The bottom line is that every business exists for one purpose and one purpose only: to make money.
Labour costs are the single largest expense for most businesses, and while it may differ from business to business and industry to industry, labour expenses typically account for 30 to 70% of the total operational cost.
It is therefore critical that all businesses maintain effective control of payroll costs in order to meet financial objectives.
In this article, we’ll discuss the three primary reasons why time and attendance solutions are important, as well as which methods of time and attendance solutions are currently available.
3 Reasons why tracking employee hours and minutes is critical
#1: Avoid overpaying and underpaying
Imagine you employed Sally and she works in an open office plan. Sally is paid a salary to provide 40 hours of work a week for the company.
But every day, Sally comes in 5 minutes late, and leaves 5 minutes early.
Sally makes her way to the coffee machine about 3 times a day, where she is bound to bump into a few colleagues, and spends 10 minutes each time having a small chat.
Every day her colleague Pat comes to visit at Sally’s desk and they catch up for about 15 minutes.
Sally checks her Facebook page three times a day for about 5 minutes each time.
Sally is wasting 70 minutes a day.
And you are paying for it.
How much is it costing you?
Now here’s the thing: Sally is not intentionally hurting the company. She is devoted, loyal and hard working. Sally is actually not your biggest problem…You may be shocked to realise that the average employee fritters away 3 hours of company time every day by surfing the web and socialising with co-workers.
Again, it must be stressed that time wasted is not usually done maliciously; there are simply too many distractions and temptations.
If you calculate the number of employees you have, and multiply 3 hours of time wasted per day for each one, what is the total? Then calculate that amount per hour wages for each employee, and you will see how much money your business is wasting.
It doesn’t have to be this way. The right time and attendance solutions eliminate overpaying, as well as underpaying, and boosts productivity.
#2: Get an accurate view of labour costs
Time and attendance software is vital for providing an accurate view of labour costs.
In addition, with just a click of a finger, management can pick up problem areas in order to take proactive action. For example: dealing with the Sally’s of the company.
#3: Accurately forecasting demand
It is only time and attendance technology that allows for accurately forecasting demand and resource requirements over a year, or even five years into the future.
When attempted to be done manually, the results are fraught with miscalculations.
In fact, this study shows that the error rate in the US for a one year forecast period, is on average, over 30%.
What is the point of forecasting if the results are not based on certain data?
According to the Society for Human Resource Management (SHRM), workforce planning technology that supports predictive supply analytics, bottom-up demand planning, employee- level action-planning, and summarization of gaps is essential for high performing companies.
Methods of tracking time and attendance
#1: Online timesheet software
Employees clock in and out on a computer.
Online timesheet software is free, but the downside is that employees are in control of their weekly time card and can easily fudge their hours, with supervisors having no way of verifying the accuracy of time worked.
This method will not provide an accurate view of time wasted by employees, so you’ll still be paying for time theft.
#2: Wall mounted time clock
Wall mounted times clocks have the employee punch in and out with a passcode.
Generally speaking, this option is less expensive than other methods, but the negative is that it’s easy for staff to “buddy punch”. All it takes is getting a coworker to punch in their code when they arrive at work, and there go your stats and forecasting, and paying for the time that was not earned.
#3: Paper time tracking
Paper time tracking works in a similar manner to online timesheets, but the form is completed by hand, or on Excel or Google Docs, and then submitted to management.
This method is time-consuming for all and inaccurate because again, the employee is in control of the mechanism and you have no way of finding out whether employee hours were actually worked or wasted.
#4: Mobile apps
A handy solution, but mobile apps again put the power into the employee’s hands, and you are left to assume that staff is being honest about their time. With a mobile app, employees can clock in from anywhere, and you wouldn’t know the difference.
#5: Punch time cards
A traditional time card system, each employee receives a paper time card. The company hangs a time card machine in a central location, and staff inserts their paper time card in the machine upon arriving and leaving work. The machine punches a hole or a stamp on the employee’s paper card.
#6: Biometric time clocks
Often pricier than other options, biometric time clocks work seamlessly with time and attendance solutions. Because they use fingerprint or facial recognition technology, employees have to be physically present at the location to sign in and out.
They are accurate because times are automatically fed from the physical apparatus to the time and attendance software. As such, you also save a lot of time, as all the calculations are done by the system. They are the most reliable and effective form of time and attendance solutions.