This article was updated on Oct. 2, 2018.
Employee time theft is costing businesses billions of dollars every year in lost productivity and unnecessary overtime. This practice, where workers pad their paychecks with hours they did not work because they arrived late, left early or spent large parts of the day on the phone, can be a tremendous hamper to the organization's bottom line.
As updated Fair Labor Standards Act (FLSA) rules have more organizations taking a closer look at their overtime, it's essential to start with a plan to reduce time theft. Through strong policies, HR software solutions and workforce analytics, employers can recapture productivity losses and eliminate unecessary overtime costs by reducing employee time theft.
Small Variances Can Add to Big Amounts
Finance leaders should take note because the true costs of employee time theft can be significant. Inc.com reports that according to a Salary.com report, 89 percent of employees admitted wasting time at work, and more than half of those employees said that they waste at least one hour per day.
The Wall Street Journal reports that web browsing costs U.S. organizations as much as $85 billion per year. While many employees may not see it as theft, they may be unaware that wasting time can cost their employer a significant sum.
Unnecessary overtime can also add up quickly. Consider that an employee who "steals" five hours of time per week in tardiness or personal time, and then works five hours of overtime to make it up, may be significantly inflating their salary.
Strong Policies and Technology
Preventing time theft calls for clear policies, operational oversight and time-keeping technology to keep employees honest and productive. Businesses should first analyze and reduce opportunities for theft with stronger controls and processes around payroll. Employers should ask themselves — can timesheets be altered? Is there a clear policy regarding internet, social media and phone usage? Are there controls in place to ensure employees are staying productive? Is there an effective overtime policy which requires employees to receive written authorization before working overtime?
Many employees see occasional padding of a time sheet or riding the clock as innocent. But as the digital age has offered endless opportunity for distraction, employers need a strong and clear policy placing limitations on internet browsing, social media and smart phone use.
Many of the easiest opportunities for time theft can be reduced with effective timekeeping software to analyze and better control scheduling. Mobile time tracking is also being used to eliminate excuses for people waiting in line to clock in or out. A new technology that's becoming more common is biometric time clocks, which use fingerprints to confirm that the employee is the one clocking in and out. These devices have been highly effective in reducing buddy punching, where one employee punches on another's behalf.
Analytics Can Help Find Red Flags
According to the ADP report, FLSA Through the Eyes of the Experts, technology can make a huge difference in helping to reduce overtime costs. Automated solutions can notify managers when someone is reaching 40 hours, help the employer use better absence management practices and spot trends that could help boost productivity. "It all adds up to having a better understanding of what's going on in your business and arming managers with the tools to proactively control costs," says the report. Monitoring these analytics can help identify time theft. By analyzing your timekeeping data, you can find patterns and raise issues that even the most astute managers won't often see.
Time theft could be costing your business thousands of dollars per employee. Set strong policies and institute controls with technology, and you should be able to help grow profits by increasing productivity and reducing unnecessary labor costs.
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