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Time Off Is Money

Absenteeism-creep begins to worry corporations as the population ages. But companies are learning that not all the added costs are necessary

By Dave Lindorff | Updated on June 01, 2003

If a finance executive noticed a cost of operation was steadily escalating every year, to the point where it averaged 15% of total payroll, you would think that the executive might make controlling the growth of the expense a high priority. You would think, but it doesn’t always work out that way. Why? Sometimes the executive simply believes that the inflation is what everyone else is experiencing, and there is not much that can be done. And sometimes the problem and all the related costs haven’t been identified sufficiently enough for the executive to appreciate fully just how much it is sucking off the bottom line.

Both factors were at work at Springs Industries Inc., a $2.1-billion textile manufacturer in Fort Mill, S.C. When chronic health problems among its employees began costing it $35 million a year, the company at first chalked it up to inflation in medical care. Then somebody asked how much the same conditions were costing the competition. The answer made the executives at Springs Industries sit up and take notice: “We found that our total cost was running $10 million higher than the benchmark average,” says Paul Gilles, vice president for compensation and benefits.

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