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The Cost of Employee Time Theft

iconAPA icon3 min read
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Did you know that nearly half of employees commit time theft in one form or another? According to a survey created by Software Advice, 43% of employees accept pay for time that they have not actually worked. Because of this, organizations are losing over $400 billion annually in lost productivity. Of the hourly workers surveyed in this study, not only did 43% of them admit to exaggerating the amount of time they’ve worked during their shifts, but 25% also said they reported more hours than they actually worked on their timesheets almost 100% of the time. However, only 3% of employees surveyed said they commited time theft by using their biometric time clocks. This is a great statistic to keep in mind as you evaluate your timekeeping process.

According to the American Payroll Association (APA), roughly ¾ of businesses in the United States are directly affected by time theft. This could refer to employees who clock in too early or too late, or those that utilize “buddy punching” in order to get paid for time when they aren’t actually working. Buddy punching is exactly what it sounds like - one employee gets another to punch in for them before they’re on site. The APA says that time theft could be costing you up to seven percent of your gross annual payroll. Luckily, with the appropriate method of tracking your time and attendance, you can significantly reduce these numbers.

The 4 Methods of Time Theft

The best way to tackle the time theft issue within your organization is understanding exactly what it entails so you can recognize it when you see it. The following are the top four methods of time theft that you should look out for:

1. Recording inaccurate times.

As we have previously discussed, employees who manually add their time into a computer or on paper can easily inflate the amount of time they were working. Even if an employee added an additional five or ten minutes to either end of their workday, the amount of excess compensation they would receive over the weeks, months and even years can be significant.  

2. Engage in personal activities during work time

In this day and age, it’s rare to find employees who don’t do this to an extent. After all, answering a quick personal call, chatting with coworkers, and even pursuing social media from time to time are easy ways to get through the day and even increase productivity. However, time theft comes into play when that “quick call” is actually a drawn-out conversation, the idol chatter turns into a 30-minute gossip session, and quickly checking facebook turns into watching a series of ten-minute cat videos.

3. Take frequent, unnecessary breaks

Again, employees should be allowed to use the restroom, grab a cup of coffee, and take a short walk when needed. Taking occasional breaks throughout the day is proven to improve employee wellness and overall performance. That being said, there will always be employees who abuse this concept. I’ve worked jobs where colleagues would “take a quick break” to go run to the bank or meet a friend for coffee, all while on the clock. These instances are very clear examples of time theft.

4. Buddy punching

We’ve already discussed how buddy punching works, and it’s pretty easy to see how this can be detrimental to your bottom line. If an employee punches her colleague in 30 minutes before he gets there, that’s 30 minutes you’re paying that employee and 30 minutes of lost productivity, creating a full hour of lost revenue. Luckily, this problem can be easily resolved.

How to Combat These Issues

If you find that your business is losing money due to time theft, I have one beautiful solution to your problems: Time and Attendance software!

With the appropriate system, you can use a variety of punching methods to track your employees’ time and attendance. This will prevent employees from falsely recording their times, allowing you to monitor their breaks closer, and eliminate buddy punching. Most timekeeping solutions will allow the use of a biometric face or finger reader that ensures employees are on site when they punch in and out. This also means that the accurate times are being recorded. Once you have this system all set up and ready to go, you can implement a mandatory rule that employees must punch out for paid and unpaid breaks so you are always aware of how often and how frequent employees are taking breaks.

Remember that statistic about how only 3% of employees said they committed time theft with biometric time clocks? That number alone should be reason enough to spring for a new clock. However, with most Time and Attendance solutions, you can use a multitude of punching methods, including biometric clocks, mobile punching, and, if you’re a client of Dominion, a free time clock app!

Want to learn more about what a Time and Attendance software can do to eliminate time theft and increase efficiency? Request a demo today!


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