Beepers, Typewriters and Adding Machines: Are Manual Time Systems Next?
For the vast majority of businesses, employee payroll is the biggest expense, and also the one most fraught with errors. Like it or not, if you’re using a manual timekeeping system, it can be costing you dearly—up to 7 percent of gross annual payroll according to the American Payroll Association. And 75 percent of employers who use punch clocks or manual time sheets are at risk.
It’s due to innocent mistakes, like employees not recording time accurately and not so innocent ones like inflating time or “buddy punching.” Add to the mix calculation errors by management, and it’s easy to understand why manual systems might soon join beepers, typewriters and adding machines as business tools of yesteryear.
For your workers, punching in for a colleague may not seem like a huge deal, but it’s time theft. The average cost: two to five percent of total payroll.
Time Sheet Inaccuracy
An employee begins his day making a cup of coffee in the lunch room. A colleague comes in and they chat about last night’s game. Fifteen minutes later they get down to work. Yet, each records the time he walked in the door as his start time. It’s classic time inflation and it happens constantly. In fact, research shows that on average, each employee inflates their time 4 hours and 5 minutes per week. Long lunches and breaks, coming in on the ‘late’ side or departing early are behaviors that add up to huge losses in productivity.
On the flip side are employees who under-report time. Think about professionals who bill by the hour. Are they recording time at home answering emails? Calls made in the car? Paperwork on the weekend? According to the Harvard Business Review, the U.S. economy loses 50 millions hours a day from billable hours that are not recorded.
Record Keeping is Complex, and Fines are Costly
Errors in time accounting start with employees and often continue with managers. After all, the rules for calculating minimum wage and overtime are complicated and when done manually, accuracy can suffer.
But nothing is more important than paying your employees correctly. It’s critical for morale and there are financial penalties for mistakes. For example if you make an error in overtime pay, you can be subject to civil fines of $1,100 per violation. And, writes the National Federation of Independent Business (NFIB), “there is also potential personal liability for employers with substantial authority over operations and terms and conditions of employment. Criminally, FLSA violators are subject to fines, and multiple offenses may result in prison time.”
NFIB’s Guide to Wage and Hour Laws is a great resource for business owners. It covers minimum wage, overtime pay, penalties for noncompliance and record keeping requirements.
It is Time to Go Digital?
Time and accounting software puts a stop to employee time theft, to under-reporting, to unauthorized overtime and to costly payroll errors. The right system is also a powerful management tool with reports that enable employers to:
- Control overpayment of employees
- Ensure proper distribution of labor costs
- Get a handle on employee absenteeism and control unauthorized absences
- Apply complex pay and work policies consistently and accurately
- Better manage labor to budget with automation tools such as actual vs. budgeted time
- Help supervisors schedule employees
- Manage FMLA and overlapping state leave laws more easily, and track intermittent leaves
- Reduce liability by automatically applying company policies, union rules and/or government mandates across your organization
Is 2018 the year to move beyond an outdated business tool and onto better business practices? CLEAR Employer Services offers powerful, yet simple-to-use time and attendance systems with the most diversified means of data collection including biometric based time clocks, remote telephony or web-based employee self service.