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The Real March Madness? The Nearly $2 Billion Lost By US Business During Tourney

March Madness is great time to bond with co-workers—while not actually doing as much work, new study finds.

For many American businesses, March Madness is a time of everyone in the office, plant or store comes together no matter their department and age group.

No event builds camaraderie like the college hoops tournament, maybe with the exception of the annual holiday party for those companies that still have them.

But that camaraderie comes with a cost, says Challenger, Gray & Christmas Inc. a Chicago outplacement firm, estimates that the tournament this month will cost companies $1.9 billion in lost wages and distracted and unproductive workers. Most of that lost productivity comes in the first week of the tournament when workers filled out brackets, talk about the tournament with each other and even tune in to watch the games online Thursday and Friday or on the weekend if they’re working.

“It’s really focused in the first week even though throughout the tournament people are going to be streaming games online on their desktops and talking about the tournament,” says John Challenger, the company’s chief executive. “For the most part what takes up people’s time is doing the research to make their picks in the first place, then filling out the bracket and organizing the pools.”

Challenger says he believes the $1.9 billion is a conservative estimate for the length of the tournament and the amount may even be greater than $2 billion. More than 60 million people fill out brackets.

In terms of any distraction at work, Challenger says March Madness is unique because it’s not just sports fans but includes casual observers and people who have never tuned into a single game all season. Challenger says the tournament continues to grow as a preeminent sporting event in American culture and all age groups are caught up in it, including those 50 and older.

Not all distraction is lost productivity, however, because some salaried workers may just stay an hour later to get their work done if they got caught up filling out their brackets or watching some of the games, Challenger says. But for every one of those people, there are plenty who are unproductive for four hours or longer and come in late because they were partying the night before while watching the games, Challenger says.

The tournament resumes Thursday and Friday with the Sweet Sixteen.

“What people often forget is a huge chunk of the American working populace is paid hourly,” Challenger says. “They clock in and clock out. Some 52 percent of Americans are paid hourly, and it’s not just blue collar jobs. Its white collar jobs like lawyers in particular.”

With tablets and smart phones allowing workers in the field to keep tabs on the tournament has an impact as well as the extra-long lunch break that employees take during the tournament.

While productivity declines during March Madness, absenteeism is also high with people either taking off or calling in sick in the first two days of the tournament when there are back-to-back games and a lot of excitement starting at noon Eastern.

“You can bet there was quite of bit of absenteeism in Kentucky when (the No. 1 undefeated Wildcats) were playing,” Challenger says.

Other than March Madness, the only other sporting even that hinders employee productivity to any degree is the NFL. Those games are played on Sunday and Monday and Thursday nights, but Challengers says plenty of employees are engaged over the 17 weeks of the regular season putting together their fantasy football teams.

“There’s not to the magnitude of March Madness in this short of period of time, but fantasy football is a huge distraction. There are fewer participants but those who participate are diehards,” Challenger says. “Often people who do fantasy football are thinking about it all of the time and do it over the whole season. There are other fantasy sports as well. Fantasy is a huge time waster for Americans at work.”

Despite the loss of productivity during the first week of tournament, Challenger says employers should just accept it as something ingrained in the national fabric and that halting it would be like trying to stop a freight train. When even President Obama is filling out brackets, it would be difficult for bosses to clamp down, he says.

“We think companies should embrace March Madness,” Challenger says. “It ends up being such a good thing to have people from different departments talking about something other than the daily business and it brings together people who might not normally interact. And the cost of trying to ban March Madness completely could be so costly in terms of long-term morale, company culture, and employee retention.”

So rather than fight it next year, companies should embrace it with a free office pool that offers free lunch or a gift card to the winner, he says. Companies could even get started now with a pool of 16 teams instead of the starting point of 64 last Thursday.

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