The Hidden Cost When Your Employees Buddy Punch & How To Stop It

Imagine paying an employee for hours they didn’t work or compensating a remote employee who wasn’t at the job site. Sounds like a way to run your business off a cliff, right? This scenario is known as “buddy punching", and it’s a time theft practice that's more common and lethal than you think. We'll get you up to speed on how to identify when your employees buddy punch for each other and how to stop it (like our customer Kevin did) before you get to the end of the road.

Key Takeaways

• A buddy punch is when an employee clocks in for one another, leads to high financial costs for businesses, contributes to inflated payroll and overtime, and can disrupt overall workplace morale and productivity.

• Indicators of buddy punching include inconsistencies in time records, frequent time card corrections, and behaviors like low absenteeism paired with low productivity, which can signal a lack of accountability and fairness in the workplace.

• Effective strategies to combat buddy punching include utilizing biometric and geofencing time-tracking technologies, creating clear anti-time theft policies with outlined consequences, and fostering a positive company atmosphere emphasizing transparency and accountability.

What We Will Cover

• The Reality of Buddy Punching
• The Financial Impact Of Buddy Punching
• Recognizing Signs of When Employees Buddy Punch
• Adopting Effective Solutions to Prevent Buddy Punching
• A True Story About a Commercial Cleaning Company
• Chronotek Pro's GPS Time-Tracking System Can Prevent Buddy Punching
• 6 Ways Chronotek Pro Prevents Buddy Punching
• Wrapping It Up
• FAQs

The Reality of Buddy Punching

As the term may hint, a buddy punch is when one employee clocks in or out for a coworker who is absent or late, essentially stealing time and costing the company money. While it might seem like a harmless favor between colleagues, this form of time theft has profound financial and cultural implications.

Job dissatisfaction, lack of appreciation, and displeasure with working hours or time off requests often lead unengaged employees to resort to buddy punching. Company culture is key in this context. Enhancing employee performance through a positive and engaging company atmosphere can lower the likelihood of unethical practices like buddy punching. Adopting effective employee scheduling can also contribute to a more satisfied workforce and prevent these serious consequences.

The financial Impact of buddy punching 

Buddy punching is a form of time theft that has devastating financial implications. Employee time theft costs U.S. employers more than $400 billion annually in lost wages and productivity. Did you know that 20% of new start-up U.S. businesses fail in their first year? Additionally, 50% fail within five years, and 65% within ten years.

The primary reason businesses fail is because their money runs out. Many factors contribute to cash flow problems, and time theft is undoubtedly a significant issue for service companies with remote employees.

For example, a survey found that 16% of employees admitted to buddy punching, resulting in 15 minutes of daily time theft. The U.S. Bureau of Labor Statistics reports the median hourly wage for janitors in 2022 was $15.38, and tacking on payroll taxes and workers' compensation puts the cost at $17 an hour.

Statistically, your 20-employee commercial cleaning company has three hourly employees stealing 15 minutes daily, costing $3315 annually in lost wages. Factor in lost productivity, and you'll understand how detrimental buddy punching is to your bottom line. Fortunately, for one-third of the cost of your lost wages, you can eliminate this buddy punch time theft practice and put $2000 annually back in your pocket.

Furthermore, buddy punching has a massive impact on overtime pay, estimated to cost U.S. employers over $373 million annually. Inflated payroll costs, increased overtime pay, and potential legal issues can result in substantial bills for businesses every pay period. These costs are categorized into two groups: Direct and Indirect Costs.

Direct costs

• Increased Payroll and Overtime Costs: When employees buddy punch to manipulate their working hours, it can lead to inaccurate payroll and overtime calculations. This may result in the company paying more for overtime than is actually worked.

  Payroll Errors: Buddy punching can lead to payroll discrepancies, as employees may be paid for hours they did not work or vice versa. Correcting these errors can be time-consuming and can result in more human error.

Indirect costs

• Loss of Productivity: When employees buddy punch, they get paid for hours worked, yet they aren't producing. An absent employee can't do work.

• Employee Morale: Co-workers aware of buddy punching may feel resentful or demotivated, decreasing overall morale within the team. This can negatively impact the work environment and team dynamics. Honest employees also must work harder to compensate for the lack of productivity by the buddy punching employees.

• Trust Issues: When employees buddy punch, it erodes trust between employees and employers, creating a culture of dishonesty and frustration.

• Reputational damage: If news of buddy punching practices within a company becomes public, it can damage the organization's reputation and erode trust among customers and clients.

A clear buddy punch policy can help reduce these direct and indirect costs.

Recognizing Signs of When Employees Buddy Punch

The initial step to addressing buddy punching is recognizing its signs. A typical indicator is when employees never call out, yet their productivity declines.

Inconsistencies in time records can also hint at buddy punching. These may include:

• Inconsistent arrival times

• Frequent corrections to time cards

• Similar attendance patterns among different employees

• Discrepancies between the time recorded and the amount and quality of actual work done.

These signs of buddy punching are usually coupled with inadequate monitoring of work hours and clock-ins and clock-outs.

