Time is money

Spend
10 minutes reading this and you could save your company time as well as £££s.
Keith Rodgers explains the four key steps to overhauling your time and
attendance management

Although they’re typically associated with shopfloor ‘clocking-in’
environments, time and attendance systems are fast emerging as a valuable tool
for a wide range of HR environments. Capable of delivering big productivity
gains and cost reductions in any operation where employees are paid hourly, or
salaried staff are entitled to overtime, the newest breed of systems offer far
more in the way of strategic insight.

By improving reporting and making employee-related data available to both
line managers and the board, T&A applications are beginning to be deployed
as planning and analytical tools, linking to financial systems. Throw in Health
and Safety issues and a growing awareness of the Working Time Regulations, and
it is easy to see why the US term for T&A – frontline labour management –
is becoming more common place in the UK.

In an environment where users demand a cast-iron return on their IT
investments, it is the cost and productivity implications that continue to
catch the eye. Simon Macpherson, UK operations director at specialist software
supplier Kronos Systems, points to a wealth of statistics that demonstrate the
impact of reducing absenteeism.

According to the CBI, 7.8 days are lost per employee per year, at a cost of
£438 per staff member – a reduction of just one day, therefore, equates to an
annualised saving of more than £28,000 for a company with 500 employees.
Reduction in overtime payment errors – a notoriously difficult area to track –
leads to similar gains.

From an IT perspective, integration with HR, payroll and budgeting systems
is a must. From a management perspective meanwhile, the introduction of these
kinds of applications can also lead to cultural difficulties. But if you are
planning to use your T&A system as a strategic tool the following four
areas are where it can have the greatest impact.

Step one: Tackle absenteeism

Absence management is typically seen in most organisations as either a basic
HR administrative task or a chore for line managers. In reality, however, the
costs associated with absence can quickly soar.

Not only do companies have to meet statutory or contractual sick pay
expenses, they also incur the cost of temporary cover and lost productivity.
Those companies that have a handle on how employee activity impacts upon
customer service and satisfaction will also be aware of the broader negative
implications.

Software developers such as Crown Computing point to user reference sites
that have achieved reductions in absenteeism of between five and 40 per cent
following the introduction of monitoring systems. By replacing slow,
error-prone manual procedures with automated systems, managers gain up-to-date
data on absenteeism and can act fast.

The software itself is not the solution. It provides the information for employers
to track frequent absentees and handle return-to-work interviews more
effectively.

It allows companies to understand trends. Organisations such as Solo Europe
now analyse absenteeism in relation to geography, for example, to understand
the impact of traffic problems on longer-distance commuters, or in relation to
repeat absence on specific days.

The information itself can be a deterrent – seeing their poor absenteeism
record online via employee self-service, can be a sufficient incentive to improve
performance.

Overtime management also has a potential for cost saving. "In most
companies, overtime is signed off by line managers on manual timesheets,"
says Kronos’ MacPherson. "There are a lot of fraudulent [entries] – maybe
not intentionally."

The advantage of automating the logging and approval process is that
apparent anomalies are visible very early on, and the system imposes a
discipline on employees and managers to explain the reason for the overtime
requirement. By automatically comparing overtime requests and hours worked
against budget, the systems can send alerts to managers warning when they are
about to run over on cost.

Games Workshop, a fantasy war-game product supplier with 240 stores
worldwide, saw savings in two additional areas after implementing a T&A
system from Softworks. It improved vacation management, preventing employees
from exceeding their holiday entitlement. Secondly, it led to a reduction in
administration time, including a reduction in payroll queries.

As Adrian Thornton-Willis, UK manager of Softworks points out, there’s
typically a 1.8 per cent error factor in payroll, and computerisation of manual
processes will inevitably reduce the potential for mistakes.

MFI UK, which installed a Kronos system, saw similar reductions in admin
overload. It estimated manual record keeping was taking 25 managers two hours a
week each to complete, totalling 2,600 hours per year. This now been cut to 15
minutes.

Step two: Focus on productivity

While productivity improvements can be harder to measure, T&A systems
can provide a platform for new ways of working. Mike Hawkesford, managing
director of Crown Computing, says that some of the benefits are specific to
certain types of organisation. "Some will achieve significant gains by getting
high visibility of their available labour and skills. If the organisation is a
diverse, multi-site or has a mobile workforce, it is not always possible to
understand this fact unless it has an attendance tool," he says. T&A
applications provide the data companies need to introduce more flexible working
arrangements, such as annualised hours.

At a more advanced level, organisations are beginning to shift from focusing
on pure time and attendance data, to logging the nature of their staff’s
activities. "We can start to understand what people do with their time –
when they’re productive, when they’re not," says Hawkesford. "That
can lead to significant improvements."

