Tips on choosing
a time and attendance system

“A minute here, a minute there,
and pretty soon you're talking real money.”
(With apologies to the late Senator Everett Dirksen)

If you’re still using an old-fashioned punchclock or handwritten timesheets, that single sentence explains why an electronic time and attendance system can benefit your business.

So let’s talk “real money.” How much can an electronic time and attendance system save you? Here's an example of the savings for a 20-employee company that pays each worker $12 an hour: If the system stops just 1 minute in errors per employee per day, it will save the company $1,040 a year—more than the cost of many systems. In addition, the time to process the employee timecards or timesheets will be cut from hours to seconds, increasing productivity.

Electronic time and attendance systems have been around for years, but only recently has their cost become reasonable for small businesses. The systems generally consist of a wall-mounted timeclock, software and a device—usually a magstripe card or a key-sized device called an “iButton”—that’s issued to each employee and identifies the employee to the system.

Generally, employees tap or swipe their ID device at the clock, which records their identity and their clock-in or clock-out time. At the end of the pay period, the person handling payroll uses the system’s software to examine the clock-ins and clock-outs, make any necessary corrections (if an employee forgot to clock out, for instance), generate reports and prepare the data for their payroll software or service.

Surprisingly, the electronic systems often end up raising employee morale, according to Doug Marsh, CEO of TimePilot Corporation (www.TimePilot.com), an Illinois-based company that manufactures time and attendance systems for offices, workshops and outdoor construction sites. “Employees know that you can’t cheat the system, so they are reassured that their co-workers aren’t getting away with anything,” he said. “Everyone is held to the same standard—an hour’s pay for an hour’s work.”

Electronic time and attendance systems save companies money in several ways:

• Because employees clock in and out with a device that positively identifies them to the system, “buddy punching” (when a worker clocks in a friend who isn’t there) is reduced or eliminated.
• The systems track employee hours down to the minute. At the end of the workday, few people can recall the exact minute they started work that morning. The systems put an end to the cases of “I think I started at 8 a.m.” when they really started at 8:03.
• Manually calculating your employees’ work hours takes time and care. (Quick: How long has an employee worked if he started at 7:53 a.m. and quit at 5:17 p.m.?) A recent study found that math errors cost companies between 1% and 8% of their gross payroll, and that it takes about 7 minutes to calculate one employee’s work hours on a single time card. Punchclock and timesheet systems’ hidden costs—errors, calculation time and supplies—add up fast.

OK, now you’re convinced that an electronic time and attendance system might make sense for your company. What are some of the things to look for in a system?

• Easy-to-understand software. Clocking in and out is easy with any system, but the big change is for the person who does your payroll. It’s crucial that they understand how to use the software. Look for software that is clear, intuitive and explained well. If the company offers a trial version, download it and play with it to get a feel for how it works.
• Durability. Employees don’t always adapt easily to an electronic system (although these systems often end up raising morale, as Marsh said), so a system should be able to stand abuse. Look for a durable clock and consider an iButton-based system. Magstripe cards crack, get creased, can lose the data encoded on the magnetic strip and transfer dirt and grime to the timeclock. iButtons have an infinite lifespan, are impervious to water, chemicals and magnetic fields and work as well in dirty environments as in clean ones. TimePilot even makes a weatherproof system that is designed to be used at construction sites.
• Expandability. It’s important to allow for the growth of your company. You don’t want to be hamstrung by a system that’s too small for you. Look for a system that can handle 25% to 50% more employees than you will use now. Also, look to see how much—if anything—you’ll pay to add employees to the system. Some companies make you pay extra for extra employees, others don’t. TimePilot, Marsh’s company, has written its software to accommodate as many as 2,000 employees at no extra cost (except an iButton for each employee). Also, does the manufacturer offer different types of clocks that combine to make up a single system? For instance, a weatherproof clock at the job site, a wall-mounted clock in the shop and a PC-based clock in the office.
• Features: Look for multiple ways to clock in: by device (magstripe card or iButton) or by ID number. Customizable reports are a bonus: You may want a report to include data that another company doesn’t. Does the system export the payroll data in a format that can be used by your payroll software or company?

In short, ask lots of questions and insist on either a trial or a return policy to make sure you choose the right system for you. In these tough economic times, every dollar counts and making your company more efficient can result in a big return on your investment.

To learn more about TimePilot's time and attendance products, click here.