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Employers turn to Biometric Technology to cut costs

Organisations of all sizes use Time and Attendance (T&A) systems to record when employees start and stop work.  A T&A system enables an employer to have full information of all employees working hours and helps control labour costs.

Attendance control has traditionally been approached using manual systems, time clocks, and timesheets. Increasingly, biometrics is automating collection of T&A data. This technology reduces buddy punching, manual data review as well as payroll error.  Biometric Time & Attendance technologies provide additional benefits over traditional employee tracking systems as they increase reliability and reduce costly errors.

Payroll is a significant operating cost for many organisations. A small percentage change in payroll error can have a significant impact on operating costs, leading companies to invest in T&A systems that help improve payroll accuracy.  However, traditional systems such as sign-in sheets or punch cards are slow and prone to error. Also such systems do not protect companies from “buddy punching” — the practice of one employee signing in or out for another.

Biometric systems, such as the handreader, fingerprint reader or face recognition devices, use biometric technology to improve the accuracy of employee tracking whilst eliminating the possibility of buddy punching.  The handreader, which is the most common and reliable technology, distinguishes employees by the size and shape of their hand. Fingerprint and facial recognition devices read the unique characteristics of a human’s finger and face to accurately identify each user respectively.

BENEFITS FROM BIOMETRICS

Key benefits associated with biometric technology include reduced payroll error through elimination of employee fraud, increased productivity, improved management reporting and improved legal compliance.
Reduced Payroll Error and Buddy Punching

Reliable biometric technologies reduce the ability of employees to buddy punch or otherwise alter time clock and other payroll-related information.  Many organisations can significantly reduce buddy punching by moving from paper timecards that can be shared or borrowed to an electronic T&A system. On average, the payroll error rate is 1.2% of total payroll.  Replacing a paper timecard system with an automated one considerably reduces this payroll error. 

Increased Productivity

Biometric T&A technologies provide faster punching in/out and employee identification.  The technology saves on supervision time and reduces the time needed for manual verification.

Automated data entry eliminates the need for manual review and correction of information on employee time cards. Managers can easily compile and review employee time keeping activity, and department heads can focus on more productive activities instead of manually approving time records.  For example, one company with a paper-based time card system required each department head to physically deliver time cards to the payroll office at the end of each pay period to be checked and reviewed.  “Even though the clock added the hours, they had to be scrutinised,” she said.  “It became an out-dated thing.”

Improved Morale

The company, which replaced their old system with biometric handreader technologies, accelerated the sign-in and sign-out process, thereby increasing the time employees spent working while improving morale.
As one HR manager said, “Most of the time when our people are leaving, it’s all at the same time — and they would try to stop working to try to be first to punch out so they didn’t have to wait.  Clocking using the handreader takes only 30 seconds a person, and most of that time is people remembering their ID number and entering it.”

Automating T&A and payroll management using biometrics also reduces overall payroll administration time. At one government department, management found it was able to redeploy more than one quarter of a person’s time to other activities by eliminating management of paper time cards.  Another payroll manager, found her team was able to save more than 30 hours a week in time card review and processing time.  Employee self-service can help reduce the number of calls to payroll administrators about leave time and other payroll issues.

Increased Savings

The potential productivity savings will depend on the number of sites, complexity of payroll rules, and the frequency of time card tabulation and payroll calculation, as well as the level of sophistication of current time and labour management systems.   

Automated collection and entry of T&A data with handreader, fingerprint or facial recognition devices enables managers to have better visibility into employee work habits and locations — resulting in better tactical monitoring as well as improved audit capabilities.  

One user, for example, found that management could quickly identify if someone had punched in but didn’t punch out, or had punched in at a different location, and immediately determine why instead of waiting until timecard data had been collected and entered.  Another payroll administrator said having near-immediate access to information helped managers to determine if an employee had punched in in one department and then punched out in another.  “It’s not a tracking device,” she said, “but it helps us keep track of which department they’re in.”

An accurate, auditable T&A tracking system can reduce the costs and liabilities associated with ensuring compliance with employment regulations and union rules and reduce the potential cost of fines or legal action.  This is particularly important in organisations with union labour or those employing workers with specific work time limitations.

WHICH TYPE OF TECHNOLOGY IS RIGHT FOR MY BUSINESS?

The choice of the biometric device for an electronic T&A system largely depends on the environment the business is operating in, and whether the device will form part of the company’s electronic security system. In dirty and dusty environments, handreaders offer robust, reliable and accurate results. Handreaders differ in the manner in which they collect data, as they take an image from multiple angles. Fingerprint scanners only take an image from one dimension.  Residue left on a fingerprint scanner, such as smudges from lotion, grease, dust, or dirt, can create problems for the next user.

Fingerprint and facial recognition devices are smaller units and tend to cost less. Like handreaders, fingerprint and facial recognition devices can also be integrated in security systems. Integrating biometric devices in security applications adds protection and increases the cost effectiveness of the technology.

CONCLUSION

As companies look to improve operational efficiencies, automating T&A management is a key area for direct savings.  Although some organisations have automated some of the payroll management tasks, many remain susceptible to errors and buddy punching.  It is estimated, that up to three out of four companies still experience loss from buddy punching.  Studies have found that employees are far less likely to attempt buddy punching or other fraud if they believe a system is reliable and accurate.

Deploying biometric T&A technologies, such as handreader, fingerprint and facial recognition devices, virtually eliminates payroll errors associated with buddy punching, delivering significant Return on Investment (ROI). Companies supporting paper-based systems can also eliminate running costs while improving efficiencies.

The scale of potential returns from implementing electronic T&A systems will depend on the number of employees, facilities, and work schedules involved.  It is not uncommon for biometric technologies to deliver payback in less than 9 months. Furthermore, companies moving from paper card are likely to see a faster payback from significant savings in materials and payroll overpayments alone.

Darryl Schembri is an engineer with AIS Technology Ltd, a leading engineering firm with over 22 years’ experience in biometric Time & Attendance solutions. AIS Technology has installed numerous T&A solutions at both private and public organisations. Darryl may be contacted on
21 803350 or  at This email address is being protected from spambots. You need JavaScript enabled to view it.

Last modified onThursday, 21 August 2014 11:58

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