Faking a stomach ache and playing hooky from school never warranted rewards. But rewards may be just what the doctor ordered for employees that feel they have to feign illness to take some time off. What’s more, granting more flexible working conditions may slash some corporate costs. Here’s why.

According to a new study, the 2002 CCH Unscheduled Absence Survey, more than ever, workers are faking illness and skipping work. Surprisingly, this has not led an increase in truancy. In fact, the absenteeism rate declined slightly to 2.1 percent from 2.2 percent in 2001. What is on the rise, though, is the number of callers that lie about their health when calling in sick.

That’s a problem because although the no-show numbers are holding, the cost of unscheduled absenteeism have reached unprecedented heights. The survey of 333 companies across the U.S. found that the direct cost of unscheduled absenteeism reached a record high in 2002: an average of $789 per employee which cost small companies as much as $60,000 a year and the largest employers more than $3.6 million annually. That’s up almost 5 percent from last year, and 29 percent since 2000.

Those numbers only reflect direct payroll costs for absent employees. The associated costs of overtime pay for other employees, hiring temporary employees to cover for absent workers, lost productivity, and low morale add to the financial drain.

Moreover, the survey found that employers are earmarking more corporate funds to pay for absenteeism costs. Indeed, respondents reported that an average of 5.1 percent of their company’s budget is set aside to pay for unscheduled absenteeism, up from 4.2 percent in the 2001 survey.

The hidden trap for senior executives, according to CCH workplace analyst Lori Rosen is that some employers are only watching the absenteeism rate, which is flat. “They are missing the fact that this problem is costing their company more than ever before,” notes Rosen. “While recent absenteeism rates are fairly level, the cost of no-shows has climbed steadily in the past few years. With an aging, more experienced workforce, that trend is likely to continue.”

The study suggests that companies can control the burgeoning costs of absenteeism by looking at why employees call in, rather than how many. The survey found that workers who called in sick were only actually sick about one-third of the time. The other reasons for unscheduled absences were non-illness-related, including personal needs (21 percent), stress (12 percent), and entitlement mentality (10 percent).

One way to manage absenteeism, then, is by addressing the non-illness-related reasons for absenteeism through work-life programs. According to HR execs interviewed for the study, the most effective work-life programs were (in descending order) flexible scheduling, compressed work week, leave for school functions, on-site child care, employee assistance programs, and telecommuting.

There are also tactics that deal with absenteeism head-on. When asked to rate their favorites in terms of effectiveness, employers ranked paid time off as the most effective absence control program, followed by disciplinary action, and buy-back programs, in which the employer “buys back”—in cash or vacation time—all or some of the employee’s unused sick time. Other popular treatments include annual reviews and illness-verification requirements, paid-leave banks, and personal recognition programs.

“If an employee’s only option for being absent is taking a sick or vacation day, the employee cannot schedule an absence for a medical appointment or to close on a new home purchase,” explains Rosen. “When time off is flexible enough to allow employees to miss work for personal business, then those days or hours off can be scheduled and the employer can be prepared to cover the employee’s duties while he or she is away.”

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