43% of hourly workers commit time theft – Here’s the solution
Have you ever modified your timesheet a bit? Well, if you have, you’re far from the only one. A recent survey from Software Advice, an online resource for employee scheduling software, shows that 43% of hourly paid employees round up their weekly work hours. The problem lies in the fact that it’s not just a few minutes now and then being added – it’s a repeating habit which ends up hurting companies in the long run.
The survey shows some interesting numbers and I’d like to give my comments on some of the findings, especially on the chart showing the most used method for cheating on your timesheet. A result that surprised me.
“Time theft” – what does it mean?
The act of exaggerating work hours is called time theft, meaning that employees accept pay for hours they haven’t worked and thereby take money from their employer without giving anything back. Time theft has a huge impact on companies’ budgets, resulting in an annual loss of hundreds of billions of dollars every year.
While exaggerating work hours by adding a few minutes extra a couple of times a week seems harmless, the American Payroll Association (APA) says that almost 75% of businesses in the U.S. are affected by this and it can cost them up to 7% of their gross annual payroll. Say, if a business pays $1 million in annual payroll, they could be losing up to $70,000 due to stolen time.
According to APA, the average hourly paid employee adds anywhere from 50 minutes to 4.5 hours every week either by showing up late, leaving late, or by taking long breaks and lunches. For a company of 50 employees, the payroll budget will quickly explode.
Here’s what surprises me
Time theft is clearly a big issue for many companies. But what can be done?
Often this is due to the fact that companies don’t have the right system in place to register hours. At least, this is what we experience when we talk to customers or when we’re out testing markets.
Most of our customers used to handle work hours on papers, in Excel sheets or in other homemade solutions, making it extremely difficult for anyone to calculate the exact worked hours. Writing down round numbers was simply the easiest way.
However, manual time tracking comes with several insecurities for the employee (“Will I be paid correctly and on time?”) and the employer (“How come I can’t stay within my budget, where is the money going?”).
What surprises me about this survey is that 40% of the respondents have stated that the easiest way to inflate their hours is by using an online web portal for clocking in /out and only 17% mention paper forms. I would have expected it to be the other way around.
For instance, to use Planday’s online punch clock, you have to log in via a browser with a unique username and password. Tens of thousands of users are using our online punch clock every day and we haven’t experienced any problems with this method – on the contrary. Our customers are experiencing huge savings on their payroll budget every month as they can track work hours down to the second. And the system is very secure.
This is because of four things:
– Employees need a unique username and password
– By logging in, employees leave an electronic fingerprint via their IP-address, making it a secure way of registering hours
– Most managers are able to see their employees face-to-face during the day to be sure that they have actually showed up
– Security settings in the system alert the manager in case of any clock in/out times deviating from the scheduled shift times
New feature – mobile punch clock
However, as we want to offer our customers the very best system out there, we are constantly working on improving our product. One of the new features we’ve introduced is the mobile Planday Punch Clock, allowing only the owner of the phone to log in – and punch in. The mobile punch clock is hooked up on a GPS function, and you can pre-set restrictions on employees’ location so they can only use the functions when they are at their actual place of work.
This feature will ensure very precise registration of work hours and minimize the risk of time theft. If not almost eliminating it. And at the same time, you, as the employer, will only pay for actual worked and scheduled hours, ensuring that you stay on top of your staffing budget.
The idea of tracking employees’ work hours may seem a bit controlling. And I guess it is, but not in a bad way. Time clocking tools will only strengthen the relationship between the employee and employer as they can be sure that payroll processes will be handled correctly every month.