In small organizations, the investment in time and attendance systems often takes a backseat compared to other factors such as researching new customer acquisition methods or improving customer retention. The attendance system currently in place may also make businesses reluctant in switching to more cost-effective and efficient systems. Few employers may not admit that time theft is a real issue in their company or they might think that an employee tacking on a few minutes here and there isn’t that significant. However, reports reveal otherwise.
A study conducted by AffinityLive and published in the Harvard Business Review found that the U.S. economy loses almost $7.4 billion per day in productivity due to inefficiencies. It is estimated that almost 43% of employees round up their weekly hours. The American Payroll Association (APA) concluded that time theft is an issue that affects nearly 75% of U.S. businesses and cost companies up to 7% of their gross payroll. Therefore, the implications of time theft can be serious and eat into company’s profits if left unchecked. And, one of the most pervasive forms of employee time theft is buddy punching.
So, what is buddy punching?
When a late or an absent employee asks a co-worker to punch into their company’s attendance management system on their behalf, it is referred to as buddy punching. This is an illegal and unethical practice as employees are recording time and getting paid for hours that they have not worked. This disturbing and incendiary workforce practice decreases the return on investment (ROI), productivity and bottom lines the profits of many organizations throughout the world. The current attendance methods prove ineffective as paper-based methods are outdated and prone to inaccuracies whereas more modern methods such as cards and passwords can be shared among the employees.
Buddy punching became a popular culture
How much money and productive time are organizations losing to buddy punching?
Buddy punching costs employees millions of dollars every year and a study found out that payroll gets inflated by almost 2.2 percent on an average due to it. This can be understood better with the help of an example. If a manufacturer employs 1000 workers at an average salary of $35,000 then buddy punching would inflate the payroll to $770,000 annually.
Another report by the American Payroll Association concludes that three-fourths of employers lose money due to employees stealing 4.5 hours’ worth of wages every week. This figure amounts to almost six weeks of paid vacation each year thus robbing the employers of money as well as productivity. When left unchecked, it can also create stress among employees and have a negative impact on the company’s culture. It is therefore evident that this is an extremely serious and pervasive issue and businesses cannot afford to ignore it.
Fortunately, there exists a solution that can effectively eliminate buddy punching. Biometric workforce management systems enable organizations to track employee time with certainty and precision. Such systems can accurately verify employee’s identity as they are based on the inherent features like fingerprints that are unique to individuals. This means that an employee needs to be physically present to clock-in or out of work. There is no way that an employee can share his fingerprints with another co-worker.
What is a biometric time and attendance system?
These systems are much more secure compared to the conventional attendance mechanisms. They free the employees from the hassle of carrying swipe cards or remembering any passwords as the employee’s fingerprints now becomes the authenticating factor. Such attendance systems are therefore becoming highly popular nowadays due to their familiarity and wide availability. When the employee places his or her finger on the sensor, the system automatically reads it and attendance gets recorded only when the employee’s identity is verified. This assures that employees cannot clock in for each other thereby preventing the incidents of employee time theft and buddy punching.
Why is fingerprint system required?
Manual systems can create inaccuracies in attendance recording. Many organizations need to track meals and breaks as well as hours worked overtime. Then there is the manual reconciliation of attendance data which is extremely time consuming and also comes with the risk of errors. There is also a cost associated with maintaining cards and password based systems. Cards may need to be replaced after a certain period of time due to wear and tear, loss etc. Also, if forgotten or lost passwords need to be reset frequently, then IT department needs to spend unnecessary time which does not yield anything productive. Hence the conventional systems are not only inefficient but also have maintenance costs.
In contrast, biometric attendance systems are error free, highly accurate, quick to install and user friendly. When fingerprint technology is combined with automated systems, it enables the employers to know with certainty which employees are inside the company premises and who is not. It allows tracking employee breaks, meals, arrivals and departures with just a swipe of the finger. Employees no longer need to stand in a queue to swipe their cards or enter their passwords.
How can biometrics boost productivity and increase operational efficiency?
The implementation of fingerprint technology in time and attendance systems can have a great impact on employee productivity. Let us discuss a few benefits that this technology can bring to organizations.
The use of a manual process to run payroll for the entire organization at the end of a pay period can be very tedious and laborious. It requires collecting time cards and re-entry of data into the payroll solution. Organizations with a manual timekeeping and payroll process spend almost five hours or more running payroll at the end of each pay period. Even if one person is assigned this job, there is a direct expense associated with it and adds up to a lot of productivity hours. However integrating a biometric attendance system with payroll software can drastically reduce this to a matter of few minutes. There will be saving of productivity hours as well as wages. Moreover, the related personnel can be relocated elsewhere once the manual processes are eliminated.
The organizational costs of employee time theft are enormous and costs U.S. companies nearly $400 billion annually. The key to achieving high output gains and boost profits is to look for ways to increase employee productivity. Businesses expect more productivity per unit of labour input from their employees to maintain strength and viability in tough economic times. In such times, buddy punching can further undermine the organization’s ability to accurately forecast strategies for future growth and maximizing ROI. They also lose faith in the integrity of their workforce. The implementation of a fingerprint system requires each employee to scan their finger on a reader to clock in or out of work. Therefore, it completely eliminates the possibility of one employee punching in for a late or absent co-worker thereby saving the business against fraud and waste. It encourages the employees to act ethically.
Businesses have to incur extra expenditure when cards need to be replaced or passwords need to be reset. Paper cards for attendance reconciliation are also a strain on the environment as they often need to be reordered and restocked. This is particularly the case when human errors are made and corrections are required.
In addition to mentioned wastage, the most important resource i.e. employee time and energy is also wasted using the conventional attendance tracking mechanisms. These tasks can better be handled by using a biometric system and allows employees to focus on the tasks they have been hired for. A simple finger swipe is all that is needed to record attendance with accuracy and certainty. It also provides the supervisors with valuable labour data which they can use to identify and correct productivity issues before they become unmanageable.
It enables organizations to regulate employee access to sensitive areas as well as monitor employee entry. For example, a janitor may need to have master access whereas an IT clerk needs access only to the IT work area. A fingerprint system will help to ensure that only the authorized employees have access to restricted areas. Thus, it reduces the risk of losing valuable physical and intellectual assets. It also prevents any inaccuracies which was present in earlier systems. Employees could share cards or passwords among themselves but this system totally eliminates any potential employee misconduct.
Businesses might be reluctant to switch to a biometric system as they might already have an attendance system in place. But the long term return on a fingerprint system far outweighs the initial investment cost. This technology is rapidly expanding and therefore a wide variety of affordable readers are available in the market. Furthermore, fingerprint systems are extremely easy to install, practically maintenance free and has a zero learning curve. Employees can start using the system right away to record their attendance. This system helps to increase the long term ROI by creating better accountability and a downturn in fraud by eliminating employee time theft. Therefore, this system is a cost-effective way of capturing employee time and provides various additional benefits such as prevention of identity fraud, protection of confidential information and elimination of errors in attendance calculation.
In this article, we have discussed the various benefits that an organization can achieve through the implementation of biometric attendance systems. The adoption of this technology is rapidly increasing in organizations across the globe as it shows proven results through maximized return on investment. It is considered to be one of the most accurate, cost-effective and efficient way of regulating employee attendance that also ensures the highest degree of confidentiality. It assures peace of mind to employers while significantly boosting operational efficiency and productivity.