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Time and Attendance: A Complete Guide

If you're managing a workforce, managing time and labor is a critical element. This page serves as a comprehensive resource for everything employers and HR managers should know about time and attendance matters.

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    Introduction

    When you run a business (or even a small part of a business), you know that there is nothing more precious than time. Time is the difference between a satisfied customer whose products arrived on time and an angry one who is still waiting for their promised goods. Time is the difference between keeping payroll within budget and experiencing runaway overtime costs. And time is the difference between a satisfied workforce that can go home at the end of the day and spend an evening with their families and one that must burn the candle at both ends until there’s nothing left.

    As you can imagine, being lackadaisical about timekeeping is not an option if you want to build a healthy business. This guide covers the foundations of timekeeping: how to do it, what tools can assist you, and what pitfalls to avoid.

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    Types of Timekeeping Systems

    At a foundational level, timekeeping systems track employee hours. Some include extra bells and whistles, but that’s the essence of it. Within this category are both manual and automated options.

    Manual Timekeeping Systems

    Sign-in sheets. This method is the lowest of the low when it comes to technology levels. All you need is a binder full of paper, a working pen, an up-to-date calendar, and a functional clock. When someone comes in to work, they turn to their page, look at the calendar and clock on the wall, and note the time and date. When it’s time to leave or take a break, they do the same thing.

    While this is the simplest and cheapest system to implement if you have no budget for technology of any kind, it’s also the system with the most opportunities for manipulation, as it essentially functions on the honor system. Unless you’re a nonprofit using it to track volunteer hours, this is probably not the best option.

    Punch cards. One step up from sign-in sheets on the tech ladder is punch cards. This classic method is still used in some businesses, although they’re becoming less common every year.

    Instead of asking individuals to hand-write their time on a piece of paper, these systems require employees to take their card and insert it into a machine that automatically stamps it with the time and date. While this still leaves employers open to buddy punching, it does at least assure that the time the card was punched was accurate. (Or at least as accurate as the machine itself is.)

    Spreadsheets. This is really just the digital version of the sign-in sheet. The benefit to this method over the other two manual methods is that spreadsheets can easily calculate total time worked, and the data is easily copied and pasted into other documents.

    On the other hand, this leans heavily on both the good memory and the honesty of all employees, which makes it a better option for a solo entrepreneur rather than someone who has already hired people or soon plans to expand their team.

    Automated Timekeeping Systems

    Automated timekeeping systems don’t magically take all of the work of clocking in and out away, but they do some fairly heavy hitting. They handle the exact time and date for the employee, who only has to worry about identifying themselves and whether they’re starting or ending their time tracking.

    On the manager end, automated timekeeping systems take on even more work, by compiling and organizing data, generating usable reports, and oftentimes integrating with other systems. No more copying handwritten or machine-stamped numbers from print to digital format number by number. From the employee’s perspective, the biggest difference between automated timekeeping systems is in how one worker is differentiated from another.

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    Digital punch systems. These essentially function like their cardboard brethren. Employees input an ID number or username and password, then start or stop the clock as needed. One benefit to this system is that the same login can be used to view their time card and check it for accuracy. Since their working hours are calculated in real-time, it’s easy to see whether they’re going to run into overtime or are likely to come up with fewer hours than usual in a given week or pay period.

    Mobile punch systems. These are the same the digital punch systems mentioned previously, but they work through a cloud-based app that can be accessed from anywhere. This makes it less secure and more susceptible to abuse, but also accessible to employees who work remotely or travel to various sites for work.

    Badge card systems. These are especially popular at businesses that also use badges for other purposes, like identification or keys to secure areas. Some badge card timekeeping systems use magnetic strips similar to a credit card, while others utilize barcodes, much like library cards typically do. Either way, it makes the process of clocking in and out go faster than with digital punch systems, which can be useful when large numbers of employees need to clock in at the same location.

    Biometric scanning systems. These systems use individual identifying physical traits such as face shape, fingerprints, iris patterns, or hand geometry to tell which employee is clocking in or out. While they require the least amount of effort on behalf of the employee (no number or password to forget, no badge or fob to lose), they are also pricier and bring up some security concerns. (Shameless plug: Complete Payroll's system poses no security concerns for our clients.)

    What to Look For in a Timekeeping System

    There are as many ways to practice timekeeping as there are businesses, but the need for good, functional timekeeping systems doesn’t change. This is true even if you’re self-employed and have nobody’s time to track but your own!

    Regardless of your business’ size or industry, these are some characteristics of high-quality timekeeping systems that you should consider when looking to institute or upgrade one in your place of business.

