What Is Time Theft? (and How to Put a Stop to It)

It’s not just pens and stationary that can get stolen from the workplace. 

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There’s far more sinister theft going on in many workplaces: time theft. And it’s estimated to be a $400 billion problem for employers.

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Time theft, like the name suggests, is when employees bill their employer for time they have not actually worked. As we’ll explain, it can come in many forms.

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What makes time theft even more complex is that it can be hard to detect. It can, without exaggeration, take years to discover time that’s being stolen. And the longer it goes on, the worse and more costly it gets.

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Think of it like a leaking water pipe that starts as a drip but gradually spills more and more water the longer it goes unfixed. By the time it’s a gushing, uncontrollable leak it’s incredibly costly and difficult to stop.

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And it’s no different with time theft in the workplace.

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In this article, we’ll explain:

1. Exactly what time theft is
2. How to detect time theft 
3. And (most importantly) how to stop time theft

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And don’t worry, preventing time theft at work has nothing to do with micromanaging or acting like an iron-fisted small town sheriff.

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As you’ll see, the key to stopping work time theft is about creating a fair, transparent workplace in which employees thrive. With the help of time-tracking software you can create an environment that naturally deters the stealing of time.

What Exactly is Time Theft?

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Time theft goes by many names. It’s often referred to as “time stealing”, “time and attendance fraud,” “timesheet fraud” or “time clock fraud”.

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In short, time theft is when employees bill their employer for time they haven’t in fact worked. And no industry is immune from time theft in the workplace.

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“In short, time theft is when employees bill their employer for time they haven’t in fact worked.”

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There’s no shortage of ways employee time theft can happen, which is part of the reason it’s so difficult to quantify, let alone prevent. For example, time theft can come in the form of: 

• Late starts
• Early finishes
• Long breaks
• Rounding timesheets
• Unauthorized overtime
• Excessive socializing with colleagues
• Personal activities at work
• Proxy attendance
• Buddy punching

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Identifying and stopping time theft at work has long been a struggle for employers. Now, following the sudden shift to remote working, employers are more susceptible to time theft than ever.

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How do you tell the difference between doing work and doing laundry?

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How do you know if your employee clocked in and then slid back into bed?

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How do you know how much time they’re spending on their phones?

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Remote work is truly revolutionary for business owners and employees alike. But it calls for a new approach and extra vigilance when it comes managing your team’s time.

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Time Theft is Expensive Business

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Now we know what it is, just how much could employee time theft cost your business? More than most employers imagine, as it turns out.

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The primary reason time theft is so costly is that employee time is one of – if not THE - most valuable asset your company has. And it can’t be replenished once it’s gone.

To understand employee time theft costs, just take a look at the eye-watering employee time theft statistics below. 

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Employee Time Theft Statistics

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• A study found that the average employee steals roughly 4.5 hours from their employer each week.
• 75%+ companies lose money from buddy punching each year.
• 20% of every dollar earned by US companies is lost to employee time theft.
• Time theft is estimated to cost employers $400 billion per year
• 1 in every 4 workers admit to exaggerating their time worked at least 75% of the time.

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Time Theft in Tangible Terms

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From a zoomed out perspective, the impact of timesheet fraud is clear. The head-spinning employee time theft statistics are enough to make any employer take notice.

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But what does it look like for you, as an employer?

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Let’s say you have an employee named James who earns $15 an hour. 

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James’ set hours are 8am-4pm five days a week. But, really, James has been arriving at 8.10am and leaving at 3.50pm.

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That’s only 20 minutes. No biggie. Right? 

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Well, in fact it is.

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That skimping of 20 minutes each day equals 100 minutes per week. That’s more than 80 hours over a year. Amounting to a whopping $1250 of lost time! 

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Multiply that across an entire team, and your company can easily be losing tens of thousands of dollars.

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Just 20 minutes a day of time theft on an average wage can cost your company $1250 per employee, per year. That’s potentially $10,000s or even $100,000s in lost revenue.

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Time Theft Means More Than Lost Money

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The financial costs of fraudulent time reporting are clear. But it goes beyond that. Time theft in the workplace can impact employee productivity, behavior and company culture.

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Think about it from your employees’ point of view. 

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If employees who accurately track time notice others are getting away with fudging their hours, they can potentially become less motivated and productive. Why should I work hard when others are getting away with less hours? they may think to themselves.

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And if longer breaks, late clock ins, and early clock outs become ingrained behavior, it can quickly set a company-wide standard that’s hard to break. 

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Again, if large segments of your team think pinching time is acceptable, this will have a disastrous effect on company-wide productivity.

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The simple truth is that unrestrained, wide-spread time theft at work will have a ripple effect on your entire company culture. 

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When it happens without intervention, employee time clock theft can create a working environment where underperformers go undetected, your best employers feel unrewarded, and showing up late, leaving early, and goofing off at work are considered acceptable.

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Hardly the makings of a high-performing team, is it?

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“Unrestrained, wide-spread time theft will have a ripple effect on your entire company culture.”

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So, How Do You Stop Time Theft?

