On Being Penny-Wise and Pound-Foolish

Do you have a time and attendance system installed at your place of work? A traditional punch clock? Or are you still hand writing timeslips… or worse yet, not recording employee time at all?

If you haven’t installed a time clock or time tracking software, why not?

Pennies

Photo by Joshua Davis

Penny Wise

I was talking recently with a friend of mine, a small business owner. I know he computes his payroll using the “consistent hope” method. (In other words, he doesn’t track employee time; rather, he just consistently pays everybody for 40 hours a week and hopes for the best.)

Since I work for a time and attendance company, I was curious as to why he hasn’t set up some kind of formal time tracking system. So I asked.

His answer was that he can’t see the need for one. After all, nobody has complained about their pay — and in these tight economic times he says he can’t justify spending money on a system designed to fix a problem he doesn’t believe he has.

So, yes, he has saved a few out-of-pocket dollars… at least, in the short run.

Pound Foolish

But I suspect most of us would rather stay in business over the long run. Unfortunately, I know a lot of business owners who seem to think the same way as my friend. They’re playing with fire… and sooner or later, they may well find themselves burned. Some of them possibly to the point of losing their businesses.

Too much focus on the short run often turns out to be short-sighted.

My friend’s casual attitude toward timekeeping may have worked OK when the company had just one or two employees… but it’s grown much larger since then. There are bound to be times now when people put in overtime and he doesn’t notice. And unless they think to stand up and say something, they’re not going to get paid for that time. Heck, they may not even know they’re entitled to be paid for it — at least, not yet.

All it takes is one disgruntled employee who goes to a lawyer or files a complaint with the DOL… and my friend could easily find himself dealing with a potentially very expensive wage and hour problem.

Wage and hour actions can cost thousands, perhaps tens or hundreds of thousands of dollars, even for relatively smaller companies. For larger companies, the penalties and back wages can easily run into the millions. Even if the company is eventually found innocent of wrongdoing, they’ve still expended countless hours defending themselves. That’s time and energy they could have spent on growing their business, developing new products, expanding into new markets. Time and energy that’s now gone forever, never to be retrieved.

And you want to know the really sad part? All of that could be avoided by spending a few hundred bucks (or even less) on a professional-quality time and attendance system.

Well, OK, spending a few hundred on the system and then actually setting it up and using it. Because, let’s face it, a system that just sits there in its box on top of your filing cabinet doesn’t do you much good.

The point is, a little bit of money and time invested now can save you a lot of headaches and a lot of money on down the line.

Where Do You Stand?

So, what about you? Have you put off purchasing or upgrading your time tracking system because money is tight, and you think you’d be better off saving your pennies now? Do you have a system sitting around underutilized (or not used at all) because you’re waiting to have enough “free time” to set it up and train your people on how to use it? Or have you made accurate time & attendance records a priority — investing in installing, configuring and using an up-to-date system, knowing it will actually save you time and money, both now and in the future?

4 Comments

  1. Terra says:

    Quality post here. It is simply amazing how many small businesses overlook the need for time and attendance management and how many are afraid of the cost. If they only knew how affordable peace of mind could be.

    • Diane A says:

      Thanks! To my mind, it’s just basic risk management. But I think it may be that people just don’t like to think about what might go wrong. After all, one probably has to be a bit of an optimist at heart to start a small business in the first place. And continuing with existing controls (or lack of controls) is the path of least resistance for most businesses. At least until the DOL comes a-knockin’ or the notification of the lawsuit arrives…

  2. Times clocks are a great way to accurately track employee time and are good for both large and small companies. Alliedtime.com has great special going on right now for their time clocks. They are also a very inexpensive and reliable way to help improve employee efficiency.

Leave a Comment