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How ‘Presenteeism’ Costs Hundreds of Billions

When employees arrive ill or distracted, they're at work but not always productive.
By Steve Jacob |
illustration by Jon Reinfurt

Many companies do not write checks for their highest health-related costs.

A decade ago, two studies  found that on-the-job productivity losses from pain and depression cost U.S. employers more than $90 billion in today’s dollars.  The phenomenon is known as “presenteeism.” Employees are there, but not doing much because they do not feel well or are distracted. Researchers calculate costs associated with lack of productivity are at least two to three times greater than direct healthcare expenses. 

Estimates vary, but some suggest that presenteeism accounts for 75 percent of productivity loss, while absenteeism represents the balance. They comprise what are called “indirect medical costs.” The two reflect an iceberg effect because absenteeism is visible, but far less prevalent than presenteeism. The combined cost to the U.S. economy is $344 billion annually.

Depending upon the industry, presenteeism can account for up to 60 percent of a company’s direct and indirect health costs, when factoring in productivity. Poor health generally costs the U.S. economy more than a half trillion dollars annually. There are, of course, causes of presenteeism that are not health-related. Financial and marital problems can weigh heavily on employees and cause them to be less productive. However, putting a dollar figure on those factors is even more difficult than indirect health costs. 

A 2004 Harvard Business Review article— “Presenteeism: At Work—But Out of It”— first popularized the term. It recounted a study of worker productivity at Lockheed Martin Corp., which found that employees who came to work sick with common ailments such as colds, flu, arthritis, headaches, back pain, and allergies cost the company $34 million in one year. Remarkably, allergies and sinus trouble cost the company $1.8 million. Presenteeism from these ailments can cut individual productivity by one-third or more. 

More than 80 percent of a company’s total cost of allergies is on-the-job productivity loss. That is not a small consideration in Dallas-Fort Worth, which consistently ranks high among U.S. regions in allergens. The corresponding figure for migraine headaches is nearly 90 percent.

Presenteeism has been around a long time. The term first appeared in Mark Twain’s 1892 book The American Claimant, and is surprisingly prevalent among those earning higher salaries, symbolic of those who are more driven and consider themselves less dispensable to their organizations. Others fear they might lose their jobs or fall hopelessly behind if they are absent. 

Today’s workplace and employee demographics foster presenteeism. Dual-earner families now account for about two-thirds of married couples, which is twice the 1970 rate. Some parents tend to push through their ailments to “save” sick leave for dealing with their children’s health problems—if they have it at all. According to the federal government, 61 percent of private-industry employees have access to sick leave. 

The Great Recession appeared to induce presenteeism. The top health-related search terms from December 2008 to December 2011 were “stomach ulcer” and “headache symptoms,” both of which increased about 200 percent compared to prior years. 

The question is what to do about presenteeism. Most large companies already have wellness programs, although it is difficult to calculate the return on investment because so many factors affect employee health. Roughly half of employers say they offer the programs specifically to increase productivity and reduce absenteeism.

A Rand Corp. study in January found that workplace lifestyle management programs aimed at reducing health risks such as weight control and stress saved $.48 for every $1 spent, taking into account the impact on both healthcare costs and absenteeism. If medical cost control is what executives seek, they are better off focusing on high-risk employees with multiple risk factors and chronic disease.

Even more elusive is figuring out the exact degree to which various ailments reduce productivity. The Stanford Presenteeism Scale seeks to determine the effects of health on productivity. Employees are asked to describe the extent to which a health condition affects their work. The questionnaire attempts to measure ability to complete work and avoid distractions.

Healthways, a Franklin, Tenn.-based well-being improvement company, has developed a Well-Being Assessment, adapted from its Well-Being Index that the company tracks with Gallup. The WBA seeks to capture well-being at the individual level. 

Healthways and Arlington-based Texas Health Resources announced a 10-year agreement in 2012 to help physicians analyze and address patient health behavior. The company also has made Fort Worth the nation’s largest Blue Zones urban project, designed to improve community health using methods based on the best-selling book of the same name. Healthways will help the city make environmental, social, and policy changes to encourage healthy behavior.

The WBA was completed by about 20,000 employees in three large companies. Those who said it was difficult to exercise or eat healthy at work were twice as likely to have high presenteeism. 

In 2011, about half of DFW adults met federal government guidelines of 150 minutes or more of aerobic exercise, or at least 75 minutes of vigorous exercise, weekly. Compared with 2001, more women but fewer men met that standard. However, the obesity rate rose by about 10 percentage points in Dallas County, to 35 percent of men and about 40 percent of women.

Worker perception of employer support had an even more profound effect. Those who said their employer had little interest in helping employees become physically active were 123 percent more likely to have high presenteeism. Those who said their employers did not support them emotionally were 320 percent more likely have high presenteeism. 

The results suggest that employee behavior and employer support each have important effects on presenteeism. Presenteeism has been studied internationally, and the research perspectives are different. Europeans tend to focus on what causes presenteeism, while Americans have concentrated specifically on the phenomenon’s bottom-line productivity losses.

Chief financial officers tend to prefer more tangible productivity measures than presenteeism, says Wally Gomaa, chief executive officer of Dallas-based ACAP Health Consulting. His company has found that there is a direct link between clinical measures and productivity.

“If you lose weight, you are going to feel better and have more energy,” he says. “You will be more productive at work.”

Gomaa says addressing workplace stress is the most tangible way to affect presenteeism. His company uses emWave technology to teach employees how to measure their own cortisol—a stress hormone—and heart rate variability, and instruct them on how to control both to remain “in the zone” at work. He calls the $200 emWave device a “high-tech mood ring for stress.” Gomaa estimates about 10 percent of ACAP’s 1,200 clients use a strategy to reduce employee stress. 

And indirect costs tend to be “obscure” to executives used to seeing a line item for health costs on financial statements, says Lisa Choate, owner of Dallas-based Ultimate Health Matters. Manufacturers, for example, have a firm grasp of measuring worker productivity, she says, but measuring it remains elusive for most other firms. Indirect health costs could impact safety claims, short-term disability, and worker’s compensation, she says.

Choate encourages clients to adopt a comprehensive approach to wellness to ensure employers “cast a wider net” to address direct and indirect costs. UHM health coaches talk to workers about physical activity, nutrition, life balance, and financial health. 

“Presenteeism may have everything to do with stress at home or financial duress, and nothing in the workplace,” Choate says. 


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