Sparks Industries, a 1,800-employee firm (40-hour work week), is faced with a serious and growing absenteeism problem. Last year, the total number of employee hours lost to absenteeism came to 119,808. Of the total employees absent, 65 percent were blue collar (average wage of 23.15/hour), 25 percent were clerical (average wage of $17.80/hour), and the remainder were management and professional (average salary $34.60/hour). On average, the firm spends 38 percent more of each employee's salary on benefits and, as company policy, pays workers even if they are absent.

The 45 supervisors (average salary of $26.35/hour) involved in employee absenteeism problems estimate they lose 25 minutes per day for each of the 245 days per work year just dealing with the extra problems imposed by those who fail to show up for work. Finally, the company estimates it loses $529,500 in additional overtime premiums, extra help that must be hired, and lost productivity from the more highly skilled absentees. As HR director for Sparks Industries, your job is to estimate the cost of employee absenteeism so that management can better understand the dimensions of the problem.

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