Two Ways to Prevent Time Theft
Originally posted April 10, 2018
How common is employee time theft? It costs millions every year.
Time theft plagues businesses of every size, in every industry, across the globe. Whether the loss comes by work avoidance or fraudulent time tracking, there are financial repercussions for your business. Chances are, it’s a challenge facing your company, too. After all, sources estimate time theft impacts 75% of US employers.
What is time theft?
Time theft occurs when an employee is paid for time that they’ve not actually worked. This form of fraud can have a negative impact on a company’s productivity and bottom line.
What does employee time theft look like?
There are five main types of time theft service companies typically experience:
- Rounding time worked. This occurs when employees round the clock-out time, usually to the next quarter hour.
- Buddy punching. This occurs when one employee clocks in or out for another employee.
- Extended breaks. This occurs when employees take longer breaks than given when not required to clock out.
- Socializing. This occurs when employees socialize rather than completing work while on the clock.
- Unscheduled stops. This occurs when members of a distributed workforce make unscheduled stops while performing a route.
Combat time theft with software to prevent time theft.
There are two key ways to prevent and avoid time theft: Implementing the right technology to safeguard timekeeping practices, and implementing the right processes to set your time and attendance protocols up for success.
Time and attendance solutions should be able to provide status updates and periodic checks. That way, managers can view the real-time status of employee clock ins/outs, lunches and breaks so they know if employees are where they need to be at the right time. Not only does this help prevent time fraud, it also lowers the risk of compliance issues for your company when keeping in line with regulatory requirements (like meal and rest breaks in the US, or other labor standards internationally).
Other solutions that help decrease time theft include biometric authentication (which lessens the risk of fraud like buddy punching,) voice verification, or geo-location verifications.
Oftentimes, time fraud is not malicious. By setting up clear processes, you can lessen the risk of time fraud by inadvertent or intentional means.
First, set expectations. Create a clear-cut time theft policy about time and attendance expectations and communicate them to employees. If you use a self-service portal, have this documentation easily accessible for ongoing reference.
Second, focus on engaging employees (and recognizing good work.) Employees who are engaged typically don’t look for ways to avoid work, as they are incentivized through recognition programs to continue to perform highly.
Third, check on your employees. Similar to how your clients require proof of work, perform regular audits and inspections to ensure work is being completed to scope. If activity isn’t completed, use your software solutions to initiate a check where the team member needs to respond within a certain amount of time. With automated and mobile timekeeping options, you can also lessen the risk of fraudulent labor costs impacting your bottom line.
4 Tips for software use to prevent time theft
Fraud can be committed in minutes. Here are some tips to prevent time theft.
- Use role permissions. Often, we’ll see companies default to letting all users – at least in the back-office – have the same level of permissions rights in a software solution. Instead, ensure you’re setting up roles with customizable features to allow either read-only, takeaway or additional permissions based on what they need to successfully complete their job. Customize features by roles to allow read-only, additional permissions or take away permissions.
- Set up checks and balances. Especially when dealing with your company’s money, you don’t want a single person to be able to write a check, void a check, or do bank reconciliation with no oversight. Those handling money, receiving money or paying out money don’t have chances to change master file records, potentially taking advantage of your bottom line.
- Run consistent audits. Run queries and audits frequently to gain visibility into how many timekeeping changes are happening and why. This can help provide insight into who is making changes, why they’re making changes and how often those changes are happening.
- Have processes in place for user security. Some software can be locked down by user or role past extended hours to limit access to personnel outside of regular working hours. This can be especially helpful during the separation process.
Employee Time Theft Statistics
Use this handy guide to help you understand the prevalence of time theft, and remember our recommendations to prevent it. But, your business can take steps to combat time theft by using the right technology and strengthening your time and attendance processes.
Don’t believe time theft or other kinds of labor fraud can happen to you? Read how one company was haunted for nearly a decade by ghost employees who cost the company an estimated $1 million over 10 years. With the help of TEAM Software’s time and attendance technology and improved hiring and payroll practices, the company is better prepared to prevent fraud and save money. Learn more in this case study.