Using time clocks to reduce labor costs

reduce labor costs with time clocks

Using time clocks to reduce labor costs

Labor cost reductions are a top priority for many organizations. Reducing labor costs is critical to attaining a competitive advantage and staying profitable. The average organization spends between 10-15% of its budget on payroll, and labor costs represent an enormous burden. The majority of labor cost reduction initiatives focus on automating operations, reducing unnecessary employee tasks, and removing nonessential personnel through attrition (i.e., letting go of unproductive staff). However, there’s another resource that can help you save money: time clocks. Time clocks provide a visible and auditable trail of time worked by employees, which helps reduce fraudulent activities such as double-shifts or ghost workers. Time clocks are also useful for companies with remote workers who come in intermittently to complete certain tasks. In this blog post we will explore whether time clocks have the potential to decrease your labor costs and what strategies you can implement today to test the effectiveness of time clock usage in your organization.

What Is a Time Clock?

Time clocks are software- or hardware-based tools that record the time employees spend on tasks, and can be integrated with an organization’s existing timekeeping system. When employees begin working on tasks, the time clock records the time spent and the task name (such as “research paper” or “phone call”). When the task is completed, the time clock automatically stops recording the time. Some time clocks also allow managers to track employee performance on certain tasks, such as quality or timeliness, as well as assign “bonuses” for high marks.

How Time Clock Usage Can Help You Save Money

Time clocks provide third-party visibility into employee time spent on tasks, which can help organizations detect fraud, identify patterns of inefficiency in the workforce, and take action to reduce costs. Labor costs are often the largest expense in any business, and time clocks can help your organization detect and correct inefficiencies in workflow. For instance, you might use time clocks to identify employees who spend a lot of time performing tasks that could be automated. Automating certain tasks can significantly reduce your labor costs and help keep your organization more efficient. You might also use time clocks to help identify areas for improvement. For example, you can use time clocks to identify areas for improvement, such as reducing time spent on tasks that could be automated. This approach can help you identify inefficiencies and take action to reduce costs.

Time Clock Trials and Exercises

Time clocks are a useful tool for gathering data, but they can’t be used as a standalone solution. You must first conduct a pilot program to assess the effectiveness of time clock usage, and determine a best-in-class implementation strategy.

The first step in a pilot program is to decide how long you’d like to test the program. Some organizations choose to test time clock usage for two weeks, while others decide to test it longer, such as six months. The length of time you choose depends on the context of your business. Large organizations with a diverse set of operations may have different needs than a small engineering team, so the pilot program length should reflect the needs of your organization.

Once you’ve chosen the length of your pilot program, you can begin collecting data. During the pilot, time clock usage data can be collected manually by managers, or collected automatically via software. If time clocks are integrated with your existing timekeeping system, you can use these system’s reporting features to gather usage data. If the time clocks are standalone systems, you can use sampling techniques to collect data.

Research Shows Time Clocks Can Decrease Labor Costs

Time clocks can help reduce labor costs by helping to identify areas for improvement, such as automating certain tasks. In one study, engineering companies that implemented time clocks were able to reduce their labor costs by 7%. Another study showed that companies that implemented time clocks saw a 10% reduction in labor costs over the two-year period. Based upon these studies, time clocks can help reduce labor costs by automating certain processes and tasks, as well as reducing non-productive time spent on tasks.

Conclusion

Time clocks provide a visual record of time worked by employees, which can help reduce fraudulent activities such as double-shifts or ghost workers. Time clocks can also help managers identify areas for improvement, such as automating certain tasks.

Time clocks are an important tool for organizations looking to reduce costs. Use time clocks to find inefficiencies in your organization, and verify that time clocks are truly saving money for your organization.

Basil Abbas
basil@tecsolsoftware.com

Basil is the Founder and CTO at ClockIt. With over 8 years of experience in the products space, there is no challenge that is too big in front of him be it sales, marketing, coding, etc. A people person and loves working in a startup for perfection.

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