Inconsistent Time Records

Inconsistent timekeeping, such as frequent tardiness or early departures, can suggest that employees might buddy punch for each other as they compensate for each other’s attendance. Employers should be wary of patterns such as irregularities in clock-in and clock-out times, abnormal attendance patterns, and disparities between time records and other forms of documentation.

Frequent late arrivals or early departures can indicate buddy punching, especially if this behavior is recurring among specific employees. Other irregular timekeeping instances may include similar staff attendance trends and scenarios where multiple employees clock in on behalf of another individual.

Employee Behavior

Specific behavioral patterns can also indicate buddy punching. These include:

• low absenteeism

• low productivity

• low morale

• employee dissatisfaction

• breaking workplace policies

Buddy punching occurs when an employee clocks in or out for their colleagues, which can reduce accountability and fairness in the workplace and decrease productivity and employee engagement, leading to resentment and disengagement among workers.

Reluctance to use automated time clocks, displaying anxiety or resistance towards being monitored, and demonstrating poor time management skills can be potential indicators of buddy punching.

Adopting Effective Solutions to Prevent Buddy Punching

Hopefully, we've proven that your company is at risk when your employees buddy punch for each other. Commercial cleaning businesses especially struggle, with their profit margins hovering at 7%. They must eliminate all threats to their cash flow. There are many ways to attack the buddy punch problem.

Let's go through a few solutions.

Establish a Clear Buddy Punching Policy and Consequences

Establishing clear policies and consequences plays a crucial role in preventing buddy punching. Measures could include formal anti-buddy punching policies, the use of time clock features in scheduling software, an attendance policy, and fostering a culture of integrity.

Companies should communicate their buddy punching policy through company-wide memos, all-staff meetings, and by mandating employees to sign a document confirming their understanding. Consequences for buddy punching may involve disciplinary action, such as verbal or written warnings, loss of privileges, compulsory training, increased surveillance, and termination.

A buddy punching policy is a step in the right direction to prevent employees from buddy punching.

Foster a Positive Company Culture

You can reduce buddy punching and payroll fraud by fostering a positive company atmosphere. A culture of transparency and honesty, cultivated through open communication, can decrease fraudulent time-reporting behaviors like buddy punching. Engaged employees develop a stronger connection to their work and the organization, decreasing the tendency to engage in fraudulent activities.

Gallup defines "engaged employees" as: "Engaged employees are highly involved in and enthusiastic about their work and workplace. They are psychological “owners,” drive performance and innovation, and move the organization forward."

A recent Gallup poll reports that employee engagement in the U.S. dropped from 36% in 2020 to 32% in 2022. This decline in employee engagement directly threatens your business's success.

You can cultivate trust among employees through regular communication, encouraging teamwork, fair treatment of employees, and recognition of their contributions. Fostering a culture of integrity stresses the importance of honesty and accountability, ensuring employees grasp ethical standards and the consequences of dishonesty.

A True Story About a Commercial Cleaning Company

Kevin, a commercial cleaning company owner in Arizona, sat patiently in his car, waiting for his suspicions to be confirmed. He hoped they wouldn't be. But Kevin is a longtime Chronotek customer, which gives him tools and insights that many in his industry lack.

Two of his cleaners, a mother/daughter cleaning team, create online time cards by calling our automated timekeeping system to clock in. Kevin noticed their time cards were always identical, although they often drove separately. His concerns escalated as their quality of work slipped.

So, Kevin sat and waited, armed with our GPS time clock app for supervisors. Finally, the app recorded the live clock-in punches for mother and daughter simultaneously, and he marched inside, hoping for the best.

He found the mother and pleasantly inquired, "Where's April?"

The mother's shock resembled a teen sneaking in through her bedroom window one morning, only to discover her father sitting on the bed.

Kevin's doubts were verified. Mother and daughter did buddy punch for each other.

Kevin told us another interesting tidbit. He's never lost a labor dispute with an employee because our employee management system equips him with the resources to support his position.

Let's discuss how Chronotek Pro's GPS time-tracking and attendance software can solve your buddy punching problem.

Chronotek Pro's GPS Time-Tracking System Can Prevent Buddy Punching

Kevin noticed suspicious clock-in and clock-out patterns from his mother-daughter cleaning duo using our live online time card reports. While it might seem logical for two employees engaging in buddy punching to have identical times on their handwritten timesheets, such behavior is less expected when employees use an automated time clock system to clock in from job site landline phones.

What caught Kevin's eye to raise his suspicions?

1. The time card reports and activity log showed identical clock-in and clock-out times for the mother and daughter

2. The reports and the call log showed the punches coming from the same job site phone caller ID

3. The quality of the work diminished

Chronotek Pro can also help your small business manage employees and detect a coworker buddy punching for another employee.

6 Ways Chronotek Pro Prevents Buddy Punching

Chronotek Pro's GPS time tracking and attendance software can primarily prevent buddy punching by raising the accountability level among your remote workforce. Handwritten timesheets empower and encourage employees to steal time. An automated online time-tracking system returns control to small businesses.

In a recent customer survey, we asked, "Have you spent less on labor dollars as a direct result of using Chronotek instead of handwritten timesheets? If so, how much have you saved?"

