It is hard enough to start a business. But it is even harder to run a business over a long period, maintaining the pace of growth. As time passes and organizations grow, people often start to take things easy, hampering productivity and growth, which hurts the company’s bottom line.

One of the biggest challenges impacting productivity is time theft. Put simply, time theft is when employees get paid for the time they didn’t work. It costs companies billions of dollars in annual losses and robs workers of their deserved income and the prospect of a better life. And that’s not it. According to the Harvard Business Review, the US economy loses 50 million hours daily in productivity, which translates to $7.4 billion in daily losses. 

But the exciting part of the phenomenon is that time theft often happens in pairs, called buddy punching. According to a report by the American Payroll Association, 75% of US-based businesses are affected by buddy punching.

What is Buddy Punching?

Buddy punching is when a coworker covers for a colleague at work in their absence. In a general case of buddy punching, a coworker clocks in or punches in for a colleague who is running late. Or, if one needs to run an errand or push off a bit early and doesn’t want their boss to know about it, they can ask a colleague to clock them out at the usual time.

Some employees have used buddy punching to take full day-offs or accumulate over time. With increasing competition in the marketplace and shrinking margins, an organization’s cost because of buddy punching can seriously drain a company’s earnings.

It results in the theft of an organization’s resources. It is not only detrimental to the profitability of the organization but also damages the culture and trust in the team.

How does Buddy Punching Impact Businesses?

It impacts businesses in many ways. As per 2017 research, buddy punching costs American companies nearly $373 million annually. On a global level, companies are believed to lose close to 7% of their profits due to buddy punching. But the impact on businesses goes beyond the hit on profits.

Impacts profitability

The biggest casualty of buddy punching is an organization’s profitability. As employees claim hours they haven’t worked, it can add up to a significant loss at the end of the year for the company. 

For instance, if you have a team of 100 employees that are buddy punching 5 hours each month on average. If you are paying $40 per hour to your 10 hourly employees, the per month loss to business comes to $20,000 per month. This results in an annual loss of $240,000. 

It is a big mistake to consider that the cost for it is marginal and would not impact the business. As explained with the help of the example above, as teams grow in size and competition increases, impacting margins, the cost of buddy punching has the potential to derail a business. 

Poor company culture

One of the biggest impacts of buddy punching after profitability is the organization’s culture. It can set wrong standards for employees. If not corrected in time, buddy punching can become the default practice. 

Organizations must take timely action to ensure that the buddy punching challenge is tackled head-on in the early stages. Otherwise, it can lay a foundation for poor company culture. 

Demotivating for high performing employees

Buddy punching affects not only the working hours of employees indulging in the wrong practice. It can be extremely demotivating for highly motivated or high-performing employees as well.

As they see others indulging in such practices, they lose interest too and may even get tempted to try such methods themselves. In such a scenario, the productivity levels would go down, and the company would fall short of its targets. 

Why do Employees do Buddy Punching?

Contrary to popular belief, many employees do not indulge in the process to rob the employer. However, the reasons can be deep-rooted, and it is essential to understand the reasons from the mindset of an employee. Here are some reasons why employees do buddy punching:

Fear of losing the job

One of the biggest motivations to indulge in buddy punching is the fear of losing a job. Employees want the job and are seen on the right side of things. As a result, the fear of losing a job may drive an employee to indulge in practices like these.

With increasing competition for the same job and uncertain global scenario, employees do not want to give the employer any chance to question the in and out timings. As a result, employees often end up indulging in buddy punching. However, the irony is that by opting for it, an employee may give the employer a chance to terminate the employment if caught.

Earning brownie points

Every employee wants their supervisor to have a positive impression of them. By doing this, they can be in the management’s good books. Some employees believe one way to do this is to maintain a clean timesheet, which nudges them towards buddy punching.

Again, like the fear of losing the job, if the whole idea of earning brownie points by buddy punching, an employee may end up losing the established reputation in front of the employer. However, the myopic view of the employee may tempt them to indulge in this practice. 

