Inter-Capital Limited is a 500 employee firm faced with a 3.7 percent annual abs
ID: 2923752 • Letter: I
Question
Inter-Capital Limited is a 500 employee firm faced with a 3.7 percent annual absenteeism rate over the 1,960 hours that each employee is scheduled to work. About 15% of those absent are blue collar (average wage 26.96 an hour) 55 percent are clerical (wage of 20.25 per hour) and remainder are management and professional (average 44.50 per hour). About 40% more of the employees salary is spent on benefits, but employees are not paid if they are absent from work. In the last 6 months, supervisors (average salary (29. 75 per hour) estimate that managing absenteesim problems cost them about an hour a day for each of the 245 work days per year. It's a serious problem that must be dealt with, since about 20 supervisors are directly involved with absenteesim. On top of that, the firm spends approximately $590,000 more on costs incidential to absenteesism. Temporary help and lost productivity can really cut into profits. Just how much is absenteeism costing Inter-Capital Limited per year per employee?
Explanation / Answer
Total hours /year/employee = 1960
Absenteism hours @ 3.7% of above/Employee = 0.037*1960 = 72.52
Total absenteism hours over the year/Employee = 72.52 * 245( no. of work days in the year) = 17767.4
Total Annual Absenteism hours for the firm = 17767.4 * 500 ( no. of employees ) = 8883700
Hours Lost due to blue collared Employees = 15% of 8883700 = 1332555
Monetary Loss due to blue collared employees = 1332555 * 26.96 ( hourly wage ) = 35925682.8 - Result (1)
Hours Lost due to clerical Employees = 55% of 8883700 = 4886035
Monetary Loss due to clerical employees = 4886035 * 20.25 ( hourly wage ) = 98942208.75 - Result (2)
Hours Lost due to Mgmt. and professional workers = 30% of 8883700 = 2665110
Monetary Loss due Mhmt. nd Professional Workers = 2665110 * 44.5 ( hourly wage ) = 118597395 - Result (3)
Hours Lost by Supervisors per day = 20
Hours Lost by Supervisors per year = 20*245 = 4900
Monetary Loss due to supervisors managing absenteism = 4900* 29.75( hourly wage ) = 145775 - Result (4)
Incidental Costs = 590,000 - Result(5)
The total costs to the company per year is the sum of results (1) to (5). Summing we get,
Total Costs = 35925682.8 + 98942208.75 + 118597395 + 145775 + 590,000
Total Costs = $254201061.6
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