100% responded that our time clock system saved them money, with 57% saving more than 5% and 20% more than 10%. These savings are due to tightening the reigns of accountability, preventing time theft, and capturing accurate time.

Let's discuss specific ways that Chronotek Pro can reduce buddy punching.

1 - Eliminate Buddy Punching with Two-Factor Authentication

Every employee is assigned a distinct login for the Chronotek Pro time tracking app, featuring two-factor authentication through their cellphone number. This setup allows employees to clock in individually, eliminating the ability to clock in other employees.

2 - Prevent Buddy Punching with Biometric Voice Verification

An upcoming feature in the Chronotek Pro time clock app includes a unique biometric voice verification. During clock in and out, the app will prompt employees to read a sequence of numbers in their native language, ensuring it's their authentic voice. On-site biometric time clocks can be expensive, but using this feature from an employee's mobile device is very cost-effective for small businesses.

3 - Highlight Possible Buddy Punching with Issue Tiles

The Pro system will highlight possible buddy punches for your review. How in the world can you detect an employee punching in for another with handwritten timesheets?

4 - Get Clock-In Alerts for Surprise Drop-in Inspections

If your field supervisors suspect that rogue employees have managed to bypass the safeguards mentioned above, they can set their supervisor app notifications to alert them when employees punch in. Then, the supervisor can drop by for surprise inspections and see if the employees are on-site.

5 - Deter Buddy Punching with Late and No-Show Alerts

The Chronotek Pro time and attendance system allows you to create job schedules and set no-show and late notification alerts. While the primary purpose of the no-show alerts is to ensure every job gets covered, the scheduled no-show/late alerts also boost your accountability measures.

Consider this strategy:

1. Create an attendance policy

2. Make employee schedules with late and no-show alerts

3. Contact employees when Chronotek Pro sends you a late clock-in alert

This practice, in unison with our other suggested ideas, informs your employees that the Chronotek Pro time tracking system will hold them more accountable than handwritten timesheets.

6 - Use GPS Tracking Notifications to Foster Compliance

When an employer creates a geofence (virtual perimeter) around the job location, Chronotek Pro can notify supervisors of several employee GPS-tracking infractions:

1. When employees punch in away from the job site

2. When employees punch out away from the job site

3. When employees leave the job site while on the clock

4. When employees return to the job site

Supervisors and admins can also see the general area where employees travel when they leave the job site while on the clock. This GPS tracking strategy, similar to scheduled late and no-show alerts, isn't a direct way to reduce buddy punching, but using GPS technology tightens up your operations across the board and deters every type of time theft.

Wrapping it Up

You can solve your buddy punch problems with our employee time clock system, just as Kevin did. Buddy punching is a significant issue that can lead to substantial financial losses and decreased employee morale. However, businesses can prevent this unethical practice by recognizing the signs of buddy punching, implementing effective solutions like online time and attendance systems, establishing clear policies and consequences, and fostering a positive company environment.

The fight against buddy punching is not a one-time event but a continuous process that requires consistent and multi-layered efforts. Armed with the right strategies and tools, businesses can create a fair and honest work environment, increasing productivity, reducing costs, and promoting a healthy company culture.

Frequently Asked Questions

What is a buddy punch?

A buddy punch is when an employee asks a colleague to clock them in or out for their work shift, which is considered a form of time theft in the workplace. The employer pays for the employee's time although the employee didn't work.

What are the consequences of buddy punching?

Buddy punching can lead to skewed productivity levels, as the amount of work generated will be less than expected despite paying for long hours. This can lead to lost profits and productivity.

What financial impact does buddy punching have on businesses?

Buddy punching has a significant financial impact on businesses, costing U.S. employers more than $400 billion annually in lost wages and productivity. The practice can lead to increased payroll and overtime costs, payroll errors, and a decrease in overall productivity.

How common is buddy punching in the workplace?

Buddy punching is more common than many employers realize. According to a survey, 16% of employees admitted to engaging in buddy punching, highlighting the prevalence of this time theft practice.

What are the signs that employees may be engaging in buddy punching?

Signs of buddy punching include inconsistencies in time records, frequent corrections to time cards, irregular arrival times, and low absenteeism coupled with low productivity. Recognizing these signs is crucial for employers to address and prevent buddy punching.

How can Chronotek Pro prevent buddy punching?

To prevent buddy punching, you can adopt online time and attendance systems, establish clear policies and consequences, and foster a positive company atmosphere. These solutions can help eliminate this issue and promote fair and accurate time tracking. The Chronotek Pro automated time clock system specifically helps with features such as two-factor authentication, biometric voice verification, issue tiles, clock-in alerts, late and no-show alerts, and GPS tracking notifications. These features help with the hard task of managing employees.

How much will it cost per month to solve my buddy punch problem?

Chronotek Pro costs $5 per employee per month + a $14 monthly access fee (with a $64 monthly minimum). A 20% discount applies for annual subscriptions. Everything is included. No hidden costs. No contracts or obligations. Owners, admins, and managers use the system at no additional cost.