Some adopters, particularly in service industries such as media, are also
using T&A systems as part of a broader competency management programme,
recording skills matrices and abilities to provide managers with an
understanding who is available and what they are capable of doing.

Step three: Use strategic analytics

Unlike other aspects of HRIT, the use of analytics in T&A is widespread,
absenteeism being a core metric for the HR function. At an operational level,
however, the emphasis today is falling on distributing that information to line
managers, most effectively via the internet.

T&A vendors are increasingly focusing on more strategic analytics. By
gathering data about hours worked on any projects, organisations can track cost
and output against budget at various levels, including department, product set
and geography.

Capability analysis allows companies to plan their forward labour needs and
assess the effectiveness of different team approaches. In deploying these kinds
of analytics, T&A specialists are likely to run up against the major
enterprise resource planning (ERP) and HRMS vendors, most of whom have released
their own workforce management product sets.

While each T&A vendor supplies some form of reporting capability, most
packages also support tools from leading business intelligence vendors, often
adopted as standard by IT departments.

Step four: End long working hours

Prompted by a combination of legal and social factors, many firms are
complementing their absenteeism analysis with a focus on the opposite,
presenteeism.

Although the public stance on long hours worked is often wrapped up in
policies relating to work-life balance, the drivers for change are actually
numerous.

Adherence to the Working Time Directive is becoming more widespread, and
many organisations are also casting an eye on both their obligations under
broader Health and Safety legislation and the possibility of individual
employee lawsuits.

As Hawkesford says: "Long working hours may rebound on people when
companies start to look at claims for stress-related illnesses. They will start
looking at the health and safety aspects of long working – it is starting to
appear in the public sector."

As well as tracking attendance, rules built into T&A systems can trigger
alerts when legislative requirements are broken. Take-up of Working
Time-related features is relatively low – Macpherson estimates around 15 per
cent of Kronos’ installed base is using them – but it is growing fast.

Again, the raw data on attendance is what generates the alert, but real
intelligence on excessive working requires activity management capability,
where employers can see how individuals are spending their time and suggest
ways of improving productivity to reduce hours.

Case study: Solo Europe, T&A hails major change management

With more than 200 employees using a
conventional card-based clocking-in system, Solo Europe was accumulating
something of a paper mountain, generating thousands of cards a year that had to
be monitored for absence management, then archived. Merely tracking attendance
was a major exercise – tackling the underlying causes was harder still.

Since it installed a T&A system from Softworks as a
platform for better absentee management, the company, which makes polystyrene
and paper cups and dairy food packaging, has seen a reduction in absenteeism of
some 20 per cent. That equates to a cost saving of between £20,000 to £35,000
per year, against a total outlay of £20,000 to licence and install the system.
Add to this savings derived from more effective overtime management, and the
return on investment looks relatively quick.

Solo’s experiences demonstrate how T&A implementations are
most effective when they’re viewed as a tool for wider HR practices. HR manager
Barry Hughes says one of the main advantages of purchasing the system has been
to give live data to line managers, so they gain a better understanding of
absenteeism. By holding weekly meetings with the line managers and linking the
T&A data to return-to-work interviews, the company has begun to root out
some of the causes of absenteeism.

Data can be analysed by a range of factors, including geography
(taking into account transportation issues, for example), the date employees
began at the company, and specific shifts. Using that information, it can begin
to understand general trends – whether absenteeism rises under specific line
managers, individual absenteeism patterns, or when an employee is reluctant to
work on a particular machine.

That allows it to tackle external factors –  if an employee has a childcare problem on
certain days, for instance.

"We’ve taken it away from monitoring working time to
looking at the real reasons for absence,’ says Hughes.

Some conclusions have been surprising. The company recently
discovered that absenteeism increased after weekend working, and assumed that
employees were taking time out to recover. However, closer analysis revealed
that most absentees hadn’t been working extra shifts. Hughes concluded the
company’s policy of restricting overtime premiums for employees who had been
absent encouraged workers to come in if they were working overtime, but was not
an incentive for staff working a flat week.

As well as tackling individual issues, the conclusions have led
to policy changes at Solo. Based in a region of low unemployment, the company
found the highest levels of absenteeism came from new starters in their first
six months, so it doubled sick pay eligibility from its original three months.

The T&A system has also led to improvements in administrative
processes. Overtime can now be automatically monitored through exception
reporting, while payroll preparation time has dropped to two hours from up to
two- and-a-half days.

One of the initial drivers for introducing a computerised
system was the Working Time Directive. Although all of Solo’s 400-strong
employee base has opted out, the company still has to keep records, and needs
to ensure it is not breaching safety practices, such as the required breaks
between shifts.

While the implementation has led to a tangible return on
investment, Hughes cautions its introduction was a major change management
programme.

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