How to Eliminate Time Theft

Alexandra Franco

16 August 2017    |   

Time theft is an unfortunate reality for many business owners. It can have huge impacts on labor costs as well as staff productivity and morale. Without the correct tools and systems, time theft can be difficult to catch, and even harder to stamp out. What is time theft? Time theft occurs when an employee bills for the time they have not worked or accepts remuneration for the time that has not been attributed to work. The most common causes of time theft include: Staff running late to work, and fudging start times. Staff staying late after work to accrue unauthorized overtime or allowances. Staff taking extended breaks.   Where a team member clocks out for another team member. Staff not submitting correct hours for leave requests or sick pay. How much is time theft costing your business? Labor is often regarded as one of the biggest expenses in running a business, alongside the cost of goods and utilities. For industries that rely heavily on high staffing numbers, such as hospitality, it is particularly important that managers are not only creating schedules to meet labor budgets and KPIs but also take control to enforce the schedule. Unfortunately, when time theft is left unchecked it can cause unexpected additional costs, including reduced staff productivity, profitability, and can negatively impact staff who do the right thing. Even time theft that isn’t malicious can add up. For example, according to a study conducted by Tanda, the average business has approximately five minutes misappropriated every shift, just from staff clocking in or out late.*  While five minutes may sound negligible, it can quickly add up over a month and even a year. For example: A team of 30 employees working five days a week could rack up an additional 50 hours/ month in misappropriated time. This could end up costing the business approximately $362.50/ month, and over $4350/ year (based on the average federal minimum wage for 2017). How to eliminate time theft? While most employers would like to believe that their staff is honest and trustworthy when filling out their timesheets, there are unfortunately a few who ruin it for everyone. Systems such as paper timesheets, excel spreadsheets, or outdated Bundy clocks, are highly susceptible to allowing time theft in a business. They fail to accurately track staff attendance due to their lack of verification and functionality. This is because there is no way to confirm that staff finished and started when they say they did, or that they were, in fact, the ones who signed off their timesheet in the first place. Using a cloud based time and attendance system is the only way to ensure accurate staff attendance records, verify that the correct staff member finished at the correct time, and ensure staff is not overpaid for work that wasn’t completed.   So what should you look for when implementing a Time and Attendance system to combat time theft in your business? 5 Must-have Time and Attendance System features to Eliminate Time Theft 1. Time Clock with Photo Verification A  time and attendance system must have a time clock device, and use both photo verification and a PIN code to confirm that the correct staff member has clocked in. This provides an indisputable solution to prevent staff getting their friends to clock in for them, or clocking in late. Fingerprint scanners will not stop time theft and have many issues that will prevent it from working effectively. 2. Smart Rounding Now you might be thinking, surely staff could still tinker with a time clock system, if they clock in early claiming to have worked? Enter the beauty of smart rounding. Smart rounding prevents staff from taking advantage of clocking in early or late when they haven’t been working. It is customizable and can round to the minute for staff clock ins and outs. This stops “accidental” time theft from staff clocking in before their shift starts, and clocking out after they have stopped working. 3. Complex Award Interpretation As time and attendance is closely linked to payroll, it’s extremely important that your system is able to comprehend any number of complex pay scenarios. For example, staff that stay back late, skip their break, or work over night may incur overtime or penalty rates. Thus, an Award Interpretation system must be able to transparently identify different types of overtime, penalty rates, and allowances if it is to prevent time theft. 4. Predict Correct Staff Ratios A great time and attendance system should be able to not only record when staff start and finish work, but how many staff you need for the shift. Paying staff for the hours they actually work is the first step in optimizing your labor costs. The second step works to improve your labor efficiencies by predicting the optimum number of staff required for the shift, ensuring that you’re not over or understaffed. This type of predictive analytics software is the latest method for businesses to ensure their labor costs are under control. 5. Fast & Simple Timesheets Using an electronic time and attendance system is pointless unless you are able to immediately generate timesheets from it. It is also vital that the system is cloud based, allowing you to easily approve timesheets from anywhere. These timesheets should be easy to use and quick to approve by utilizing technology such as autosave, fast editing, and cognitive payroll. This will allow you to complete your payroll in minutes, not hours or days. Time theft, if not managed accordingly, has the potential cost business owners thousands of dollars every year. It is therefore important that business owners implement simple, yet effective measures, such as electronic time-keeping devices, and integrated time and attendance systems to combat time theft. Improving staff attendance tracking results in greater productivity and profitability, and can provide valuable insights into how your team works

Time theft is an unfortunate reality for many business owners. It can have huge impacts on labor costs as well as staff productivity and morale. Without the correct tools and systems, time theft can be difficult to catch, and even harder to stamp out.