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That’s the $400 billion question so many employers need answered.

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First of all, make no mistake: it’s incredibly common as a business owner or manager to have time stolen. If you suspect – or know – that it’s happening within your team, you’re certainly not alone.

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So, what can you do about it? A lot, as you’re about to find out.

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Stopping employee time theft takes a combination of communication, strong policies, smart systems and a culture of transparency. Here, let me explain.

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Set Clear Expectations & Policies

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Often, employees may not even be aware their actions constitute time theft. So, it’s your job to set expectations and policies about what is and isn’t acceptable.

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For instance, employees may not think extra time here or there is no big deal. What’s an extra 5-10 minutes? 

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Your policies need to make it clear why it is in fact this is a big deal. As well as outline every other expectations you have of your employees.

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Your company policies should outline:

• Overtime rules
• Permitted personal tasks
• Acceptable employee socializing
• How you accurately and fairly track time and attendance
• A time theft policy that outlines consequences of time theft 

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Effective policies and expectations need to be fair and reasonable. They are the backbone of a high-performing environment. 

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Your time theft policies must protect employees from underpayment, and employers from overpayment. Policies should also make it know that it’s OK for employees to take a call or handle a personal task at work now and then. 

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Of course, you also want your employees to take breaks to look out for their health and wellness. Your policies should encourage your employees to get the respite they need. 

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A healthy, trusting workplace built on strong, fair policies will allow your employees to balance life and work. And this will be a net positive for employee productivity, health and turnover.

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Be Communicative, Not Combative

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When you discover time is being stolen, it can be incredibly frustrating. Even infuriating. 

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Your first task is to determine why it’s happening. 

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Often, work time theft can happen rather innocently. It’s not always malicious. A couple of minutes to pay an important bill here. A quick personal phone call there. 

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However, if fraudulent time reporting in your organization is more commonplace, it could be an indication of much deeper workplace issues.

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So, when it comes to addressing time theft with your team, be communicative, rather than combative. Take a constructive approach and consider it an opportunity to improve the way your employees work – and you operate as a company.

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That means if time stealing is uncovered, accusations don’t have to be the default communication method. It’s about making it clear what you expect and what is the right way to work.

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In the long run, this approach to dealing with employee time clock theft is best for relationships, morale, and rectifying the issue. It builds a culture of trust between you and your employees.

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Naturally, if work time theft persists or is unquestionably malicious, then comes a time to escalate your response and actions. But, until then, communication is the key.

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Put it in Your Employees’ Interest

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As we’ve established, eliminating time theft can save your company thousands of dollars. And this doesn’t just have to mean more company profits.

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This money could be put toward employee perks. Things like free snacks, paid meals or fun company outings. Even a rise in hourly raise. In short, a better overall employee experience.

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When you explain the benefits of better time tracking to employees like this, it makes stopping time theft in their interest too. After all, what employee wouldn’t want more perks on the job?

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Capture Time Automatically Via Computer Activity

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There can be a big gap between when an employee clocks in and when they actually start working. Especially when using manual or timecard systems.

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Just by their nature, manual systems like punch cards, spreadsheets and roster sign ins leave more room for timesheet fraud. They lack accuracy, oversight and aren’t absolute.

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Timesheet software is definitely an improvement. It certainly helps prevent rounding timesheets. But this technology isn’t foolproof. Because manual inputs are still involved. 

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And, simply, the more manual effort involved, the more room for time fraud.

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Thankfully, time and attendance software has come a long way. 

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To a point where clock ins and clock outs can be captured based on computer activity. This provides a definitive indication of when your employees are actually working – not just when they say they are. 

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Activity-based, automated timesheets can eliminate timecards, spreadsheets, and manual sign-ins. Doing away with these manual tasks alone will dramatically reduce the possibility of time fraud.  

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“Activity-based, automated timesheets can eliminate timecards, spreadsheets, and manual sign-ins.”

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Track Time & Monitor Website/App Usage

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Activity-based time and attendance software lets you track when employees come and go. But that can still leave a blind spot of how they’re using their time while on the clock.

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That’s where time tracking based on tasks and projects and monitoring website and app usage comes in. 

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With the right time tracking software, you can see what your employees are working on in real-time and how long it takes them to complete tasks. 

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If you discover staff are spending an excessive amount of time browsing social media or on non-work related websites, that’s a clear indication of time slippage that needs addressing.

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Likewise, time tracking software shows you how long it takes employees to complete tasks to see if certain tasks are taking an abnormally long time. Then find out why.

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For instance, you may find a weekly data entry task that typically takes two hours is consistently taking one of your employees three hours. 

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This could mean your employee is spending two hours on the task, and the other hour browsing on their phone or socializing. Or, at the very least, they may need some extra training.

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With time tracking software, you can dig into the data and find out exactly how company time is being used, eliminate time leaks, and boost productivity.

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Connect Payroll with Time and Attendance

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It’s not uncommon for employers to capture employee time and process payroll separately. This leaves a gap between the two distinct processes. Creating a gray area with plenty of room for employees to shave off extra time each week. 

