Employers that rely on paper-based time keeping methods will naturally have a certain amount of inaccuracies leading to payroll inflation. But add these little mistakes up it can lead to a pretty significant impact on a per employee per year basis. Honest time reporting errors can occur like use of the honor system (turning in the same paper time sheet over and over), but manual time process can also lead to employees gaming the clock or taking advantage of time rounding rules, each of which causes payroll inflation over time.
More than likely an organization won’t have all of these issues happening, but without proper visibility to accurate employee time and attendance data, companies tend to overcompensate, overstaff, and as a consequence overpay regular hours or overtime. Small amounts of “time creep” leads to significant amount of increased payroll dollars.
The Cost of Time Creep Throughout The Organization
- The average time employees incorrectly reported is 4.5 hours/week which is the equivalent of six weeks of vacation (Robert Half and Associates).
- 35% of the average HR department’s time is spent on payroll and error correction administration alone.
- For a company with 25 full time employees (FTE’s), 100 wasted person hours per year on manual payroll processing and exception handling.
Automate Time Keeping to Reduce Three Common Causes of Payroll Inflation
Automation can reduce common causes of payroll inflation and potentially save thousands of dollars a year in wages, overtime and administration.
Compliance Risk
Manual time keeping processes also increase exposure to wage and hour risk. Did an employee take the required break? Do staff regularly engage in work off-the-clock not reflected in the paper time sheet? Not having a complete picture of labor hours or reliable historical data will make it difficult to defend against a claim.
According to DOL statistics, the average issue can cost a typical organization $30,000 in back wages, but easily cost three times this amount in internal handling/mitigation costs, legal fees, and additional damages (DOL).
Unified Workforce Management Solutions
OnePoint HCM unifies time and labor management processes with payroll to produce real-time data connectivity that can reduce errors that lead to payroll inflation, increase administrative time and compliance risk.
- Real time visibility into who is working, when and for How long
- Mitigate compliance risk by accurately capturing meal breaks, off-the-clock work, and
- Auto alerts to notify supervisors of exceptions and analyze trends
- Reduce HR administration time dealing with exception and correcting reporting errors. reporting errors.
- Pre-established rounding rules.
- Biometric time capture functionality and automatic transfer of correct time calculations to payroll.
Sources:
Robert Half and Associates http://www.deputy.com/blog/time-theft/
DOL, Working for a Fair Day’s Pay, found at http://www.dol.gov/whd/statistics/
