How Employee Time Theft Hurts Small Businesses

November 23, 2015

What exactly is time theft?

Time theft is when an employee receives pay for time that they haven't spent doing their job, and this can manifest itself in a variety of ways, each of which, over time, can affect small businesses financially.

What are the different types of time theft?

There are quite a few, but here are the main suspects:

  • Lateness
  • Making personal telephone calls
  • Chatting or socializing with colleagues
  • Using the internet for personal use

However the time is being inappropriately used – whether it be fifteen minutes here and there or an hour every day - you can be sure that your business will suffer as a result.

How could this affect small businesses?

Over time, your small business could see a decline in productivity and a decrease in profit. Various studies have been conducted on the subject, with one concluding that the overall cost of time theft to US employers could add up to as much as $400 billion dollars a year in lost productivity. While it may not be easy to calculate exactly how time theft is affecting your business, any loss of productivity or profit could be damaging and you will want to do everything that you can to help prevent it from occurring.

How can you prevent time theft?

Below are 4 ways in which you can help prevent time theft:

  • Ensure that you have a very clear policy regarding staff breaks and make it clear to your employees that there will be repercussions if they abuse their allotted break periods.
  • Make your employees aware of exactly what constitutes as time theft; some may believe that they are entitled to extend their breaks or arrive late for their shift every now and then, if they feel they have been performing well at work. Be specific when giving examples, that way your employees will have no excuse for not following the rules.
  • Invest in time and labor management software to better keep track of your employee's attendances. Software tailored to your companies needs, will allow you to keep check on the exact amount of hours worked by each member of staff and track their paid time off, too. Such software can also be used to discourage unauthorized absenteeism by issuing attendance points, and can produce automated written warnings for time theft offenders.
  • Use a biometric time clock to prevent timecard fraud and keep an accurate check on your employee's attendance; this system requires fingerprint or iris verification of each employee, making it impossible for another person to 'clock' a colleague in or out.

Keeping time theft under control is essential for the well being of any small business, but by following a few simple rules and investing in some time keeping software, you and your business could easily avoid the costly repercussions of time theft.

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