Companies lose money every year to employee theft of equipment and supplies. Even more prevalent is the theft that occurs when employees are paid for the time that they haven’t worked. This form of stealing can be just as harmful to a business as the loss of physical assets. A study conducted by the American Society of Employers found that 20% of every dollar earned by a U.S. employer is lost to time theft. In addition, the overall cost in lost productivity has been estimated at more than $400 billion per year.
There are several common forms of time theft:
- Exploiting Flexible Schedules. With more team members working remotely, there are more opportunities for time fraud. The lack of physical monitoring makes it easier to falsify timesheets by reporting hours not worked.
- Conducting Personal Business. The increased use of technology at work has led to an increase in people conducting personal activities like shopping and interacting on social media during work hours.
- Longer Breaks. Businesses that don’t require team members to clock out for breaks may suffer from extended break times. An Ohio State University study found that smokers cost employers $5,800 per year on average due to frequent breaks.
- Buddy Punching. Traditional time clocks allow team members to clock in for each other, such as when one person is running late, and a friend punches them in before they arrive at work.
Although time theft is often seen as a problem related to hourly workers, it’s also common among salaried team members. According to Karen Harned, Executive Director for the National Federation of Independent Business’s Small Business Legal Center, “Salaried employees can waste time just as easily surfing the net, abusing telework options, or failing to record PTO. Employers should ensure that salaried workers are held accountable for acceptable job performance and enforce all work-related policies consistently.”
Time theft hurts the bottom line by impacting productivity. To minimize losses due to time theft, companies must take proactive steps.
Set Expectations with a Time Recording Policy
Don’t assume that every team member understands company expectations about recording time worked or the implications of falsifying their record. Some may not be aware that they’re doing something wrong when they lie about what time they started work or spend a significant amount of time looking at their phone during work hours. A written policy about time and productivity that’s part of a company handbook given to every team member will ensure that mistakes aren’t made due to ignorance.
Avoid Paper Tracking Systems
It’s easier to commit time theft with time clocks and old-fashioned paper-based systems. Electronic timecard apps automatically enforce a time recording policy and detect when mistakes have been made. Additional security measures can be installed, such as fingerprint or face recognition, to stop team members from logging in for each other. More advanced technology includes GPS tracking and geofencing to physically track remote team members as well as screenshots and URL trackers for digital tracking.
Follow Through with Disciplinary Actions
The time recording policy should be enforced with disciplinary actions, including termination. Money paid to a team member for time not worked is theft and should be treated as such, depending on the severity of the offense. Wasting time on the internet might be overlooked, especially if productivity isn’t affected. Still, team members should understand that using someone else’s timecard or logging into someone else’s account to falsify their time record will be treated as a serious matter.
Docking a team member’s pay for falsifying their time record may seem like a fair punishment, but there may be legal ramifications. Instead, many companies choose progressive discipline when responding to team members who have falsified a time record, beginning with verbal and written warnings followed by suspension and then termination. Team members who are stealing time with personal activities may be treated differently from those who have lied on their time record, but not following up allows team members to think their time theft hasn’t been noticed or doesn’t matter to the company.
Make Time Theft Harder to Commit
A company’s time recording policy should be enforced by checks and balances, such as having team leaders verify and sign off on each team member’s time record. Knowing that they’re being watched will discourage many from cheating. Another way to avoid time theft and other types of workplace theft is to make sure team members are adequately paid and feel appreciated. Ensuring that every team member feels invested in their job is one of the strongest tools for fighting time theft.
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