Employee Theft: What It Is And How To Prevent It
Employee theft can happen anywhere, anytime, to any business. In this article, t...
Time theft is a growing epidemic in businesses from California to New York and around the world. As mobile devices and the ubiquity of the internet continue to increase, so too does the potential for your employees to become distracted and waste 15 minutes here and 15 minutes there throughout the workday.
While this may not seem like a problem at first, over time, the expense of paying people for work they didn’t do can seriously impact your bottom line.
But what exactly is time theft? What are the possible ways it can occur in your business? And how can you prevent time theft in the first place? In this article, the experts at Sling will answer those questions and help you avoid lost time and revenue.
Time theft is when an employee accepts wages for work he or she didn’t do. The theft can be deliberate, accidental, or just negligent.
But regardless of how the theft occurred, the loss of both time and money can have a negative impact on the way your business operates.
As we mentioned above, time theft can be deliberate, accidental, or just negligent. It can also happen in small or large increments.
For example, let’s say Jane works in a warehouse where she makes $15 per hour. Her time sheet indicates that she works from 9 a.m. to 5 p.m. Monday through Friday. In reality, she arrives at 9:05 a.m. and leaves at 4:50 p.m.
Fifteen minutes may not seem like a lot at first, but, over time, it can really add up. Over the course of a five-day workweek, you are paying Jane $18.75 for 1.25 hours she didn’t actually work.
That adds up to 5 hours every month for a loss of $75. Extend that out to 12 months and your business is paying $900 annually for 60 hours of work that never got done.
The above example is an instance of small amounts of time theft adding up to big numbers. But time theft can also occur in large increments that can add up to even higher numbers.
Let’s say instead of arriving five minutes late to work as she did above, Jane has her friend clock in for her (i.e., ghosting or buddy punching discussed in the How Does Time Theft Occur? section below) and doesn’t report to work until 10 a.m.
Now, imagine she gets in the habit of doing this every day for a week. You’ve paid her $75 for five hours she didn’t work.
A month of that and your business has lost $300 and 20 hours of labor. If the time theft continues for a year, your business will lose a whopping $3,600 and 240 hours of labor.
That’s a significant amount of money and time that can affect your bottom line for the worse. And that’s only one employee!
From these examples, it’s easy to see how time theft — small and large, deliberate and accidental — can quickly add up and have a very serious and negative influence on the way your business operates.
So far, we’ve discussed what time theft is. In the next section, we’ll examine how it occurs. In this section, though, we’re going to focus on why time theft happens.
Ask 10 employees why they engage in time theft and you’ll get 10 different answers. That said, those 10 answers will boil down to one underlying cause: your employees feel undervalued.
Time theft is a way for your team members to make up for those feelings and recover the benefits they believe they deserve.
A decline in employee appreciation — leading employees to feel undervalued and, eventually, disgruntled — can take many forms.
Your HR department may put employee morale on the back burner in order to address other, more pressing, issues. Or, employee engagement may decline because of business strategies or even external forces.
For example, in response to a decrease in market share, management may institute KPIs that demand your team keep costs low while still maintaining (or even increasing) output.
A change such as this may necessitate that your employees work more hours or take on more responsibilities for the same or less compensation.
Over time, your team may feel that they’re being treated unfairly and may resort to time theft to recoup what they feel they rightly earned.
As we touched on earlier in this article, ghosting, also known as buddy punching, is when one employee (employee A) clocks in for another employee (employee B) who is not actually at work.
Sometimes employee B is just running late and doesn’t want to get in trouble. But other times, employee B may not show up for work at all while still getting paid for a full eight hours. That can mean a significant loss in productivity for that employee and for the business as a whole.
One of the most common forms of time theft has to do with taking longer-than-usual breaks. If a mandatory break is 15 minutes, employee B might leave 10 minutes early and come back 10 minutes late. That’s 20 extra minutes of lost work that you, the employer, are paying for.
If employee B does that every workday for a five-day week, you’re paying him for almost two hours he didn’t work. Extend that out to a month (four or five weeks) and you’ll wind up paying employee B for eight to 10 hours of work he never did.
Time theft can occur even when employees are at work, clocked in, and doing what they’re supposed to be doing. In this case, theft happens when they make or take personal calls, check their email, IM or text with their friends, and basically do something other than work-related activities.
Some employers allow these diversions up to a point, but when the time spent on non-work related tasks starts to exceed 10 to 15 minutes in a day, you might consider it time theft.
Timesheets that your employees fill in by hand are extremely susceptible to time theft.
As we discussed in the example at the beginning of this article, writing down a full eight hours but arriving a few minutes late and leaving a few minutes early is one of the most common types of timesheet fraud.
Even one or two minutes of lost productivity and labor can add up to a serious deficit for your business’s bottom line when multiplied by five, 10, or even 100 employees.
Software solutions like the Sling app are an ideal way to deter the time theft that occurs through timesheet fraud.
Any time tracking system that requires your employees to manually enter their arrival and departure time is susceptible to time theft.
