Preventing Time Theft Without Becoming a Surveillance State

Time theft is a scary concept for a lot of employers. This is because they know that employee time is their most valuable asset and the theft of it will inevitably impact profit margins.

Employees, on the other hand, might not be aware of the fact or impact of stealing company time as they go about their day. Or they might purposefully commit time theft knowing that it bears no consequences and remains unnoticed.

Is time theft such a scary thing that can harm a company? The answer to this question will determine the scale of the effort needed to prevent, detect, and penalize time theft. Let’s explore this topic in detail to try and find balance between protecting profit margins and employee morale.

Company time theft definition & examples

Time theft can be defined as using work time (paid by a full-time employer or client) for performing activities unrelated to work and unauthorized by the employer.

Because we’re well versed in the language of work time on this blog, we can define time theft as using billable time for non-billable, non-admin activities. We say non-admin because even though admin is most often non-billable it’s essential to company operations and therefore justified.

Among the most common examples of time theft are:

• Rounding up start or end times
• Extended or unauthorized breaks
• Personal business during work hours
• Intentionally overestimating tasks
• Intentional project scope creep

Let’s look at all of them in greater detail.

1. Rounding up start or end times

Contrary to popular opinion, rounding up times is not a practice exclusively reserved for businesses that bill by the hour and therefore track time on tasks. It occurs in all kinds of workplaces where employees have a habit of arriving at work late or leaving early.

Even though isolated incidents of being late for work or leaving early don’t pose any threat to profitability, they can add up over time.

‍For service businesses with an hourly billing model, rounding up start or end times can result in significant time theft from clients, ultimately undermining the reputation of the service provider.

2. Extended or unauthorized breaks

Extended breaks has to be the most common type of time theft as it’s the easiest to commit. Whether it’s a coffee break or a lunch break, employees can abuse them without much regard for company time or consequences.

Extended or excessive breaks are hard to detect as they can be incremental. With no working system of clocking in and out, or no creepy practice of employee monitoring with screenshots and the like, it’s virtually impossible to detect company time theft due to extended breaks.

3. Personal business during work hours

Attending to personal matters during work hours is another common form of time theft. This does not include the cases of authorized away time to conduct personal business. Rather, we’re talking about the practice of habitual and unauthorized usage of company time to run personal errands.

Like other forms of time theft, personal errands during work hours can be hard to detect in a remote work environment without retreating to workplace surveillance tactics.

4. Intentionally overestimating tasks

Overestimating the time required to complete a task is not an issue in and of itself. In fact, it can be a smart move to add buffer time to make sure the client has realistic expectations and the work is completed in the allotted time frame.

More often than not, over- and underestimating tasks comes from the lack of historical time data, i.e. not knowing how long it took to complete similar tasks in the past. This occurs in the absence of time tracking and can result in overestimations and time theft, either intentional or not.

5. Intentional project scope creep

Scope creep occurs whenever a project exceeds its allotted time frame and budget because the work could not be completed on time. This happens because of poor estimates or overservicing clients who pile up revisions and additional requests on top of what was agreed upon.

Intentional scope creep results in time theft because employees either steal company time or the client’s time they can bill for additionally.

Time theft laws: the crime and punishment

Spoiler: time theft is not really a crime, it’s a form of employee misconduct. As such, it’s not punishable by law and is handled through disciplinary measures undertaken by the employer.

At the same time, falsifying timesheets (billable time records) can step into the territory of fraud and breach of trust. This entails civil legal action but can be escalated to criminal prosecution in cases of significant financial damage or payroll fraud.

Timesheets can then be considered evidence that can be used to pursue disciplinary action against the employee.

Many service businesses have some system of time tracking in place, whether for billing or utilization/profitability management purposes. For them, employee time usage data is valuable as it translates into profits. Tampering with this data constitutes payroll fraud, contract breach, and entails termination.

