• By timehub
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  • 18 Jun 2019
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"Paper Timesheet Tear Down" We look at "Time Theft" vs "Time Creep" vs "Real-Time"

Lately, I’ve been thinking a lot about “Employee Time Creep”.

The industry term, generally bandied about by time and attendance vendors to scare employers into buying their systems, is “Time Theft”

I wonder whether “Time Theft” really is the key issue you should be looking to solve. I don’t think it is.

I prefer the term Time Creep as this better reflects the reality of what is happening and in some ways it is a worse scenario.

The term “Time Theft” was first coined in 1985 in an often quoted study conducted by the Robert Half Group and the American Payroll Association.

The study asserted that on average an employee will "steal" up to 4 ½ hrs per week.

While this may be a reality in a small number of cases, I do not believe the issue is this extreme. The reality is that there will always be staff who steal, whether it be your pens, stationary, money or time.

So yes, stopping an employee who is intentionally recording their hours incorrectly is something which every employer would want to stop. Yet experience has shown me that most employees who are cribbing a minute or three here and there do not see it as theft.

They naively think “its ok” to write down that they were on time when they were 2 minutes late because “no one will care” or worse, they are not sure the boss is working out the time sheets correctly or he isn’t keying the right data into the payroll, so why should they worry.

The irony of asking staff to use a manual system which is open to abuse i.e. a paper time sheet is inviting trouble, yet every day I hear – “we’ve always done it this way” and then in the next breath “I think some staff are recording the wrong times”  

Added to this, when you use a manual system like paper time sheets, an employee’s data will be touched over around 35 times every pay period, before they receive their pay into their bank account. The opportunity for error is massive.

Employee records start and finish times twice a day

One of the key benefits of automating your employee attendance is that computers know how to calculate time, total and collate data, apply rules, transfer data and they do it all at speed.

This removes the factor of human error (intentional or accidental).

If your employees clock in and out as they should, they can trust that they will be paid accurately and on time for the hours they work, as the system will work out everything based on the company’s rules and it will also speed up the process.

You will be able to trust that you are paying your employees accurately for the hours they work, and, in the process, you will be saving money with more accurate data and reduced processing time from not having to manually calculate or key anything into your payroll.

With modern time and attendance systems, you can see your employees clocked times in “real-time” from any internet connected device. Therefore, if you still don’t trust them you can check where and when they clocked.

As a bonus, experience has shown us that automating employee time and attendance will pay for itself in less than three months with typical savings of between 2% and 5% of annual wages.

So, the question to ask yourself is not – “Do I have a time theft problem” but rather “what can I do about it to ensure we are accurately recording the hours' staff work in a way which is fair, accurate and equitable to both the employee and the business”

Here are some of the common issues we have seen in the 25-years we have helped businesses improve their payroll processes.

Many of the issues are backed up by the study conducted by the Robert Hlf Group and the American Payroll Association.

Time Creep

This involves employees recording start and finish times in their favour, long lunches and breaks, tardiness, early departures, etc. While cribbing a minute here and there may not seem like a lot, it soon adds up when you multiply each incident by the number of staff you have. Even if it is only 5 minutes per day that equate to around $500 a year per employee in extra wages (based on the minimum wage of $17.70 per hr)

The study show the average weekly time creep was up to 4 hours per employee!

Calculation Creep

It was found that the calculation and/or keying error rate was up to 8% of total payroll in companies that use time sheets. Even if you take a conservative view and you use a figure of 1% what would 1% of you annual wage bill equate to?

Buddy Punching

While this less of an issue we have seen cases of both Buddy Punching where employees clock for each other and also situations where employees complete each others timesheet. The average loss as a result of clocking in for each other or completing each other’s time sheet was between 2-5%.

Hidden Admin Costs

The study showed that manual calculation and keying of time sheets takes approximately 5 minutes per time sheet.

Non Compliance with Record Keeping Rules

Another issue often overlooked by employers using manual systems is the record keeping requirements of the Employment Relations Act, Holidays Act and the Health and Safety in Employment Act.

All employers must keep a record of the hours worked each day, including start time, finish time and any non-paid breaks taken. These systems will ensure you meet your record keeping obligations under these under these acts.

The misconception that new systems “cost more than they are worth”

While this may be true, what are the costs of not changing? The research indicated manual attendance systems can add up to 5% to your annual wage bill.

The naive view that “This doesn’t apply to us”

The most telling finding was that most employers who experienced these issues we not aware they had a problem.

A reluctance to change because “We’ve always done it this way”

This is not a business strategy. If you don’t compare your current method to the alternatives you will never find out if there is a better way.

So what does this mean for your business?

If you were honest with yourself how many of these issue apply to your business and what are manual systems like timesheets costing you every year?

If you would like help answering this question you can book a free, no obligation chat with me about your current method of tracking employees attendance.