    Accuracy

    Above all, a timekeeping system must be accurate. Accurate timekeeping is key for a number of reasons.

    • Payroll. When employees (particularly hourly employees) aren’t paid accurately based on their time, it leads to disillusionment and provides both opportunities and incentives for time theft.
    • Benefits. When benefits are accrued based on time worked (such as paid time off) or kick in after a certain number of hours worked, using estimations can become a major source of conflict.
    • Scheduling. If you aren’t able to accurately track the amount of time your business spends in order to get certain results, you won’t be able to schedule effectively. Do you have busy seasons? Slow shifts? When you get fuzzy with timekeeping, these key differences tend to average out, leaving you with inadequate or excessive staffing.
    • Performance tracking. While you don’t want to judge individual or team performance solely by the numbers, efficiency can definitely be a factor. Accurate timekeeping means that you are better able to assess who is making good use of the time they’ve been given, rather than relying on underlying assumptions about the length of workweeks overall. It’s also critical if tardiness and attendance play into your performance evaluations.
    • Compliance. Timekeeping systems need to comply with all governmental and industry rules related to accuracy in timekeeping, including appropriate rounding.
    • Planning for growth. When there’s never enough time, this is often a signal that it’s time to grow. Accurate timekeeping will show you which parts of your business are hurting for the extra time that another full- or part-time employee can bring.

    Ease of use

    Even the most accurate timekeeping system will fall apart if people can’t be bothered to use it correctly. The more complex the process for the end user, the more likely you’ll find employees are making mistakes, or even deliberately avoiding going through the necessary steps of logging their time correctly.

    How much time does it take for employees to clock in and out? If you’ve only got one timeclock on site, is it going to create a line of employees who aren’t able to get to their jobs on time?

    How easily can employees view their own time cards? If you want to catch errors early on (rather than waiting until the very last minute when everyone suddenly has an issue to fix before payday), it should be fairly simple for even the least tech savvy to review their own time history.

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    How easily can the relevant managers or employees use time cards appropriately? Is it easy to integrate with payroll? Scheduling? Are reports automatically generated or do they need to be assembled manually?

    How accessible is the troubleshooting process if something goes wrong? Is there a 24 hour helpline available? Is there a technician who can diagnose problems and make repairs? Or will you end up relying on a pencil and paper for hours every time there’s a momentary problem with your internet connection?

    How accessible is this system for your employees with disabilities? What kinds of adaptations or accommodations have been made using similar systems?

    Adaptability

    Timekeeping and attendance systems are designed to work for a wide variety of businesses and organizations, but your needs will no doubt be different. This is why most systems have at least some degree of customizability.

    • Do you need the ability to allocate labor costs? (The answer is probably yes.)
    • Do you need the ability to allocate labor by process, job, or both?
    • Do you need your system to work from multiple types of devices?
    • Do you need to be able to set various levels of access for different types of managers?
    • Do you need to be able to set limits on when people clock in and out?
    • Do you need your timekeeping system to be able to integrate with your scheduling system? (Additionally, do you want it to also be your scheduling system?)
    • Do you need your timekeeping system to be able to integrate with your payroll and benefits systems? (Would you like it to handle this as well?)
    • Do you need your system to be able to track variable pay rates based on the type of work?

    Whatever your circumstances, it’s best to make a list of any special needs (whether common or unique) before investing in a new timekeeping system.

    Scalability

    It’s important to consider whether a given timekeeping system is able to scale up with your business as it grows. Here are some examples of considerations that might fall into this category.

    Does this system have the capacity to handle the number of employees we anticipate having in the near future? Some systems that are designed for small businesses have hard caps on the number of employees it can handle.

    Do we have the budget to scale this system up to the number of employees we anticipate having in the near future? It’s not uncommon for timekeeping software (particularly cloud-based systems) to charge different rates based on the number of employees that make use of it. Also consider the cost of extra equipment, including computers, scanning devices, badges, etc.

    Does this system handle data in such a way that it will still provide useful, comprehensible information at the number of employees we anticipate having in the near future? Tracking five people in a basic spreadsheet isn’t too challenging. Tracking 500 would be a near-impossibility in the same format, and would require some more significant data wrangling to produce usable reports.

    Timekeeping Compliance Considerations

    Personal wants aside, everyone needs a timekeeping and attendance system that complies with all pertinent regulations. Labor law violations can result in significant fines, terrible publicity, and even jail time, so it’s important to get these things right.