Employee time theft in professional services

Time theft can occur in any workplace situation but some workplaces are more prone to employees stealing company time. Depending on the industry and employee qualification, however, the expectation for time theft is different.

For example, the more creative work is expected of an employee, the more non-productive time they’re allowed. That’s because the higher the billable rate, the more time can be allocated to non-billable work.

Let’s look at some examples of time theft in the professional services industry.

Field services

Field services encompass a variety of on-site services (cleaning, maintenance, repair, etc.) compensated by the hour or, more often, on a flat fee basis. In field services, time theft takes the following forms:

• Buddy punching
• Extended breaks
• Overestimating tasks

Field services pose an additional challenge and risk of time theft in the form of logistics planning and optimization. Something as simple as picking inefficient routes to complete multiple jobs across town can cost a business hours of time that could otherwise be billed for.

If we think about services such as construction or planning and architecture that rely on paper-based time records, the risk of time theft becomes even higher, not to mention the financial consequences of large-scale projects going over time and budget.

Public services

Public services such as teaching, tutoring, or translation – to name a few – can be susceptible to employee time theft. In these cases, time theft most often takes one of these forms:

• Rounding up start or end times
• Personal business during work hours
• Extended or unauthorized breaks

Detecting time theft in public and field services is harder than preventing it. That’s why service providers develop strict policies around employee time theft hoping to mitigate the risks and minimize the damage.

IT services

IT services fall under the category of highly skilled labor delivering complex projects. When it comes to software development, employee time is the #1 most valuable and costly resource. That’s why many IT projects are priced on an hourly basis, with time theft being an anticipated risk clients take on.

In IT, employee time theft manifests itself in:

• Overestimating tasks and projects
• Going into scope creep
• Providing inaccurate information in timesheets

Given the complexity of software development projects, overestimating tasks is the lesser evil. Underestimating and overservicing clients is what damages many service businesses. With projects as complex as IT projects, it’s always better to add buffer time than going into scope creep later.

Speaking of scope creep, it may occur both at the cost of the service provider (overservicing the client without proper compensation) and at the cost of the client (service providers charging for additional time beyond the agreed upon timeline).

The most common form of time theft in IT services is unintentional timesheet falsification. As in, relying on guesstimates when reporting on project hours and therefore providing wrong data to project managers and clients. This happens whenever there’s no functional system of time tracking in place and employees rely on memory to report on their time usage.

Creative services

Creative service providers are freelancers and agencies working across verticals such as marketing, advertising, design, etc. Like IT professionals, creative service providers know that time is their biggest asset. Even though compensation for creative services is often result-based, the usage of time aka utilization is a big topic for service providers.

Any marketing agency servicing clients and billing them for the time invested in the projects is concerned with overcharging on the one hand and overservicing clients on the other. That’s the reason why profitable digital agencies have solid timekeeping policies for the sake of preventing the following:

• Inflating project hours
• Falsifying timesheets

The job of a creative agency owner is finding balance between minimizing time theft (both as a reputational risk and a profitability risk) fostering a culture of accountability while protecting the creative process.

Creative professionals don’t thrive in environments where their creative flow is restricted with harsh admin and surveillance. Nobody does. At the same time, they need reliable, non-intrusive systems of time tracking to make sure both PMs and clients have reliable data on billable hours and utilization.

Legal, finance, consultants

Legal services, financial services, and consultancy fall under different categories but for the purposes of addressing the topic of time theft we can group them in one. Legal, financial, and consulting service providers are among the highest paid professionals whose time is extremely valuable.

It’s common for lawyers and consultants to bill in the smallest increments of 6 minutes. This illustrates the importance of strategic time usage like nothing else. For professionals of this caliber, time theft is much less of an issue than overservicing clients because of high ethical standards in the legal, finance, and consultancy fields.

We’ve discussed how lawyers track their time multiple times on this blog. The gist of it is not relying on memory, gut feeling, or paper-based records if you strive for the accuracy of data. Ensuring profitability and preventing time theft is all done with the same tools – time tracking apps and software that helps you take ownership of your time.

