Survey Indicates That Too Many Depend On Manual Timekeeping

A surprising sum can be cut from payroll costs by automating the timekeeping process.
Although we're living in the age of cell phones and PDAs, workers in many sectors still use punch cards and time sheets to record their whereabouts for the payroll department. But timekeeping software can, on average, pay for itself in a few months.

The findings were part of a report compiled by Nucleus Research, a research company that was hired by timekeeping software vendor Kronos to survey 25 Kronos customers. The customers were in health care, manufacturing, retail, education, and government, and they had head counts ranging from 300 to 15,000.

Payback comes from fewer calculation errors, reduced processing time, less unauthorized leave and overtime, and elimination of paper time-card costs, according to the report.

Although the Nucleus study looked specifically at Kronos customers, the general findings are consistent for most companies that move from manual timekeeping to automated processes, says Paul Hamerman, research director at Giga Information, another research firm that follows human-capital-management trends but wasn't involved with the Kronos/Nucleus return on investment study.

"The results aren't surprising. Timekeeping is a neglected process that can be complex, high-volume, and full of opportunities for error," Hamerman says.

The Nucleus study indicates that 75% of Kronos customers report an ROI of 250%, while the median ROI was 469%. Some realized payback in about five months, and 88% of those surveyed said that the elimination of payroll errors alone paid for the system. Mike DiPietro, Kronos VP of industry and product marketing, says that Kronos software costs between $50 and $150 per employee.

Cynthia Summers, human-resources IS administrator at Health First Inc., a health-care services firm, says her company deployed Kronos software more than a year ago for all of its 6,000 employees, ranging from part-time, full-time, and per diem nurses to executive staff. The automated process, in which employees swipe an ID badge into a clock device that is integrated into the Kronos systems, replaces a manual process that included time sheets and punch cards.

Within the first year, Health First reduced its payroll costs by $4 million, or 3.5% of total payroll costs, Summers says. The system eliminated mistakes that were made when manually calculating complex time rules (like overtime, shift differentials, and workshop pay); it reduced inaccurate time records; and it also allowed Health First to reduce its payroll department to two clerical workers from four.

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