The practice of “buddy punching” has gone on as long as there have been time clocks. It’s basically the practice of punching in or out of work by a buddy of an employee, so that the employee’s late arrival or early departure isn’t recorded by timekeeping.
Work buddies do this for several reasons:
• They’re running late and don’t want to be reprimanded
• They want to leave a few minutes early and don’t want the hassle of scheduling it
• Their buddy punched in or out for them, and they want to reciprocate
• They think they’re underpaid and want to game the timekeeping system in a minor way
Why It’s a Problem
Buddy punching is more than a minor ethical lapse; it costs employers a lot of money. A study by Nucleus Research found that 19% of employees admitted to buddy punching. The practice is responsible for employer losses of 1.5% to 3% of gross payroll, which may not sound like much, but can add up over a year.
Experts on fraud prevention use a rule of thumb called the 10-10-80 rule. Ten percent of employees simply won’t steal. Another 10% will steal no matter what. The other 80% of employees may or may not steal, depending on circumstances. Managing the practices of that 80% is how companies prevent the most time theft.
Why a Few Minutes Here and There Matter
The American Payroll Association says that over 75% of companies lose money due to buddy punching, with employees stealing around 4.5 hours per week. That’s six weeks over the course of a year. Money lost to buddy punching is money that isn’t put back into the business, isn’t used to hire more workers, and isn’t used to give raises to deserving workers.
Small Businesses Suffer the Most
Small businesses have the most to lose with buddy punching. These businesses typically have fewer anti-fraud controls in place. And when smaller businesses lose money due to buddy punching or other forms of time theft, they typically have fewer resources cushioning the financial blow. Small businesses have the most to gain by taking measures to prevent buddy punching, such as using advanced time and attendance software.
Stop Buddy Punching
Fortunately, there’s a lot businesses can do to prevent the practice of buddy punching. One step that doesn’t involve investing in new timekeeping technology is to have a supervisor who knows who is scheduled and who sees who shows up at work when. While this may work as a stop-gap measure, it’s impractical at larger companies, and isn’t the best use of a supervisor’s time. The right time and attendance software, however can make a real difference long term.
Some companies curtail buddy punching by issuing swipe cards. Employees use these cards, embedded with magnetic strips, to swipe in and out of work using a card reader and time and attendance software. Buddy punching can still be done with swipe cards, but it involves handing over the card ahead of time, and this is too impractical for most employees to bother with.
Biometric timekeeping systems require employees to scan their fingerprint or their entire hand in order to clock in or out, so buddy punching isn’t possible. These systems start at around $250 and several biometric systems cost under $1,000 – an investment that can pay for itself quickly depending on the size of payroll and the prevalence of buddy punching. They integrate with time and attendance software that can be automatically sent to payroll or a PEO company.
You can also get “selfie” time clocks that use employee faces as the metric for clocking in and out. These systems, which are made for iOS systems like the iPad prevent buddy punching and can be made location-aware and locked down to specific IP addresses so they can’t be used remotely. These too use time and attendance software that can integrate with payroll or a PEO provider.
Buddy punching is expensive, particularly for small businesses, but there is much that businesses can do to prevent the practice. Many new timekeeping systems come with great features that allow timekeeping data to be delivered automatically to the payroll department, payroll company, or PEO company that takes care of payroll services.
SourceOne Partners offers PEO solutions, with offices in Boca Raton, Ft. Lauderdale, and Miami. SourceOne also has offices in New Jersey. We are PEO brokers who understand the needs of small businesses regarding accuracy of payroll. Buddy punching costs businesses needlessly, but with the right timekeeping software and the right PEO brokers, you can put an end to the practice and enjoy healthier profits. Call us at 561-674-0748 for a consultation or contact us online.