Time theft policy for service businesses

Time theft is always better prevented than investigated. Instituting an effective time theft policy is no easy feat but once done it makes your life as a manager or business owner a lot easier. Below we highlight the steps to implement an effective time theft policy for a service business.

1. Define time theft

Step #1 in crafting a time theft policy is coming up with a definition of time theft applicable to your service business. It may be that you don’t consider extended breaks time theft, especially if you employ highly qualified and/or creative staff.

On the other hand, rounding up hours or overestimating tasks can be a serious issue if you’re concerned about your reputation and profitability. Coming up with a list of activities that constitute time theft is crucial before you sit down with your team and discuss the terms of your new time theft policy.

As a professional service provider, you’re likely to have some understanding of your team’s utilization. Expand on that and based on the activities and tasks considered as billable vs non-billable develop a list of activities that fall under time theft.

2. Get your team on board with the idea

You don’t need to be a psychic to figure that your team won’t be thrilled about the idea of your new time theft policy. That’s why it’s absolutely essential to have an honest conversation with your employees about why you’re instituting a time theft policy. Here are some pointers to help you have “the talk”.

As you can gather from the last point, “the talk” is a good opportunity to get your team involved in crafting the time theft policy. They might have notes on your list of activities that fall under time theft or bring their ideas as to how you can prevent it.

3. Implement a time reporting system

Echoing one of the points from the previous section, you need to figure out a system of time tracking and time reporting that benefits your employees and also helps you prevent time theft.

For your staff, the perk of having an efficient time tracking system is that their effort will never go unseen. Some examples that often slip through the cracks:

• Every minute in meetings that drag beyond the allotted time
• Every urgent Slack exchange that interrupts the flow
• Every minute of “quick revisions” requested by the client

A time reporting system benefits your employees, especially those working with multiple clients that are charged for the time put in by the team. When every minute is accounted for, service business billings increase exponentially in an hourly model. Even if you don’t bill by the hour, precise time reporting allows you to calculate accurate utilization rates and prevent overservicing and subsequent burnout.

This is possible with clever time tracking solutions such as Memtime that run passively in the background and keep all user data offline and private. When your team is on board with time reporting, they’re happy to use the tools that make their lives easier.

How Memtime helps prevent time theft

Memtime is an automatic tracker of computer activity. Once you’ve installed it on your Windows, macOS, or Linux device, it works autonomously and quietly records every minute you spend in browsers, tabs, documents, files, etc. Everything you do is displayed in a private chronological timeline visible only to you.

By looking at their activity timelines, your employees can remember down to the minute what they did on any given day and then create time entries that get exported into your timesheet. You can export time entries locally to Memtime projects or connect any project time tracking software you’re currently using for automated timesheets.

Teams love Memtime because they don’t have to worry about time tracking. Unlike manual start/stop timers, Memtime requires 0 manual effort while protecting employees’ privacy. Nobody gets to see someone else’s activity timeline. It’s all based on trust and self-reporting.

If you’re ready to upgrade your time reporting system as a team, let’s jump on a call and start your team trial at zero cost. You’ll see the benefits of fully automated time tracking first-hand.

Before you go: a time theft meme

Time theft is not an easy topic to bring up without sounding suspicious or accusatory. Nobody wants to work under a surveillance system and no one has to. Time theft is preventable and time theft policies can be beneficial to the employees as well.

To set the tone for a productive conversation about time theft, bring a good attitude and use humor. The most important thing is to be on the same side of the table as your team.

Remember: any time policy you introduce to your service business has to benefit all stakeholders: you as the business owner, your team, and your clients. I hope this deep dive into time theft has given you ideas for approaching the issue with everyone’s best interest in mind.

And if you need reliable, employee-friendly tools for keeping track of time, do not hesitate to reach out and try Memtime as a team. We’re always happy to hear from you and support you with the best tools for managing time as a service business.