    Timekeeping Compliance Checklist

    While there are some parts of timekeeping compliance that must be handled on a human level (making sure that employees are not miscategorized as independent contractors, for example), there are others that are more system-based. Examples of these include:

    • Ensuring that any rounding up or down of time is fair and consistent.
    • Calculating overtime for non-exempt employees properly.
    • Checking that paid training, travel, and sick time are included.
    • Determining the timekeeping policies noted in your employee handbook are consistent with those implemented in practice.
    • Providing appropriate data security for private information.

    Your industry might have additional regulations regarding time and attendance. This is especially true in areas such as healthcare and education, where the ratios of employees to those in their care (patients or students, in these particular examples) may be a part of maintaining licensing or accreditation.

    For a more detailed list of potential compliance issues, download a copy of our Timekeeping Compliance Checklist.

    Employee Scheduling

    There are some businesses (and certain positions at other businesses) in which tracking time as it occurs is all you need. People arrive, do their work, and leave, making a note of how long their day was and what they spent that time doing. If they start their work at 4am, or finish it in half the usual time, or work from a beach house in North Carolina for a week, who cares? The work got done, right?

    In other roles and businesses, though, coordination matters, and sometimes a lot. You can’t have a daycare where all the teachers decide to take off early one afternoon, leaving an unsupervised room full of toddlers to fend for itself. A dentist needs to be around when their patients are. A 24 hour call center needs enough shifts of customer service agents on hand to cover the phones around the clock. You need a schedule.

    What to consider when looking at scheduling systems

    • How do you handle schedules? Do you create them weekly? Daily? Monthly? Does this jive with what your system is designed for?
    • How do you track planned time off? If you know Janae is planning a honeymoon next August, can you input that information now, or will you need to wait?
    • How often do you make adjustments? If two employees want to trade shifts on a regular basis, is this an easy change to make?
    • How often do you need to view schedules by group? If a particular team all needs to be present for a meeting, is it easy to view their schedules together so you can choose an appropriate date and time?

    How does scheduling impact timekeeping?

    If you have employees who are on a tight schedule, this will impact the way you track time. If you need shifts to be covered with just a few minutes of overlap for transitions, it might make sense to limit early clock-ins to ensure that there are no gaps caused by people starting (and thus finishing) their shift early.

    If you have budgeted for an employee to work 20 hours in a given week and they’re on track to work 25, an alert that there’s a discrepancy between the projected schedule and reality can give you the chance to address this with the individual in question and stay under budget. And if the work accomplished during a shift seems to be highly variable despite the same number of employees being scheduled, this can provide a hint to look closer at the available data. If it turns out that productivity drops whenever Claudia is the supervisor, it’s time to have a conversation with her about that.

    Due to all this complexity, it’s normal for scheduling and timekeeping systems to either be well-integrated with one another, or to be the same system altogether. If you’re using a manual timekeeping method this isn’t available to you, but nearly all automated systems have the ability to work well with scheduling software on some level.

    Request a timekeeping software demo - Complete Payroll

    New Technology and Emerging Timekeeping Trends

    What’s new in timekeeping? A lot. Here are just a few trends.

    Big data

    Do you have a lot of employees? That’s also a lot of information. So what are you going to do with it? If you’re like most employers, the answer is “not much.” But with new tools (and smart folks with a background in analytics), you can uncover a lot, ranging from schedule tweaks that could save you large amounts of money, unsung heroes of productivity among your staff, and discrepancies that might indicate payroll fraud.

    Biometric scanning

    This was mentioned earlier, but it’s worth mentioning again as the the technology in this area keeps advancing. In addition to classic biometric measures such as fingerprints and faces, “physical-behavioral” analyses are also being developed, including gait analysis (yes, just like that Mission Impossible scene). The time when your chair can identify who is sitting in it might not be too far off. Voice recognition is also coming into its own.

    On an equally important but less viscerally exciting level, security around how biometric data is stored is also improving, which will be critical if it is to be expanded to a larger audience.

    Geofencing

    It’s not surprising to anyone that GPS-enabled devices (usually smartphones) can be used to track the location of employees in real-time. What’s new is how geofencing technology takes this to the logical next step, using a perimeter around the worksite to note when employees have entered and exited the workspace. Crossing this boundary then prompts employees to clock in or out, which they can do from their mobile device. No more getting home and wondering whether you remembered to sign out for the day.

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    Ultimately, seeing is believing. While theoretical knowledge is nice, it’s hard to grasp whether a time and attendance system will work best for your business unless you’ve been able to see it in action. Are you ready to start getting hands-on in your timekeeping system search? Then you’re right where you need to be: schedule a demo today.

    Request a timekeeping software demo - Complete Payroll

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