How One Late Employee Can Hurt Your Business: Data from 25 Million Timecards

Employees who clock in a few minutes late—or not at all—often dampen sales and productivity, says a study of 100,000 workers by Ananth Raman and Caleb Kwon. What can managers do to address chronic tardiness and absenteeism?

The retail business is not for the faint of heart. Turning a consistent profit requires navigating many variables, such as hiring capable staff, ordering the right products at the right time, and complying with a litany of regulations.

But one of the biggest challenges may well lie beyond the control of store owners: Employees showing up late—or sometimes not at all.

Managers are aware that employee lateness and absenteeism is prevalent and expensive to their operations. Now, researchers at Harvard Business School have gone a step further and documented the impact of unexpected scheduling deviations on the performance of individual stores in a new study.

“ONE EMPLOYEE BEING LATE OR ABSENT CAN NEGATIVELY AFFECT NOT ONLY STORE OPERATIONS, BUT ALSO THEIR COWORKERS BY MAKING THEM STAY TO MAKE UP FOR THE LOST LABOR.”

Ananth Raman, UPS Foundation Professor of Business Logistics at HBS, and doctoral student Caleb Kwon analyzed timesheet records of more than 25 million employee shifts over four years at a large US grocery chain. Controlling for a host of variables, they find that a 1 percent increase in lateness and absenteeism is associated with a 2.3 percent decline in daily sales.

Perhaps more important for retailers, though, the study suggested that lateness and absenteeism can become a contagion that weighs down the employees who have to pick up the slack. Those findings could be especially important if the economy slows and employers regain the upper hand in hiring after pandemic fatigue set off a wave of “quiet quitting” and not-so-quiet quitting.

“The heart of what we found is that the [quality of work] depends on how much it’s accompanied by other employees being late or absent,” Kwon says. “You still have 100 minutes of labor, but it won’t be as productive. In addition, employee lateness or absenteeism can have spillover effects. Specifically, one employee being late or absent can negatively affect not only store operations, but also their coworkers by making them stay to make up for the lost labor.”

The chain reaction of showing up late—or not at all

The authors reach their conclusions by correlating the timesheet records to a host of other data points, including daily store sales, scheduling practices, store traffic, and weather.

In conducting their analyses, the researchers created a statistical abstract of sorts showing the chain reactions triggered by lateness and absenteeism in the stores. According to their research, in a sample of more than 25 million shift timecards covering more than 100,000 employees across 500-plus stores over a four-year period:

• 9.6 percent of shifts were associated with a late employee.
• Employees who were late were late on average by 21 minutes.
• 11.6 percent of shifts were marked absent.
• Employees missed the start of morning shifts—between 6 a.m. and noon—most.
• Part-time workers struggled most with coming in on time.
• One employee’s lateness or absenteeism can increase the probability that coworkers will need to work longer.

In addition to a decline in overall daily sales, the research shows that lateness and absenteeism correlate to smaller order sizes.

Specifically, a 1 percent increase in tardiness corresponds to 1 percent lower sales per transaction. That phenomenon could be due to factors such as longer lines or difficulty in finding a store employee for help.

Retail operations: An oxymoron

The paper adds granularity to Raman’s three decades of research into operations management, which includes a focus on retailing. He notes with a laugh that when he first decided with his mentor at the Wharton School of Business at the University of Pennsylvania to focus on retail operations, many considered the topic an “oxymoron.”

“THE RIGHT LABOR NEEDS TO BE AVAILABLE AT THE RIGHT TIME AND STORE TO MATCH CUSTOMERS WITH PRODUCTS MORE EFFECTIVELY.”

“Retailing was seen as a marketing topic: why do you need operations?” Raman says. “Over time, we figured out that you have to have the right product available at the right time and place, when the customer is there and ready to spend. So, we focused on understanding consumers and supply chains better.”

He adds: “It’s only over time that we focused on the vital role of store labor. The right labor needs to be available at the right time and store to match customers with products more effectively.”

Worrisome trends on the rise

Kwon and Raman found indications that the extent of tardy or absent employees is getting worse. A portion of their study included periods before and after the onset of the COVID-19 pandemic.

The authors looked at the dataset over three defined periods: October 2019 to March 2020, April to September 2020, and October 2020 to March 2021.

The study pinpointed “considerable increases in absenteeism” across the three periods, as well as signs that the increases were not one-time phenomena. As a result, “understanding the causes and effects [of lateness and absenteeism] should be a key priority of retailers.”

One tip for managers: Address the problems through better training and scheduling practices, particularly if they reduce the elements of surprise and give employees certainty about expectations, the authors suggest.

Managers should understand, ”If they call people on Monday and say, ‘hey, you gotta work on Tuesday,’ there’s a higher likelihood they might not show up for work,” Raman says. “Maybe they can’t find daycare for a child, or maybe they have another job because you only employ them part-time to avoid paying for healthcare benefits.”

 

Source: HBSWK