What is time theft?

Time theft occurs when an employee bills for the time they have not worked or accepts remuneration for the time that has not been attributed to work.

The most common causes of time theft include:

  • Staff running late to work, and fudging start times.
  • Staff staying late after work to accrue unauthorized overtime or allowances.
  • Staff taking extended breaks.  
  • Where a team member clocks out for another team member.
  • Staff not submitting correct hours for leave requests or sick pay.

How much is time theft costing your business?

Labor is often regarded as one of the biggest expenses in running a business, alongside the cost of goods and utilities. For industries that rely heavily on high staffing numbers, such as hospitality, it is particularly important that managers are not only creating schedules to meet labor budgets and KPIs but also take control to enforce the schedule.

Unfortunately, when time theft is left unchecked it can cause unexpected additional costs, including reduced staff productivity, profitability, and can negatively impact staff who do the right thing.

Even time theft that isn’t malicious can add up. For example, according to a study conducted by Tanda, the average business has approximately five minutes misappropriated every shift, just from staff clocking in or out late.*  While five minutes may sound negligible, it can quickly add up over a month and even a year.

For example:

A team of 30 employees working five days a week could rack up an additional 50 hours/ month in misappropriated time. This could end up costing the business approximately $362.50/ month, and over $4350/ year (based on the average federal minimum wage for 2017).

How to eliminate time theft?

While most employers would like to believe that their staff is honest and trustworthy when filling out their timesheets, there are unfortunately a few who ruin it for everyone. Systems such as paper timesheets, excel spreadsheets, or outdated Bundy clocks, are highly susceptible to allowing time theft in a business. They fail to accurately track staff attendance due to their lack of verification and functionality. This is because there is no way to confirm that staff finished and started when they say they did, or that they were, in fact, the ones who signed off their timesheet in the first place.

Using a cloud based time and attendance system is the only way to ensure accurate staff attendance records, verify that the correct staff member finished at the correct time, and ensure staff is not overpaid for work that wasn’t completed.

 

So what should you look for when implementing a Time and Attendance system to combat time theft in your business?

5 Must-have Time and Attendance System features to Eliminate Time Theft

1. Time Clock with Photo Verification
A  time and attendance system must have a time clock device, and use both photo verification and a PIN code to confirm that the correct staff member has clocked in. This provides an indisputable solution to prevent staff getting their friends to clock in for them, or clocking in late. Fingerprint scanners will not stop time theft and have many issues that will prevent it from working effectively.

2. Smart Rounding
Now you might be thinking, surely staff could still tinker with a time clock system, if they clock in early claiming to have worked? Enter the beauty of smart rounding. Smart rounding prevents staff from taking advantage of clocking in early or late when they haven’t been working. It is customizable and can round to the minute for staff clock ins and outs. This stops “accidental” time theft from staff clocking in before their shift starts, and clocking out after they have stopped working.

3. Complex Award Interpretation
As time and attendance is closely linked to payroll, it’s extremely important that your system is able to comprehend any number of complex pay scenarios. For example, staff that stay back late, skip their break, or work over night may incur overtime or penalty rates. Thus, an Award Interpretation system must be able to transparently identify different types of overtime, penalty rates, and allowances if it is to prevent time theft.

4. Predict Correct Staff Ratios
A great time and attendance system should be able to not only record when staff start and finish work, but how many staff you need for the shift. Paying staff for the hours they actually work is the first step in optimizing your labor costs. The second step works to improve your labor efficiencies by predicting the optimum number of staff required for the shift, ensuring that you’re not over or understaffed. This type of predictive analytics software is the latest method for businesses to ensure their labor costs are under control.

5. Fast & Simple Timesheets
Using an electronic time and attendance system is pointless unless you are able to immediately generate timesheets from it. It is also vital that the system is cloud based, allowing you to easily approve timesheets from anywhere. These timesheets should be easy to use and quick to approve by utilizing technology such as autosave, fast editing, and cognitive payroll. This will allow you to complete your payroll in minutes, not hours or days.

