- By timehub
- 5 Nov 2020
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Why the Way you manage employee time & attendance could be wasting Time & Money and causing stress - And it has nothing to do with TimeTheft
When it comes to managing employee time using manual systems like paper timesheets, punch clocks and even some digital tools, it's usually TimeTheft which gets the most attention. Yet, Time Theft is the least of your worries when it comes to why these systems cause TimeCreep. It has been shown that there are many other ways these systems impact your business.
The Cost of Admin time is as big an issue as Time Theft.
Admin time is one of the largest costs in your business. Using manual systems like paper timesheets to record time and process payroll takes up a large amount of valuable admin and management time. Generally, this admin time comes at a greater hourly rate cost than that of the employees being tracked.
Some of the common ways paper timesheets waste admin and management time include:
- Printing and Distributing Paper Time Sheets. In order for your employees to complete and submit a paper timesheet, they need to have access to a timesheet. Therefore, someone needs to spend time printing and distributing the timesheets to the team. This process could be repeated if employees lose their timesheet during the pay period.
- Collecting and Collating. Just as is the case with distributing timesheets, you then have to track them down at the end of the pay period. Depending on whether all your staff are in one location or are spread across multiple sites, this could involve picking them up, having them scanned and emailed or even having staff take a photo and text it. Then if they haven't completed a timesheet you need to chase these people up.
- Timing. We often see the situation where staff wait until the end of the pay period to complete their timesheet, just in time to get paid. And the more that employees leave it until the last minute, the more time pressure that puts on your managers and admin team. Completing a timesheet in anything other than real time i.e. at the end of the week, does nothing to improve accuracy.
- Calculating and Keying. Finally once you have collected all the timesheets, you, a manager or your payroll admin have to manually check them, calculate each employees hours, check leave, allowances and breaks, and then the data needs to be entered into your payroll and/or job costing. If an employee is completing a paper timesheet their data will be touched 30-35 times before it reaches their bank account. Each touch point takes time away from something more important.
Calculating, reconciling, and keying time sheets into your payroll can cost an employer approximately 5-15 minutes per employee being paid.
This process is time consuming and a waste of valuable resources. This is time which, as a business owner, manager or payroll administrator could be spent on more important and productive activities.
The cost of inaccurate paper timesheets
Not only are paper timesheets more time consuming, but they are also less accurate than a digital alternative, which leads to actual, measurable cost.
- TimeCreep -The effect of the small, incremental, and often hidden costs of incorrect recording of time, tardiness, rounding errors, calculation errors, buddy punching etc. Eliminating the cost of TimeCreep can save a business thousands of dollars a year. International Research has identified that using manual systems for tracking staff hours can have a real financial impact on your business.
They identified 4 keys areas:
- Companies that use traditional time sheets or punch clocks have a potential error rate of between 1-8% of the total payroll.
- The average weekly "theft" of time (industry term not ours) i.e long lunches. tardiness, early departures, etc. is 4 hours and 5 minutes per employee! If you give humans the opportunity to game the system, then some will.
- The average loss as a result of "Buddy Punching" is between 2-5% of total payroll in companies that use traditional timecards! Completing another employee’s timesheet for them can also be an issue.
- Human error (intentional or accidental)- Even if Time Theft is not an issue, using paper timesheets for tracking employee time and payroll, leaves you open to human error. For example, an employee might fill out the timesheet incorrectly, adding up the time wrong (humans struggle with time math's )—or the timesheet may be illegible and the person checking it has trouble reading the handwriting, misinterprets what was written, and you end up paying them for more or fewer hours than they actually worked. If you are tracking time for billing this could result in under charging or worse, over charging.
- Trust can be eroded. Employees want to know they are being paid accurately for the hours they work and equally you want to know that the hours you are paying your staff have are real. Unfortunately, timesheets are the most creative way to track staff time as some staff will record what they think you need to see, and this erodes trust. Then from the other side some staff will worry that you are not calculating or keying the time correctly which also erodes trust. If you are using your timesheets to track jobs, there is is also the trust aspect that your clients want to know are paying fairly for the time it has taken to do the job.
The "information gap" cost of manual systems
While manual systems create real costs in financial, time, and accuracy terms, they also cause an "Information and Compliance Gap"
- Transparency - You want to pay your staff accurately and on time, and they want to see you doing this also. You also want to be able to see this in as close to real time as possible and not at the end of the week when it is too late.
- Compliance - In addition to the financial benefits of improving the way staff track their hours, there is the increasingly important consideration of compliance which is often overlooked. In recent times we have seen the spotlight being put on employers for their lack of accurate record keeping when it comes to meeting their obligations under:
- The Employment Relations Act
- The Holidays Act
- The Health and Safety at Work Act
- Under these Acts, an employer is required to keep accurate time records Who Worked When and be able to present them to an employee or their representative when asked. Could you do this?
- Access to Information - When you manually processing paper timesheets, you don’t have the same access to data that you’d get with a digital solution. You can’t run reports, look at time spent between pay periods, or easily track leave or overtime hours. This makes it harder to identify issues or areas for improvement. Paper timesheets force you to individually collect and analyse data for each employee. This makes it harder to get a comprehensive overview of what’s going on in your business with respect to your employees, hours, job costing and payroll costs as a whole.
As we said earlier - Time Theft is the least of your worries if you use manual systems. At the end of the day you want your business to run as efficiently as possible. You can't do that with manual, analogue systems like paper timesheets