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Think about it... How is an accountant in payroll supposed to tell if the employee hours in front of them are accurate? They just process what they’re given. Right or wrong.

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The good news is, any effective time and attendance software will allow you to connect the accurate, automated timesheets they capture directly with your payroll systems. 

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That way, your company – and payroll – know the hours being processed are the hours that have been worked.

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Employers Can Commit Time Theft Too

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Now, employee time clock theft is one thing. But it’s also part of a bigger conversation around time and wage fairness.

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In other words, transparency of time cuts both ways.

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Employers, like employees, need to make sure they’re not pinching time. Because employer time theft is a very real thing.

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For instance, if employees are required to arrive 15 minutes early for their shift or a must-solve issue causes them to stay an extra 30 minutes, this is time they’re owed. You’re legally obligated to pay them for it.

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When overtime goes unpaid, this is employer time theft. And if it becomes common practice, it can land employers in deep legal trouble.

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So, remember, as an employer you, too, have a duty to accurately pay for time worked. 

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What you’ll likely find is that avoiding employer time theft via a  dedication to fair and accurate pay will contribute to a culture where employees themselves are less likely to be tempted to steal time.

Why Does Time Theft Happen?

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We’ve covered how to detect and address time theft and the very real employee time theft costs. But why do employees commit time fraud? Beyond the obvious answer of wanting to earn more money, that is.

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Employees often pad their timesheets because they feel underappreciated, undervalued, or underpaid. While some employees simply dislike their job and steal as a form of retribution. 

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When you catch time theft, it’s critical to first understand why it’s happening. By getting to the bottom of the motives, you’ll know which the best action is to take.

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For instance, if it’s a sense of being underappreciated and undervalued, this may be a sign that there’s an opportunity to address these concerns by making some changes to your work environment. 

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Could you provide more growth opportunities for employees?

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Could you implement a reward system for greater recognition?

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Could you provide more social activities?

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These are just some ideas for countering any sense of being underappreciated or undervalued. 

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You’ll be amazed how small, simple changes like these can not just decrease fraudulent time reporting, but enhance your entire culture.

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When trying to get to the bottom of why time theft is happening, just be sure to avoid falling into the trap of micromanaging, which can breed resentment and make the problem worse.

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On the other hand, if the unavoidable fact is that some employees are stealing time as retribution, there is no excuse and this should be dealt with.

Ultimately, the goal is to…

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Build a Culture of Time Fairness and Transparency

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Your time management systems, communication approach,, right down to your  time theft policy should all play a big part in building a culture of fairness and transparency. 

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Nurturing this kind of equitable environment has a powerful effect.

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When employees believe they’re being treated fairly, they are significantly less likely to steal time. Simply, it makes it much more difficult to rationalize time stealing.

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The reality is, in ethical terms, just about all employees think stealing is wrong. So, if they’re doing it, they either feel unappreciated at work or they are rationalizing it as what they deserve. 

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That’s why focusing on building a culture of fairness and transparency is the most effective way to counter time theft -- rather than trying to eliminate it on a case-by-case basis. Which will feel like you’re playing a never-ending game of Whac-a-mole and prove fruitless.

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The truth is preventing time theft goes beyond striving for more accurate timesheets. 

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Your focus should be on how you treat your employees, your company culture, enhanced time management, and optimizing the way your team uses their time more broadly. 

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As a natural by-product of building a more effective, transparent and fair culture, time theft will decrease drastically. 

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And the benefits extend far beyond that.

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When your team’s time is used to its full effect, your employees and company will become more productive, perform better, and achieve more. 

The Simple Solution: Use Time and Attendance Software 

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The best proactive approach to dealing with time theft is adopting employee time tracking software in your company.

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Effective time and attendance software eliminates the main causes of time theft: manual time tracking, manual punch cards, and spreadsheets. Replacing them with activity-based clock-ins and clock-outs and down-to-the-minute time tracking during work hours.

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More than that, a time and attendance solution that allows you to share data with employees breeds a culture of transparency and fairness.

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The best time and attendance software should include:

• Simple setup and use – easy for employees and employers without any interruptions to workflows.
• Productivity tracking – so you can build an environment in which employees can be their best, reward top performers and provide additional training where needed.
• Activity-based time & attendance – eliminate early clock ins and clock outs and extended breaks by tracking time when your employees are actually on the job.
• App & website usage – make sure your employees are spending time on the platforms necessary for their job.
• Screenshots – gain the ability to view what employees are working on in real-time.
• Project and task time tracking – see exactly what your employees are working on, for how long, and better manage resources.
• Automation – reduce human-error or padded timesheets by automating time collection, management, and calculation.
• Transparent data – you and your team should have transparent access to time data that is collected to discuss and improve performance and time management.

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Lucky for you, Insightful does all of the above – and more. That’s why Insightful is a great option for preventing time theft.

Insightful is designed for use across industries, including remote employees, insurance companies, business outsource process providers, healthcare, finance, legal services, banking and more.

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Insightful is a simple yet incredibly effective solution for managing your employees’ time.