of success is simply showing up. But most chief executives realize that in today's business environment, simply showing up no longer cuts it.

To that effect, you already know that absenteeism hurts your bottom line. But have you considered what presenteeism is costing your business?

Unlike absenteeism, presenteeism is the new buzzword to describe low productivity of employees who are at work. It comes from distractions, be it physical (malaise, exhaustion), mental (concentration problems, depression) or because of problems at home (eldercare, childcare issues) or at work (job seeurity or performance concerns). It also comes from worker burnout--the exhaustion of mental and physical resources to complete self-perceived unrealistic work demands.

The Harvard Business Review estimates that presenteeism costs American businesses $150 billion annually in direct and indirect costs. And if you believe that your human resources department has it under control, think again. Most don't think that it is their responsibility, nor want to admit there is a problem.

Like most things, if presenteeism isn't prevented, minimized or managed, it can give rise to depression or substance abuse, increased disability claims and higher overall medical costs. In other words, it can undermine a company as much--or more--than better-known workplace challenges such as absenteeism.

The management of employee stress, performance anxiety and work/life balance isn't just for HR to focus on. In fact, HR people typically expect line-management to handle these types of problems. But when all things are considered, presenteeism should be managed as closely as employee turnover or the cost of health care benefits.

Presenteeism is much more difficult than absenteeism to measure, but researchers have found that lost productivity due to presenteeism is, on average, 7.5 times greater than that lost to absentecism. Moreover, recent industry studies show that productivity losses due to health-related presentecism amount to three times that spent on direct medical costs. In some industries, the cost can be as high as 10 to 1.

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Of course, presenteeism is not always the result of medical problems. Psychosocial issues, including financial troubles, addiction, divorce or family problems, can also have a significant impact on employee productivity. Further, employee problems can affect entire work groups, hurting morale, shifting the burden of work onto others, and distracting co-workers. Helping employees address these issues will pay off in productivity gains.

Unfortunately, it often takes a personal crisis at the executive level for the organization to wake up and recognize the toll a psychological crisis takes on the ability for an employee to do his or her job. CEOs need to understand and address the impact of behavioral issues on a company's overall performance. When company leadership commits to understanding, measuring and addressing presenteeism, chances for success improve dramatically.

Recent advances in behavioral health sciences have led to new psychometric tools that can be used by companies to quantify the business impact of behavioral health in general--and presenteeism in particular. These tools can guide corporate executives to solutions such as enhanced employee assistance programs and work/life benefits. Like other behavioral health issues, presenteeism requires an integrated approach to care delivery that addresses behavioral, medical and pharmaceutical issues in one fell swoop.

No matter how noble the intention, CEOs should not attempt to address presenteeism out of the goodness of their individual or corporate heart. It's a business necessity, and the executive suite should champion the notion that addressing these issues will directly benefit the bottom line. Fact is, no company can compete for long on a global scale, when behavioral-related productivity drains are impeding its efforts to maximize worker performance and minimize expense.

Keith Dixon is president and CEO of CIGNA Behavioral Health, headquartered in Eden Prairie, Minn.