In many cases, this time theft isn’t even the deliberate type we’ve been talking about so far. Sometimes, employees forget to clock in or clock out because they’re in a rush or have other things on their minds.
Like all the other forms of time theft in this article, these simple mistakes can take a bite out of the operating capital that your business could use for research and development, advertising, marketing, or office improvements.
There’s nothing wrong with your employees socializing, working together, and getting to know one another while they’re at work.
But excessive socializing leads to wasted work hours, lost productivity, and even conflict with other team members who are trying to pick up the slack.
A few minutes of socializing here and there is fine, but when the chit-chat extends into 15, 30, or even 60 minutes, you should consider it time theft and address the problem before it goes any further.
Some tasks make it easier to get away with time theft — and are, therefore, more prone to the practice — than others. That’s not to say it’s always going on in these jobs, just that it can be difficult for you to know one way or the other.
For example, it may take a delivery driver twice as long as usual to get to the customer and back. When asked, they may claim that traffic is to blame when, in actuality, they ran some personal errands while they were out of the office.
One form of time theft that is the most difficult to monitor and prevent is non-work-related internet use. This can range from employees surfing their favorite websites to spending time on social media or shopping.
Unfortunately, unless you have a dedicated I.T. professional who can monitor internet activity, there’s not much you can do to keep this type of time theft in check.
That doesn’t mean that all is lost, though. There are a number of ways you can address the issue of time theft without personally watching your employees all the time while they’re at work.
Put the rules for clocking in and out in your employee handbook and then define what time theft is so that everyone is clear. Be specific with your information so there’s no misunderstanding. And be sure to outline the penalties for each type of time theft.
One of the best ways to prevent time theft is to remove two of the largest temptations: ghosting and long breaks. With software like Sling, you can make it more difficult for one employee to clock in another employee and you can restrict breaks to their preset limit.
If you see someone regularly stealing time when they should be working, institute progressive discipline. Start with a verbal warning. If it occurs again, consider a written warning in their file, docking their pay, suspension, or even termination.
Whatever discipline you choose, make sure everyone is aware of the punishment beforehand, and do your best to follow through with each employee who breaks the rules.
Your employees will emulate your behavior, so be sure to set a good example. Avoid taking excessive personal time and using the internet for non-work-related activity.
If you have to take extra time at lunch to meet a customer or complete other business-related tasks, be sure to explain to your employees (or one of their supervisors) why you will be gone longer than usual.
Another key component of preventing time theft is maintaining communication between management and team members (and vice versa).
Communicating regularly about what’s working and what’s not in your business — through employee self-evaluation and satisfaction surveys — helps both you and your employees identify how long certain tasks should take so that there’s less risk of time theft.
And don’t make the mistake of thinking that communication should only be from the top down. Your team members should feel free to talk to their managers about problems they’re having with product, process, or anything else that affects their job.
You can prevent time theft in all its forms by improving employee accountability while they’re at work. In many cases, this means setting goals and targets that employees should try and abide by when performing specific tasks.
In the case of the delivery driver mentioned earlier in this article, a good strategy would be for all managers to know how long it takes to complete the round trip (even under the most congested circumstances) and communicate those metrics to the employee.
That way, the driver is held accountable if an hour round trip winds up lasting two hours.
As an owner or manager, it’s important to exercise understanding in your work expectations. Your team will function better and more efficiently if they are allowed to take breaks and unwind for a few minutes now and then.
You don’t need to schedule these breaks, but you do need to allow a bit of flexibility in everyone’s schedule so they can rest for a moment when they feel overwhelmed.
When your employees are aware that they can step away from their job for a moment to regroup and refocus, they will be less likely to engage in excessive socializing, unauthorized personal time, or other forms of time theft.
Regardless of the methods you use to prevent time theft, one of the simplest and most effective is to incorporate scheduling and time-tracking software, like Sling, into your workflow.
Good work habits start with giving your employees the hours and shifts they want. Sling can help make this job easier and less time-consuming.
Employees can use Sling to indicate when they can work and when they need time off. The powerful A.I. built into the Sling app then provides notifications and reminders that help you take all of these variables into account.
That way you can avoid double-booking your employees and scheduling them to work on days they’ve requested off.
Sling also helps you track clock-in, clock-out history so you can see exactly when your employees worked. And if you’re worried about employees clocking in on their mobile devices when they’re not actually onsite, you can use Sling’s built-in geofencing system to establish boundaries around your business.
Your employees will only be able to clock in or out when they are within the lines you set. That reduces the risk of both deliberate and accidental time theft in your business.
So instead of tougher penalties for lost work, harness the many features and flexibility that Sling offers to combat the different types of time theft and help keep your payroll and labor costs under control.
For more free resources to help you manage your business better, organize and schedule your team, and track and calculate labor costs, visit GetSling.com today.
This content is for informational purposes and is not intended as legal, tax, HR, or any other professional advice. Please contact an attorney or other professional for specific advice.
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