employees

Stop Paying Employees Just to Show Up!

Beware small businesses – you get exactly what you pay for. According to a recent survey of 1,000 small businesses in the United States by management consulting firm George S. May International Company, 41 percent of owners pay their employees just to show up and that model is killing profitability.

“Too many small businesses still reward employees for just showing up, for being a warm body everyday, when they should be paying them based on performance related to specific, measurable goals,” said Paul Rauseo, managing director of George S. May International. “You’re setting the stage to destroy profits when employees expect compensation for participation in collaborative activities, regardless of results.”

In fact, 45 percent of small businesses say they aren’t profitable. And the relationship between the compensation and profitability data isn’t a coincidence, according to Rauseo. “The similarity of those numbers shows how closely your compensation style and profitability are linked. Small businesses can no longer turn a blind eye to that connection. They need to shake off their complacency and commit to making real change in operational efficiencies,” he said.

Initially limited to a small group of companies, the pay-for-performance concept has rapidly expanded over the past year as businesses look for ways to improve their operations. About 60 percent of small businesses claim to use the model, while not all (only 55 percent) institute the specific, measurable employee goals needed to make the system work.

“We tell clients to stop paying employees just to show up,” Rauseo said. “Pay-for-performance doesn’t guarantee profitability, but it has advantages in a down economy. Now is the time to climb out of the cellar of economic despair and plan for profit. You can turn your business around – start by taking a long, hard look at your compensation practices.”

employees

Workers Continue to Cheat on Timesheets

A new survey commissioned by The Workforce Institute at Kronos and conducted by Harris Interactive reveals that 21 percent of hourly workers have cheated on their timesheet to gain extra pay from their employer. The “Gaming the Clock” survey indicates that employers who use outdated workforce management methods are at risk of significant payroll inflation.

News Facts

• 21 percent of respondents who are compensated with an hourly wage admit to “gaming the clock” (cheating on their timesheets)
  • Of the total number of respondents who state that they game the clock, 69 percent admit to punching in earlier or punching out later than scheduled
  • 22 percent admit to adding additional time to their timesheet
  • 14 percent say that they don’t punch out for unpaid lunches or breaks
  • Five percent admit to having someone punch them in or out (“buddy punching”)
• 35 percent of respondents who receive an hourly wage stated that their employers use paper timesheets to keep track of employee time worked
  • According to a Nucleus Research report, organizations with manual time and attendance systems typically incur unnecessary payroll costs upwards of 1.2 percent of their total payroll costs due to inaccurate application of pay rules, as well as human errors. For example, an organization that has annual payroll costs of $50 million could save more than $600,000 per year if they automated the collection of employee time.¹
• Along with providing immediate cost savings by reducing time-consuming processes and costly payroll errors, an automated workforce management system can also empower organizations with the information they need to uncover significant labor cost savings. A recent Diagnostic Assessment analysis by Kronos of more than 19 months of timekeeping history for a manufacturer with approximately 6,800 employees uncovered more than $20 million in cost savings overall including $3.6 million in gaming the clock-type abuse.
• When researching the purchase of a workforce management solution, organizations should ask vendors about the potentially hidden costs of customization; whether the time and labor data is provided in real-time or in batch fashion; and how intuitive and easy to use the product is.