How Do Biometric Time Clocks Reduce Payroll Costs? [4 Simple Ways To Cut Overhead Without Layoffs]
by Liz Strikwerda
Do you have hourly employees? Looking for ways to reduce labor costs without layoffs? Consider getting a biometric time clock.
4 Ways Biometric Time Clocks Reduce Payroll Costs
1. Eliminate time theft by buddy punching
2. Eliminate time theft by hours padding
3. Eliminate out-of-schedule punches
4. Prevent payroll mistakes
Before we get into the details, let’s go over the basics.
What Is ‘Biometrics?’
Biometrics is the collecting and analysis of an individual’s physical or behavioral attributes. The attribute measured must be unique to that person. When used with biometrics, the attribute or characteristic is called an ‘identifier.’ Identifiers include fingerprints, facial scans, iris scans, hand vein geometry, or DNA. Behavioral identifiers include typing patterns, iris patterns, or gait (the way you walk). Some attributes—such as voice—are both physical and behavioral.
How Does A Biometric System Work?
Any biometric system requires a device, software, and database. The device collects the identifier. The software converts the collected information into a digital format. (Most systems encrypt the information for security and legal compliance.) The database stores the information.
What Are Biometrics Used For?
Biometrics are used for security and/or transaction authentication. A biometric system is an effective way to verify a person’s identity. They are used in airports, forensic investigations, secure buildings and workforce management. For our purposes today, we will now discuss how you use them in workforce management.
What Is A Biometric Time Clock?
Biometric employee time clocks identify employees and track their work hours. Employees punch in and out on the biometric clock. Biometric time clocks can be placed at the entrance to the workplace. Or at the entrance to specific departments within the facility. Some employee timekeeping apps have biometric capability. This allows employees to clock in biometrically from a mobile device. Biometric clocks can sync with employee time and attendance software.
What Are The Different Types of Biometric Time Clocks?
Biometric clocks are distinguished by the type of attribute they use. Common identifiers include fingerprints, iris scans, facial recognition, and hand geometry. Some biometric time clocks are designed for specific workspaces. For example, portable dirt- and water-resistant clocks for construction sites.
How Does A Biometric Time Clock Help My Business?
Biometric clocks provide many benefits. They reduce labor costs by preventing employee time theft and reducing payroll errors. They also enhance security, improve efficiency, and simplify compliance.
How Do Biometric Clocks Prevent Employee Time Theft?
Employees steal time in a couple of different ways. With paper time cards, it’s easy for an employee to add a few minutes before or after every shift. (‘My manager doesn’t know the exact time I arrived.’) These minutes add up. Even a small employer can lose up to four hours a week per employee.
Employees also commit time theft with ‘buddy clocking’ or ‘buddy punching.’ This is when an employee clocks in for an employee who isn’t at work. In some cases, the employee eventually shows up. The ‘buddy clock’ scheme prevents the absent employee from receiving a tardy or an absence. It also ensures that their paycheck isn’t reduced. U.S. employers lose over $370 million a year to buddy clocking fraud.
Both time card padding and buddy punching increase payroll costs. Flagrant abusers can cost their employers thousands of dollars every year. A biometric time clock can cut your payroll costs by 10% (or more) by preventing time theft.
How Do Biometric Clocks Improve Payroll Accuracy?
We’ve talked about payroll problems caused intentionally by dishonest (or careless) employees. People also make payroll mistakes unintentionally. These include math errors on paper time cards, data entry mistakes, and lapses in memory. How many people touch each time card with a traditional system? Up to three: 1) the employee, 2) the manager, and 3) an HR or payroll staff member. Each manual step is vulnerable to human error.
When a time card error isn’t caught and corrected, it triggers an inaccurate paycheck. When the employee tells the manager or HR team about the error, they have to issue another check. And fix inaccurate PTO calculations. The error could affect overtime benefits. If a tipped employee doesn’t get paid accurately, it may put you in sketchy minimum wage territory. In all cases, it’s a hassle for the employee, manager, and admin team.
How Do Biometric Time Clocks Improve Efficiency?
Imagine a large warehouse with hundreds of employees. With an old-school punch clock, each worker has to find their card and put it into the machine. Then they return their card to the rack. This may only take a few seconds. But multiply that by 50 employees and dozens of weekly shifts. It results in lost productivity every month. It’s also frustrating for employees who have to wait in a line every time they clock in or out.
Many biometric time clocks don’t require the employee to touch the clock. For example, with a facial scanning clock, the employee stands in front of the clock for a half-second scan. It speeds up the line at the time clock for each shift change.
Hands-free clocks simplify punch-in if you’re wearing gloves. Or carrying equipment in factories or industrial environments. And they help maintain sterility in laboratories, hospitals, and ‘clean-room’ manufacturing spaces.
How Do Biometric Time Clocks Improve Security?
Business owners that need secure access can use a biometric clock. They can put one at each entry point in the building. Or they can place them at the entrances to areas within. For example, those with sensitive documents or equipment. A biometric clock only allows access by authorized employees.
How Does A Biometric Time Clock Sync With Timekeeping Software?
Time and attendance software can integrate with time clocks. These include proximity card clocks, PIN clocks, or web portals. When you sync timekeeping software with a biometric clock, you gain more control. You also automate many time-consuming workforce management processes.
This is how it works:
1. The employee clocks in with the biometric clock.
2. The clock identifies the employee and records the punch time.
3. The timekeeping software adds the hours worked to the employee’s (virtual) time card.
4. At the end of the payroll period, the software imports the hours data into the payroll system.
Tallying hours worked is essential, but the systems do much more. They give you timekeeping superpowers. Let’s look at some of them:
· Breaks/meals tracking
· PTO accrual tracking
· Missed punch notifications
· Overtime alerts
· Intelligent prompts
· Customizable compliance settings
How Does A Biometric Time Clock Synced To Timekeeping Software Reduce Missed Punches?
The clock prompt will present only logical options to each employee. For example, suppose an employee is already clocked out for a break. When he returns from the break, the clock prompt will only present and END BREAK punch option.
How Does A Biometric Time Clock Synced To Timekeeping Software Enforce Schedules?
If an employee attempts to clock in before the scheduled shift start time, the clock will deny access. A prompt will notify her of her authorized start time. She can’t clock in until that time.
How Does A Biometric Time Clock Synced To Timekeeping Software Prevent Buddy Punching?
Buddy punching can wreak havoc on your labor budget. A biometric clock identifies each employee by their unique biological identifier. There is no practical way to cheat the system. (I can imagine a few, but they would only occur in a horror movie.)
Are There Laws That Govern The Use Of Biometric Time Clocks?
Yes. Some states limit what types of biometric data you can collect. They also dictate how you can store and use the information. There are also Federal privacy laws that come into play.
If you are considering a biometric time clock, find out what your legal obligations are. Most employers can find a clock that is compliant with both State and Federal privacy laws. Consult with an attorney to create compliant policies. Appropriate policies will protect you in case of a Department of Labor audit.
Workforce management service providers can help you choose a biometric time clock. They can also help you have a smooth rollout.
Let IPP Help You Reduce Labor Costs
Biometric time clocks integrate with our industry-leading timekeeping software. Contact IPP to speak with a biometric time clock specialist.