Employee Divorce is Draining Your Profits
Researchers estimate that every ten divorcing employees cost a company more than $83,000 a year in lost productivity.
This includes an estimated loss of supervisor productivity as a result of time spent dealing with issues of performance and productivity for employees affected by divorce.
(Source Note: “The Cost of Divorce to Employers”, by Guest Columnist Rosemary Frank, Nashville Business Journal.)
Loss of productivity by divorcing employees may actually be your greatest operating expense. On the stress-meter of life, divorce is second in severity only to the loss of a child. Divorce is debilitating. More than 70 percent of your employees may be working at reduced productivity levels, due to their own divorce or a co-worker's.
Considering the effort and expense you might put forth to increase the bottom line even a mere 1 percent, it begs the question: "How much profit are we losing due to the cost of divorce?" Surely, profits would increase if you simply got most employees working to near their productive capacity at least most of the time.
About one in 10 employees will divorce in any given year, when their productivity is most impacted. However, the year prior, with all the accompanying anxieties, has already suffered, as will up to five years after the divorce. Divorce is a seven-year event, with 70 percent of your workforce at one stage or another at any given time.
It is estimated that employee productivity is reduced by 40 percent, and disrupted co-workers down 4 percent, during the six months prior and the year of divorce; their supervisor is down 2.5 percent to deal with the situation. For one year post-divorce, employee productivity is down 20 percent; co-workers lose 2 percent; and the supervisor loses 1 percent.
During the second, third, fourth and fifth post-divorce years, the employee loses 15 percent, 10 percent, 4 percent and 2.5 percent productivity, respectively. Rather conservative estimates considering the trauma of divorce, realities of "presenteeism" (present in body but not in mind), actual absences and the fact that many divorces do not conclude within one year.
Therefore, the divorce of a $60,000 per year employee is estimated to cost you $85,934 in lost productivity, based on simple salary calculations. This does not include the costs of mistakes (waste, contract errors that must be honored, etc.) or potential profits on lost productivity.