If you hire hourly workers, you have a time theft problem, and it's bigger than you realize.
Time theft is the false reporting of hours worked, usually to receive a larger paycheck or to avoid disciplinary action. Time theft occurs any time an employee claims to have worked longer hours than they actually did — usually by doing one of the following:
- Buddy punching
- Time rounding
- Lying about hours or "forgetting" to record time
The problem is more rampant than you would probably guess. According to the American Payroll Association, more than 75 percent of companies lose money due to time theft. The average employee steals an astounding 4 hours and 5 minutes per week. For a company of 50 employees paying an average of $25 per hour, that's more than $22,000 per month, or $265,000 per year.
But the ripple effects go beyond lost money. Consider the implications on productivity, if that same 50-person organization is missing more than 200 hours per week.
You're also in danger of losing your best workers, who leave the company because they're tired of receiving the same paycheck as employees who get away with working fewer hours. When your people see management turning a blind eye to the problem, morale drops and productivity suffers even more.
Handpicked related content: 7 Simple Keys to Get Employees to Track Their Time
Time theft is a problem that leeches into every area of your company. If it goes unchecked, it will continue to affect your bottom line, productivity, morale, corporate culture, and ability to grow the business.
Fortunately, there are effective ways to control time theft.
Preventing Time Theft
The idea of ending time theft can seem impossible, but you can be effective against it by taking a multi-pronged approach. We've seen organizations successfully manage stolen time by implementing these solutions.
Build a culture of ownership and trust
When employees take pride in their work and have a sense of ownership in the organization, they're more likely to act in ways that strengthen the company. You can build that sense of ownership by valuing their work, communicating the impact their work has, and extending trust and accountability.
When employees feel that they are being treated fairly, they are much less likely to commit time theft.
Clearly communicate your policies
By clearly and frequently communicating your company's time and attendance policies, you're expecting your employees to meet a standard. The message is clear: time theft won't be tolerated here, and we're watching for it.
When you hire new employees, walk them through your time and attendance processes. Show them how to punch in and out, how to request time off, and what to do if they're running late. Explain that buddy punching isn't allowed (surprisingly, not everyone understands this).
When you communicate your policies, also be clear about the consequences of violating them.
Use the right time tracking method
Time-and-attendance systems are becoming more and more effective at stopping time theft. Different systems are a better fit for different companies, and there is a technology available that can help your company to prevent false time reporting.
Some options include:
- Card swiping. Card swiping eliminates rounding theft, because it logs the exact start and end times. However, you could still have buddy punching if employees keep their cards on-site.
- Biometric devices. Biometrics are quickly becoming one of the more prominent time-capture tools on the market. Fingerprint scanners are good, and palm readers are even better. Often, a company will also install a camera at the clock for identity verification. Some devices even have facial recognition software and retinal scanners.
- Mobile devices. If your employees are in the field, biometrics probably aren't very practical. But mobile apps can record GPS coordinates. This ensures that your people are clocking in and out from the worksite, and not from home.
- Data tracking. No matter what technology you use to capture time, some employees will find a way around it — for example, "forgetting" to clock in and claiming to start earlier. Data tracking can help identify these practices by monitoring trends and time habits. If a worker continually forgets to clock in, that's a possible indication of time theft.
Keep employees accountable
Of course, your policies and time capture systems won't be effective unless you keep your workers accountable. Run weekly and monthly reports of employees' time card data. Keep managers accountable for initiating disciplinary procedures or termination, if necessary.
Are Time Capture Systems Really Worth It?
For many companies, investing in state-of-the-art time capture systems can seem too expensive. There are ways around even the most advanced systems, so why spend thousands of dollars on a hand reader? Won't you just be losing more money by spending it on a high-tech solution?
Often, these organizations don't realize how much money they're actually losing each month. Let's take the example from the top of the article: a company of 50 employees is losing about $22,000 every month. In addition, they're losing 200 hours of productivity, which means less revenue. And they may be losing their best employees.
Would you spend a couple thousand dollars to recover $22,000 — plus new revenue and better workers?
Reducing time theft keeps people accountable for their time. Employees are working full shifts, increasing productivity (and profits) while reducing your lost money. You retain your best employees, while terminating those who can't adhere to your attendance policies. Reducing your overall turnover rate reduces operating costs, since it costs less to keep employees than to hire more people.
Perhaps the question isn't, Can you afford an advanced time system? but Can you afford not to buy an advanced time system?
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