Your Hourly Workers May Be Stealing From You

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Sep 27, 2018

Every day, thousands of hourly employees are stealing from their company. They are not literally stealing money, but getting compensated for work they didn’t actually do.

Time theft does not stem from the modern workplace. It may have existed ever since the first employee was hired. However, time theft only appeared on the radar of HR professionals as an important issue relatively late. This is probably because it’s only recently the impact of time theft on business has been quantified into business metrics that matter.

So, just how bad is it?

Time theft is a profit leak

Here are a few of the stats that underscore the negative impact time theft has on businesses:

  • 43% of hourly workers surveyed admit to exaggerating the time they work.
  • On average, time theft costs businesses up to 7% of total wage expenses annually. Therefore, if a company spends $100,000 in salaries per year, $7,000 is wasted on unrendered work.
  • 14% of “time thieves” steal 21-30 minutes every week, 14% steal 31 minutes to 1 hour, and 7% steal more than an hour.

Why do employees steal time?

A very simplistic answer to this question is time theft happens because there are opportunities for it to happen. Unethical workers will seize the opportunity to work less while earning more when an opportunity presents itself.

People steal when their backs are against the wall or when they feel that they need to take back something that rightfully belongs to them. For example, if employees feel their employer is cutting cost on wages to keep profitability high, they could commit time theft as a way to take what they feel is something they rightfully earned.

HR as time theft police?

While it is true that time theft is the concern of the entire organization — from the senior managers of those who work in operations to the line managers and supervisors — HR has a roll to play. Given the impact time stealing has on an organization, HR managers should be vigilant against it. The good news is you are not helpless in the face of time theft. While direct supervisors are most closely involved, there are a number of measures that can be implemented to minimize or even prevent time theft.

Here are a few recommendations on how HR managers can help curtail time theft.

When protecting our homes against burglars, the first line of defense is to lock our doors. The same goes with securing your organization against time theft. Incorporating a sound recruitment process that filters out the “bad crops,” so to speak ,is the equivalent of locking your company’s doors to keep out potential time thieves.

Ask previous employers if a candidate was ever caught doing the most common forms of time theft:

  • Buddy or proxy punching.
  • Exaggeration of logged work hours.
  • Counterproductive Work Behaviors (CWBs) such as excessive use of social media and other non-work-related activities.

Determine if there are past offenses that would be indicative of a propensity to commit other offenses such as time theft. The track record of potential hires speaks for itself.

Diagnose and fix culture

More than anything else, time theft is a product of a serious problem in an organization’s culture. As mentioned, time stealing could be an indication that employees are rebelling against something they dislike about how the company is running its operations or treating its employees.

This includes:

  • Inadequate time off and vacation days for employees.
  • Non-existent recognition and rewards program for top performing employees.
  • Unpaid overtime work hours and inaccurate payroll.

Let’s focus on the unpaid overtime work hours and inaccurate payroll. Inadequate or inaccurate employee compensation is a strong trigger for employees to unleash their own version of the Robin Hood effect on an employer. According to author Kim Bobo: “Millions of workers are having billions of wages stolen each and every year. It’s a major crisis cutting across industries, regions and many sizes of firms.”

It’s clearly a two-way street. Steal wages from employees and they will steal back from you. The HR department should be the main champion and advocate of the employees’ best interests in the company, including their right to correct wages.

It’s also a compliance issue. The Fair Labor Standards Act requires employers to pay non-exempt workers at least the minimum wage for the first 40 hours worked in a week and at least 1.5 times that for overtime hours. (There are some exceptions.)

Technology can help minimize time theft

A biometric login system is perhaps the best way to prevent the biggest form of time theft — buddy punching. Today, technology has evolved in a way that you can integrate biometric into your web login/attendance/time tracking portal. With this integration, it is possible to ensure that your employees are not using proxies to clock in for them, even if they are working remotely or telecommuting.

Time tracking systems can also measure productivity and monitor non-work-related activities within a company. In fact, specific firewalls can be created allowing employees to only access certain applications during specific hours.

The only potential barrier that could prevent implementing this type of time tracking system is when employees feel they are being spied on. However, clear guidelines outlining how your system is to be used should keep your policy implementation on track.

A shared responsibility

Time theft prevention is a shared responsibility across the entire organization. That said, HR managers could be the frontline to prevent this issue from proliferating in their organizations.

Everything starts with a strong recruitment process consisting of multi-level background checks. Employees should also feel that HR is advocating for their right to correct wages to avoid retaliation in the form of stealing time.

Lastly, the real-time data provided by time tracking systems empowers HR managers to take swift action to address time theft issues. Using the available time tracking technologies to stop it early before it becomes a major problem is a must for every modern workplace.