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While you might see your employees every day, keeping track of exactly when they're working, and for how long, can be a tremendous undertaking.
For each employee, employers must add up the number of hours they log, determine how much paid time off they've taken and how much they have left. Since not all employees are paid the same wages, businesses have the added responsibility of ensuring their workers are getting paid the correct amount each month.
Instead of spending countless hours to compute all those calculations manually, many businesses are moving to a digital time and attendance system to make sure they are tracking everything properly.
Matt Rissell, CEO of TSheets Time Tracking, said time and attendance systems handle all of a business's time-tracking needs.
"A true time and attendance system tracks employee hours worked in real time from virtually anywhere and automatically manages paid time off, vacation and timesheet approvals," Rissell said.
Punching in and out
While time and attendance systems provide a wide variety of benefits, their main purpose is to accurately keep track of how many hours employees are working in each day.
Frank Moreno, director of product marketing at Kronos Inc., said historically time and attendance systems captured time manually. They relied on employees clocking in each day either through a traditional punch clock or by using paper timesheets to record their hours.
However, since all the calculations had to be done by hand, those methods proved cumbersome and error-prone in regards to payroll processing, Moreno said. Today's systems rely on a variety of technology to make the time collection process much smoother.
"More sophisticated and innovative methods have become available in recent years to capture time, including intelligent time clocks, smartphones and mobile devices, GPS location tracking, magnetic swipe cards, biometrics and touch screens," Moreno told Business News Daily of the time collection methods that work in conjunction with time and attendance systems. "In an ideal configuration, information is [then] automatically transferred to a system that enables proper payroll processing."
In addition to the different methods today's time and attendance systems can collect data by, many are also Web- or cloud-based.
Jim Wacek, president of the time and attendance division for Insperity, which offers the TimeStar time and attendance system, said this is an additional advantage for businesses that don't want to be forced to host the software or system on their own network.
"Having this system helps reduce costs because companies don't have to purchase and maintain their own servers and IT infrastructure," Wacek said.
Rissell said time and attendance systems are different from employee timers in that they do more than just log the hours an employee works. He said timer systems are essentially an employee stopwatch, and don't offer the array of features that time and attendance systems provide.
"Employees can clock in and out but when the app is closed, the time stops accruing," Rissell said of timers. "Integration for payroll, invoicing, job costing and reporting is limited and it lacks the data backup and compliance features required for many companies."
Giving employees the ability to clock in and out from mobile devices, being able to track where remote employees are punching in and out from via GPS locators, keeping benefit accrual details, integrating with payroll systems and ensuring businesses are complying with federal, state and local labor laws are all benefits that employee timers can't offer, Rissell said.
Financial insight
One of the biggest benefits of time and attendance systems is their ability to give businesses a better look at the staffing picture as a whole.
"A time and attendance system is important for businesses because it provides advanced tracking for job costing and labor distribution," Wacek said. "It also provides enhanced views of the organization's key performance indicators, including hours and wages, employee counts and scheduled/working status."
Having this complete picture of their staffing needs also helps prevent unnecessary and costly overtime expenses. Since many time and attendance systems allow businesses to set up automatic alerts when employees are nearing overtime, employers have the ability to rearrange schedules so they aren't on the hook for those added costs.
"At times [overtime] may be unavoidable, however consistently and accurately tracking time can help proactively manage employee hours," Rissell said. "Setting up overtime alerts can notify you prior to incurring the cost and minimize unnecessary or unprofitable overtime hours."
In the end, Moreno said time and attendance systems save businesses money by providing a detailed look at their labor costs and where changes can be made.
"[You can] see time and attendance trends that could be costing you money so you can control them now and into the future," Moreno said.
Wacek said businesses can save as much as 5 percent of their payroll costs by automating their time and attendance system.
Do I need a time and attendance system?
Rissell said any business with one or more hourly employee can benefit from a time and attendance system.
"If you can't accurately track time, how can you predict employee hours, determine your staffing needs, or verify employee time is being spent on the highest priority projects first, avoiding unnecessary overtime," Rissell asked. "The insight into labor expenses, project costs and overall financial analysis are true benefits to businesses using a quality time and attendance system."
To help businesses determine if they are a good fit for a digital solution, TSheets provides them with a checklist of questions to answer, Rissell said. Among the questions on the checklist are:
- Does your company have hourly employees?
- Do you have a mobile workforce?
- Do your employees work at multiple jobsites or in remote locations?
- Is employee accountability and verification of employee location critical?
- Do you need to know who's working, in real time?
- Do you need to ensure employees are paid accurately for the time they work?
- Have paper timesheets or punch time cards have become too difficult to manage?
- Do you need a way of measuring the productivity of your organization?
- Is accurately measuring the cost of goods or projects a challenge?
- Do you need a way to accurately calculate job costing and forecasting numbers?
- Do you need a way to ensure overtime, PTO and vacations are calculated correctly, kept in check and paid out properly
Rissell said the more questions they answer yes to, the more of a good fit a time and attendance system will be for them.
Wacek said if the decision is made that a time and attendance system is needed, business owners should try to find a solution that will take on many of the administrative hurdles they face so they focus on growing their company.
"Businesses should look for systems that help manage employee scheduling, time tracking, advanced time calculations and paid time off calculations," he said. " Additionally, these systems should have easy-to-create reporting capabilities, offer configurable alerts for employees and employers, as well as employee and manager self-service functionality."
Moreno said it's critical to have a good grasp on when employees are working because if you're not in control of that, then you might not be in control of your business.
"Keeping track of time is at the heart of managing your workforce," Moreno said. "If you're not doing it well, you could be wasting time and money while missing opportunities to improve your bottom line."
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