Time theft, if not managed accordingly, has the potential cost business owners thousands of dollars every year. It is therefore important that business owners implement simple, yet effective measures, such as electronic time-keeping devices, and integrated time and attendance systems to combat time theft. Improving staff attendance tracking results in greater productivity and profitability, and can provide valuable insights into how your team works

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Employee Scheduling    |   

Time Theft: Top 3 ways employees steal time and how to stop it

The loss of productivity and profits due to time theft has been an enduring problem for many employers across industries. It can come in many forms, from clocking out too early to slacking off at work. While it can be hard to determine exactly how much it costs, a 2017 PollFish survey revealed that the U.S. economy loses approximately $373 million to time theft every year. This is true everywhere else, not just in the US. Paying unproductive employees for their time can make companies lose millions. Below are the top 3 ways employees steal time, and what you can do about it. 1. Buddy Punching The Problem: Buddy punching occurs when one employee clocks in or out for another as a favour. Employees do this to avoid being reprimanded. They often believe that this act is not inappropriate, as it only affects a few minutes of the total hours. But some employees use buddy punching to get paid for hours or even days they didn’t work. This is more prevalent in off-site locations where monitoring systems are lax. A 2008 Nucleus Research report showed that 19% of employees admit to buddy punching. The Solution: Confirming the identity of the person clocking in or out is the easiest way to solve buddy punching. Previously, employers opted for fingerprint clock in technology but this has become less popular with increasingly strict biometric privacy laws. In fact, a data privacy complaint was filed in Illinois against a biometric equipment provider. Because of this, photo-verified clock ins are the safest way to confirm an employee’s identity. A manager can monitor if a clock in matches the employee via cloud data, regardless of where they are working. Read more: Why Fingerprint Scanners Don’t Work for Time and Attendance 2. Time Clock Deception The Problem: Time clock deception, or timesheet falsification, happens when an employee inflates the hours they worked. A 2015 American Payroll Association (APA) study found that 43% of hourly employees surveyed admit to exaggerating the amount of time they work during their shifts. Further, a shocking 25% of employees surveyed report more hours than they actually worked more than 75% of the time. APA estimates that a business that pays out $1 million in annual payroll could be losing up to $70,000 each year due to timesheet falsification. The Solution: Manual forms of timesheet monitoring is the most susceptible to deception. Companies who allow employees to write down their own clock ins and outs will often have no way of knowing whether the information is accurate or not. Even 30 minutes of falsified timesheets can already cost money for businesses. The only solution is to invest in a program that accurately records clock ins and outs, and generates timesheets at the same time. Tanda’s workforce compliant timesheets even calculates precise shift costs using either a managed award or EBA. Read more: The Digital Workforce Success Revolution: Why you need to shift to cloud-based HR today 3. Extended Breaks The Problem: Employees can sometimes take breaks longer and more frequently than they’re supposed to. For many companies, a 30-minute break extension, or five 10-minute smoke breaks, may not seem much. When done large-scale however, it can have a real impact on productivity. Smoke breaks in particular accounted for the highest cost in lost productivity, according to a 2013 Ohio State University study. The study further suggested that U.S. businesses pay almost $6,000 per year extra for each employee who smokes. The Solution: Enabling employees to clock in or out for their breaks is one way to shift responsibility for their time to them. Because automated time clock solutions can be programmed to accommodate breaks, this will come at no extra cost, and will enable businesses to monitor employee breaks better. But because this affects compensation, employers should take care to abide by laws that apply to breaks. They should also ensure that they are not deducting pay illegally. Conveniently, Tanda’s system is able to flag anomalies in breaks, and makes sure the pay interpretation is always legally compliant, wherever you are in the world. Read more: Only a Matter of Time: Punctuality and attendance in multicultural workplaces To eliminate time theft, it is essential to create a work environment with the resources to monitor and prevent it. Investing in the right software will take care of many of the administrative issues that contribute to letting time theft slide by. After these systems are in place, it is also important to increase employee engagement by making sure your onboarding process is effective, and rewarding attendance the right way. These strategies will enrich the work experience and drive productivity to benefit both the employees and the business as a whole.

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About the author

Alexandra Franco

Alex was a former Business Manager for Tanda.

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Time Theft: Top 3 ways employees steal time and how to stop it

The loss of productivity and profits due to time theft has been an enduring problem for many employers across industries. It can come in many forms, from clocking out too early to slacking off at work. While it can be hard to determine exactly how much it costs, a 2017 PollFish survey revealed that the […]

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