The majority of Irish companies have no idea how much employee absenteeism is costing them each year, and this laissez-faire attitude could seriously impact on their competitiveness, according to Mercer Human Research Consulting.

A survey recently conducted by Mercer revealed that 65 per cent of respondent companies do not calculate the cost of sick days taken by their employees.

Kevin Kinsella, a consultant with Mercer, explains that absenteeism results in both direct costs such as sick pay, replacement staff and disability pay, and indirect costs such as loss of productivity.

In addition, "serial offenders" can have a detrimental effect on workplace morale if team members are regularly forced to pick up the slack.

With the average Irish employee taking approximately eight sick days per year, the total cost of absenteeism to employers can become significant.

Of the organisations surveyed that do measure absenteeism, more than one-quarter estimated an annual cost in excess of €500,000, while 40 per cent placed it at more than €250,000.

Kinsella advises that it is well-worth taking a proactive stance on absenteeism rates.

"Even a 5 per cent improvement can have a dramatic effect on the bottom line.

"There will always be short-term absence in organisations. Mercer's experience and research suggests that there is no one 'magic cure' to manage sickness absence," he says.

"The introduction of a range of simple measures such as absence reporting, early interventions on health issues, the provision of health insurance and the provision of support and training for line managers can, however, dramatically reduce absenteeism."

One of the key points to emerge from the survey is that putting in place a system to record the number of sick days taken by employees is the single, most-effective method of addressing the problem, particularly in the case of minor illnesses.

The data recorded on such a system should be analysed by relevant personnel to decide on the most appropriate course of action for each individual absence, and "to ensure that individuals receive the most effective treatment and that they return to work as soon as possible".

"Effective measurement and reporting can drive behavioural change," he says, adding that any such steps much be supported by senior management in order to succeed.

However, the research showed that while senior management may be aware that absenteeism is an issue, very few companies are taking enough action or a "strategic approach" to reduce the level of employees taking sick days. For example, 41 per cent of managers have no formal targets in relation to reducing the level of absenteeism.

Mr Kinsella stresses that the emphasis should be on enabling the employee to make a speedy recovery to full fitness, rather than adopting a "Big Brother" approach, such as regarding all sick days with suspicion.

Another simple method which acts as a psychological deterrent which Mr Kinsella says can be highly effective is the "return to work interview", in an effort to change an employee's attitude towards taking unnecessary sick days.

In recent years, incentive programmes have become popular, with employers trying to encourage their workforces to reduce absenteeism rates. Methods include providing bonus payments, prize bonds and even holiday to employees with good attendance rates.

According to Mr Kinsella, "the jury is still out" on the effectiveness of such schemes. He says that there is no conclusive evidence that they achieve their aim of reducing the number of sick days taken by employees.

According to the survey, the highest cause of absenteeism is "minor illnesses".

These account for one-third of sick days, while one in five cases cited ailments classed as "muscular-skeletal" - this covers back pain and injuries caused by accidents.

Stress was also found to be a contributory factor.

Although the companies surveyed indicated that only 4.7 per cent of absences from the workplace were due to stress, Mr Kinsella says that the contributory effect of stress may be "cloaked in other statistics" - such as recurring health problems or even alcohol-related problems - as employees may not feel comfortable attributing their absence to stress.

However, 20 per cent of organisations recognise that stress is a linked to absenteeism and accordingly have put in place some form of stress management service.