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Prevent Employee Embezzlement, Part 4

Originally published: 12.01.14 by Ruth King

Time is money — don’t let your employees steal time


Stealing money and stealing materials are the two types of theft most contractors try to protect against. Perhaps the most prevalent type of theft — and least protected — however, is Time Theft. 

Most contractors don’t think about how much time is stolen by employees doing personal activities on company time. It is significant, but “under the radar,” because most contractors don’t calculate the significant cost of time theft. 

In fact, 95% of all employees steal from their employers, according to a 2013 anonymous survey of retail and service industry employees by Kessler International. Kessler includes personal use of a computer or phone during working hours as time theft.

You pay your employees to work eight hours per day on specific tasks. Unless an employee is responsible for marketing or updating your Facebook and other social media sites, there’s no reason that employee should be on those sites, surfing the web, shopping, playing Internet games or on personal phone calls during working hours. During lunch, when you’re not paying them, is an acceptable time for those activities. 

Your field employees should use their cell phones

only on company business, not talking to family and friends. It’s best to supply company phones so you can make the policy of no personal phone calls on company owned mobile devices (unless it is an emergency). 

Managers and owners must lead by example. If you’re spending time on personal Internet activities and personal phone calls during the day, you’re setting the example for your employees. 

You might feel entitled to those personal activities because your employees don’t see the hours you expend after “normal working hours.” Employees follow what you do, however, and if you spend company time on personal activities, you’re sending the message it’s ok for them to do it too. 

Time Theft is Expensive

Assume you have six field employees, each who spend 15 minutes per day on personal time while on the clock. That’s 1.5 hours per day or 7.5 hours per week or 390 hours per year. If your hourly rate is $150 per hour, that is $58,500 in lost revenue. 

In addition, assuming your average field labor cost is $25 per hour including benefits, that’s an additional $9,750 in cost just for payroll.

Assume you have three office employees who spend 30 minutes per day on personal time while on the clock. That is 1.5 hours per day, 7.5 hours per week, or 390 hours per year. If your average labor cost is $20 per hour including benefits, that is $7,800 you’re paying them to surf the web and work on personal activities rather than your activities.

This unproductive time costs you more than $75,000 per year. 

To solve the time theft issue, answer these questions:

  • Does he or she have enough work to do? 
  • Is he or she bored with their job? 
  • Is he or she doing personal things at the expense of the job and has “to work overtime” to get the job done?

If not enough work is the issue, then re-examine their job description and job duties. It might be a part-time position rather than a full-time position. 

If you sense boredom, have a frank discussion with that person. Is this the right position? Can another position in the company be found or is it time to move on?

If personal activities are overriding company activities, this is a disciplinary issue. Monitor activities and track the amount of time spent on personal actions. If the person won’t stop stealing time, and has been warned, it’s time for that person to go through a career readjustment program (i.e. get fired!)

Some companies banned access to certain websites on their computer systems thinking this would stop time theft. As Internet usage has grown, and as more of your customers are reaching out to you from social media sites, this has caused a problem because access from the company computers is necessary.

Implement an Internet usage policy and have guidelines on acceptable usage during the day. Define the verbiage and message parameters that can be put on LinkedIn profiles, Facebook fan pages and other social media sites. 

Define what pictures can and cannot be taken and uploaded. Define the signatures on all email communications. You want your messages, in the format you want, spread throughout the Internet.

Like stealing money or materials, time theft should be stopped as soon as you see it. If you don’t, and you don’t have an Internet policy, you can experience tens of thousands of dollars in lost revenue, additional expense and getting the wrong messages to your customers.  

About Ruth King

Ruth King

Ruth King has over 25 years of experience in the hvacr industry and has worked with contractors, distributors, and manufacturers to help grow their companies and become more profitable. She is president of HVAC Channel TV and holds a Class II (unrestricted) contractors license in Georgia. Ruth has written two books: The Ugly Truth About Small Business and The Ugly Truth About Managing People. Contact Ruth at ruthking@hvacchannel.tv or 770.729.0258.

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