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July 22, 2003
Study: Shiftwork Costs Businesses
Extended hours (shiftwork) operations offer major advantages to retail, healthcare, manufacturing and service businesses and their customers. However, the unintended and largely unrecognized costs associated with irregular schedules, night shifts and extended hours are eroding the profits of American businesses by $206 billion annually, or approximately $8,600 per extended-hours employee, according to a new study by Circadian Technologies, Inc, a firm that offers consulting services for extended hours operations.

The study predicts that the financial and social costs of such work are likely to escalate as extended hours operations become even more prevalent. Today, nearly one in five employees, or approximately 24 million Americans, half of whom are in professional or white-collar occupations, regularly work irregular schedules, night shifts or extended hours positions.

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Extended hours operations enable companies to attain lower unit costs, shorter supply chains, and better asset utilization and customer service. But extended hours operations also incur higher costs than traditional daytime operations. Primary factors eroding potential profits for businesses with extended hours operations in order of magnitude are: lower productivity ($79.4 billion), higher absenteeism ($50.4 billion), greater employee turnover ($39.1 billion), increased health care costs ($28.2 billion) and more job-related accidents ($8.5 billion), the study reports.

"Difficult economic times have resulted in understaffed and inefficiently staffed conditions in many extended hours facilities. This, in turn, leads to excess and imbalanced overtime, high absenteeism and turnover rates, increased costs of recruitment, and excessive employee health and accident costs," says Circadian's Alex Kerin, a co-author of the report. "Workplace productivity and employee morale also suffer as a result of unmanaged challenges confronting extended hours operations."

The report also recommends ways senior management can manage the costs and risks of extended hours operations. Here are three of the recommendations:

1. Analyze rates for overtime, absenteeism, turnover/recruiting, accidents, health problems, and property/casualty insurance costs in total and by facility; benchmark against internal and external measures and identify high-risk extended hours facilities.

2. Reallocate human resources, training, health and safety budgets to provide additional resources for extended hours operations.

3. Adjust employee work schedules and staffing distribution to minimize excess overtime, absenteeism, turnover and replacement costs.

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