Absenteeism is so pervasive in Latin America and Asia that 10 percent of a business’ workers might not show up on any given day.
This risk can create tremendous uncertainty, especially for businesses running on low margins, says Jorge Tamayo, an assistant professor at Harvard Business School.
“You can’t control absenteeism, and you don’t know when you will receive an order for a very important buyer,” he says. “So how do you execute your strategy?”
While studying a factory in India, Tamayo found one efficient way businesses can remain productive even when employees regularly call in sick: Managers can forge close relationships with other managers so they can borrow employees from one another to fill in the absentee gaps, according to his forthcoming research in the Journal of the European Economic Association.
Grappling with chronic absenteeism
To explore how managers handle high absentee rates, Tamayo and his fellow researchers—Achyuta Adhvaryu of University of California–San Diego, Jean-Francois Gauthier of HEC Montreal, and Anant Nyshadham of University of Michigan—studied a factory in India that produced ready-made garments.
The factory handled some 20 production lines with 60 workers each, running on tight schedules with little room for error. Yet the average daily worker absenteeism rate was 11 percent, and for any particular production line, the absence rate was 20 percent or higher at least one out of 11 days.
“You need to solve the problem quickly. You can’t wait to put the data in the system.”
Sickness wasn’t the only reason for absences. Factory workers, who came to the city from rural areas all over the country, each celebrated holidays by attending cultural festivals, which varied depending on the cultural and religious background of the employees—making absences even more difficult to anticipate.
Prior to the study, the company’s CEO tried to solve the chronic absenteeism problem by calling in a big-name consultant, who attempted to develop a formal system for transferring workers among lines based on demand—but unfortunately failed. With attendance changing daily, it took half a shift to thoroughly analyze the problem in order to address gaps.
“You need to solve the problem quickly. You can’t wait to put the data in the system,” Tamayo says.
How managers handled absenteeism efficiently
Somehow, however, line managers were dealing with chronic absences every day and were managing to keep production running, so the CEO called in Tamayo and his colleagues to understand how.
“They realized, if you help me today, then I’ll help you tomorrow.”
To gauge how managers were coping, the researchers implemented a clever system to track workers, placing a table at each station, where individuals would sign in and out for their shifts. They found that managers struck informal agreements with the managers on either side of them to lend and borrow workers as needed. Since managers could quickly assess the number of missing employees in their department every morning, they could easily grab someone from next door at the start of the shift when they had a big order due. Unspoken was that their neighbor would respond in kind.
“They realized, if you help me today, then I’ll help you tomorrow,” Tamayo says.
To increase productivity, it would be more effective to encourage more handshake contracts between managers to share workers than to create a central system for replacing employees, the researchers found.
Since different people on production lines perform different tasks, more options for borrowing and lending workers could improve the chances of filling needed jobs.
Applying a mathematical model to these relational contracts, the researchers found that the optimal number of connections among managers was seven or eight. Those relationships could boost productivity by 1.3 percent—a small but meaningful increase for a company struggling with widespread absenteeism.
The researchers advised the factory’s CEO that senior managers should do whatever they could to build relationships between managers working not only right next to each other, but also elsewhere on their floor and in other parts of the factory.
Soft skills are key
Tamayo and his colleagues have moved on to studying other companies and industries in Latin America, including a carmaker, a fast-food restaurant, and a retailer. The best managers, they have found, identify talent and train workers to do multiple tasks, so they can increase employees’ skills and easily move people around to cover a wider range of absent colleagues.
This is just one way rapport in the workplace seems to be critical in enabling productivity. This project is between fellow managers, but in the fast food context in Latin America, Tamayo and his colleagues have shown the importance of the rapport between the manager and worker to enable managers to make the staffing adjustments that are often necessary to meet fluctuating demand or convince workers to be trained in skills the firm requires.
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Image: Illustration created using images generated by Midjourney, an artificial intelligence tool.
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