According to a 2013 CareerBuilder survey of over 3,000 full-time private sector employees and over 2,000 managers and HR professionals:
- 48% of employers expect employees to be on time every day.
- 23% of employees admit being tardy at least once a month.
- 15% of employees admit arriving late at least once a week.
When your employees arrive late, does your timekeeping system record that late arrival properly? Or are you potentially paying for work time when employees haven’t even arrived in the building yet?
According to one survey I’ve seen, up to 60% of employers say they don’t know if their employees are reporting their time correctly, or (worse yet) they know their workers are reporting incorrect time.
But Wait, There’s More!
The problem isn’t confined to employees arriving late for work. Whether you use handwritten time sheets or rely on punch clocks and stamped time cards, it’s not hard for employees to dupe your timekeeping system and cost you extra money. They can:
- Give themselves a “hall pass” when they arrive a few minutes late or leave a few minutes early, and round up the hours they report on a manually prepared time sheet to make it appear they were at work for the full day.
- Ask a friend to clock them in or out at the punch clock to conceal a late arrival or early departure (this is sometimes called “buddy punching”).
- Clock in several minutes ahead of the shift start, or hang around and wait to clock out long after they’ve stopped working to inflate their hours and perhaps “earn” a little extra overtime pay.
Supervisors can contribute to the problem, as well. Let’s say there’s a new project that needs to be completed quickly. The supervisor can choose to give the project to Chris or to Pat. The supervisor likes Chris, so Chris gets the project.
The problem: Chris is already into overtime hours for this pay period. Meanwhile, Pat has a clean slate and could have completed the project within the standard 40 hour week without incurring any overtime.
The result: you end up paying overtime to Chris that you didn’t need to pay.
Add in the potential for mistakes in adding time sheets or time cards, and possible data entry errors, and it’s little wonder many companies end up paying more than they should for labor costs.
No Harm, No Foul? Not Exactly…
Most of your workers probably don’t intend to cheat the company. It’s likely a combination of ignorance, procrastination and simply following the path of least resistance.
When employees report time via manual time sheets, many will wait until the last minute to complete the sheets. If you arrived 10 minutes late one morning two weeks ago, will you remember that fact when you’ve got five minutes to complete and turn in your time sheet to meet the payroll processing deadline — or will you simply report a quick eight hours of work every day and be done with it?
With a manual system, your supervisors may not have access to timely reports, and so may not know how close employees are to incurring overtime until it’s too late.
If you’ve never trained employees on the importance of reporting their time accurately or impressed on supervisors their responsibility for managing overtime expenses, they may not even understand why any of this would be a problem. After all, it’s only a few minutes here and there, so what difference does it make?
Payroll waste is like a poltergeist — floating around your premises largely unseen, wreaking havoc everywhere it goes. And, like a ghost, many may not even believe it exists at your company.
The thing is, those minutes (and dollars) add up fast. Just 10 minutes of waste a day can add up to over a week’s extra pay over the course of a year. Overtime is paid at time and a half, so the dollars add up even faster. It doesn’t take much payroll waste to cost your company a lot of cash.
What’s A Conscientious Employer To Do?
Well, even if you strongly suspect they’re incorrect, you can’t ignore your time records. The Fair Labor Standards Act requires you to keep accurate time records and to pay according to those records.
The answer is to make sure your time records are accurate in the first place.
Here’s a four step plan to exorcise the ghost of payroll waste from your company:
- Install, properly configure and insist everyone use a modern timekeeping system. Whether you choose biometrics, a badge based system or a traditional punch clock, make sure it’s installed in a convenient location and that you’ve provided a sufficient number of clocks to avoid long lines to clock in or out.
- Train employees, supervisors and managers. They should be aware of all the features of the system, the benefits it will bring to the company (and to them) and the consequences of non-compliance with your timekeeping policies — both the cost to the company and the potential discipline they will face.
- Automate as much as possible, but insist on human reviews. You can virtually eliminate data-entry errors by using an automated time and attendance system that exports employee work time directly to your payroll system. However, it’s important to have your supervisors and managers review and approve the time reports before they are sent off for processing — looking for inconsistencies, missing punches, evidence of excessively early or late punches, and so forth.
- Apply discipline for timekeeping infractions, consistently and fairly. When someone works unauthorized overtime, the law says you must still pay them for the time they worked. However, you are allowed to discipline them for failing to obtain approval. Likewise, you can (and should) have disciplinary procedures in place to deal with falsifying time records, working off the clock (for supervisors, forcing their employees to work off the clock), regularly failing to clock in or out, and so forth. While draconian measures often backfire, many employers find reasonable, even-handed, consistent discipline fosters an atmosphere of honesty and compliance.
With a modern timekeeping system, some training and a little diligence on your part, you may find you experience significant savings on your payroll expenses. In fact, many companies find a new automated timekeeping system saves them enough to pay for itself within a matter of months.
So what are you waiting for? If you suspect you’re haunted by the ghost of payroll waste, call the Wastebusters at Acroprint. We have solutions to suit almost every type of company and almost every budget.