Do You Know How Much Time Theft is Costing Your Business?

The cost might be adding up faster than you think. If you run a business – you might want to consider that some of your employees may have given into the temptation to steal something from you. Not necessarily cash from the till drawer, or merchandise from the shelves, or office supplies – but time. This is known as time theft.

This form of theft is prevalent in many workplaces and it really adds up. In fact, a study conducted by the American Society of Employers estimates that 20% of every dollar earned by a U.S. company is lost to employee theft. Another study found that time theft costs U.S. employers more than $400 billion per year in lost productivity.

10 or 15 minutes here or there, can really add up over time!

Let’s take a deeper look at time theft, what it is and how you can reduce it in your workplace.

What Is Time Theft?

Time theft is what happens when employees bill their employers for the time that they have not actually worked. This can happen in a lot of ways, including:

Buddy Punching (Asking a co-worker to punch in for you)

Starting late

Finishing early

Taking long breaks

Working unauthorized overtime

Doing personal activities during work hours

It’s important to note that time theft isn’t necessarily always done maliciously. It can sometimes be an accident – such as an employee forgetting to clock out during their lunch break. Also, in a situation where an employee has no accurate way of tracking their time, they will naturally overestimate and round their time up or down.

Time Theft – A Relatable Experience for Many Managers

I put the question out there on Quora – “Have you ever caught your employees engaging in time theft? What happened?”

It turns out that this is an issue that many employers can relate to, as I received a lot of responses. A retail manager said that he caught his employees clocking in and out for each other – a form of time theft known as “buddy punching.”

Another manager noticed that on a normal day all employees punched their time cards with a few minutes in between – whereas on a day where the boss was not in the office they all punched in at exactly the same time. He started to suspect that this was not a coincidence.

A manager at a nursing home also had an issue with time theft, mostly due to the old-fashioned time tracking system in place.

“When you clocked in on time, it would be stamped 15 minutes earlier,” she wrote. “That let them get a little overtime every day. It made it seem like someone got to work on time when they were actually late.”

“I caught the timer error and it was easy to confirm and repair. It was so common that only the ones who took the biggest advantage were fired. The others had to work overtime, clocked out, to repay the extra, unauthorized OT they had stolen.”

In another answer, a manager explained that time theft is specifically mentioned in the employee handbook as a reason for immediate termination. He described the special biometric features within the time clock system designed to prevent time theft – including fingerprint and photo recognition.

The True Cost of Time Theft

According to a time theft study conducted by Robert Half International, employers lose about 4.5 hours every week per employee to all different types of time theft. Another study by Software Advice found that 1 in every 4 workers admitted to exaggerating their time worked at least 75% of the time.

If you have a large workforce, with multiple employees, and many of them are engaging in time theft – this can add up quickly. Soon, you realize that your employees are submitting fraudulent timesheets or being paid for unproductive time and you are spending hundreds (or even thousands) more than you should.

Every penny counts when you are running a business, so it’s important for business owners to do everything they can to minimize time theft.

However, the cost of time theft is not only simply the extra wages paid for unproductive hours. If employees are in the habit of time theft, this can have negative impacts on the workplace as a whole.

For example, employees who clock in late and clock out early in a fraudulent way and getting away with it can make other more hardworking employees resentful. It is frustrating when someone else is successfully scamming the system while you are putting in your honest hours.

It can also affect customer service and the business as a whole. For example, if customers in a retail store get poor service because their sales clerks are playing with their smartphones or chatting – there will be fewer sales and this can cause the company to struggle.

Tips for Preventing Time Theft in Your Workplace

Here are some strategies that you can use to reduce the risk of time theft in your working environment:

Talk to your employees about time theft and explain why it hurts your business.

Develop a clear policy for time tracking that outlines how employees must record their time – and the consequences for not following the policy.

Avoid old-fashioned paper time tracking systems, which are very easy to defraud. Instead, use an electronic time card app , which is a much more accurate way of recording shifts. This type of time tracking system makes it almost impossible for time theft to happen – even accidentally.

Look for an employee time tracking app that includes biometric features such as fingerprint or face recognition, so that you can prevent employees from punching in for each other.

Also, choose a time tracking app that automatically records the location of an employee – so that you can make sure they are actually on site – even if you are not.

Make sure to remind employees to clock in and clock out when they arrive and leave at work – as well as when they start and end their breaks.

Put checks and balances into place. Supervisors and managers should review and approve all timesheets before they are finalized. Employees will be less likely to falsify their time sheets if they know they will be carefully checked.

Pay your employees a fair and competitive wage. They will be more motivated and less likely to feel like they need to engage in time theft if they are being well compensated for what they do.

You can start preventing any current or future employee time theft immediately today within minutes. All you need to do is sign up on Boomr and start using our employee time tracking app. You can get it free for 30-days too.