Lack of motivation

Sometimes, an employee is not aligned with the organization’s goals and hence lacks the motivation to work. This lack of motivation can also stem from boredom with the kind of work, poor work culture, or feeling undervalued. This lack of motivation often results in employees indulging in practices like buddy punching. 

If the employee feels that there is not enough challenging work, they would want to spend their time meaningfully rather than spending hours at work without interest. As a result, an employee may end up opting for buddy punching. However, a better approach would be to talk to the employer directly about the situation and seek possible solutions on what can be done. 

Poor timekeeping system

Outdated techniques such as paper-based timesheets, swipe cards, and other similar methods are ineffective and easy to tamper with, often motivating employees to make wrong declarations about their time.

 The traditional methods have existed for many years. As they give an easy way out to the employees, more often than not, employees end up trying buddy punching, and some of them get hooked to it. 

Lack of awareness

Sometimes, employees might be unaware of the negative impacts of time-theft practices. They might see older colleagues indulging in such exercise and take it as the norm. Or even worse, the informal discussions in an organization with the seniors can give a vibe to the new employees that it is alright to indulge in buddy punching. 

The employer needs to create awareness around the importance of productivity and the negative impact of time theft among the employees across the board.

How to prevent buddy punching?

Buddy punching is real. And it is a serious threat to the productivity and sustainability of businesses. The best way to deal with it is head-on. There are multiple ways to check it and nip it in the bud. There are multiple technologies available in the market today that can help you better track your employees’ hours at work and prevent time theft. 

Here are some of the things that you can do to prevent buddy punching at the workplace:

Create policies and procedures

One of the steps that can help you handle the buddy punching challenge is creating the right set of policies and procedures. By making basic HR policies for attendance, time off, and punches, employees will clearly understand their expectations.

Make it clear to the employees that the organization is serious about buddy punching and has a no-tolerance policy. It is essential to make employees understand the policies so they are clear about the possible consequences. 

Set up notifications and alerts

When filling attendance and timesheets manually, some employees may forget to mark themselves on certain days. There is no way to find their login and logout timings in such cases. 

To prevent such instances, companies should take the help of technology. They should set up notifications and alerts in the system to inform employees and supervisors in real-time so that timesheets are filled and updated regularly. 

Talk to your employees

Communication is the bedrock of any successful relationship, including the one between the employer and the employee. A communication breakdown is not only detrimental to an organization’s work culture. It can often hurt the business in the long run. 

Talk to them if you discover an employee indulging in time-theft practices like buddy punching. Understanding the motivation of the employees who do it regularly is critical. By being proactive and communicating with your employees, you could create a bridge between the expectations and reality and bring down instances of such practices.

Technology is your friend

While you should trust your employees and communicate with them to create a culture of trust, having the right safeguards in place to protect the business interests is essential. Maintaining the right balance between the privacy of employees and the organization’s goals is critical.

You should embrace technology and use the latest solutions to handle buddy punching. Adequate research about the possible solutions must match them with your end requirements. This will help zero down on a solution to help you handle the buddy punching challenge. 

How to Resolve the Challenge of Buddy Punching? 

It is a challenge that is costing companies billions of dollars annually. Experts believe that rather than putting high fences and costly solutions in place to prevent buddy punching, a better approach would be to trust employees and encourage self-reported punching systems while explaining the organization’s policies and procedures.

Organizations usually create large barriers between the workforce and top management by deploying costly and complex solutions to monitor each employee’s movement. It is better to have an inclusive approach and solve the problem of buddy punching with employees and management on the same side.

Having trust in employees results in a high rate of employee engagement. And any entrepreneur worth his salt will tell you that it is better to have a highly motivated and engaged workforce rather than a bunch of automatons turning up and leaving on time.

However, a trust system is not enough on its own. There is a need to create safeguards as well to protect the business. For instance, a combination of a self-reported attendance system coupled with security cameras can work well for any organization to avoid buddy punching. It can create the right balance between trusting your employees and creating enough safeguards to avoid any misuse of trust. These measures can be supported by the policies created to ensure a collaborative culture in the organization.