Reducing Overtime by 20% or more!
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1 Reducing Overtime by 20% or more! The Power of Proactive Technology Author : T J Sehmi tsehmi@timerack.com
2 Copyright TimeRack Software, Inc All rights reserved. WARRANTY The information contained in this document is subject to change without notice. TimeRack, Inc. makes no warranty of any kind with respect to this information. TimeRack, Inc. shall not be liable for any direct, indirect, incidental, consequential, or other damage alleged in connection with the furnishing or use of this information. TRADEMARKS All trademarks and registered trademarks used in this guide are property of their respective owners. TimeRack Headquarters 1787 Pomona Road, Suite L Corona, CA U.S. and Canada: Please refer to our Web site for regional and international office information. Updated October 27th, 2008 Page : 2
3 Introduction Time Rack, Inc. prides itself as the national authority on web based proactive time clock solutions. Time Rack is the only provider offering solutions that feature automatic, customizable proactive alerts geared towards small to mid-size businesses. Based on extensive field experience and a thorough understanding of the unique requirements and frustrations of small to mid-size business users, Time Rack solutions empower clients to reap the same benefits in advanced functionality, enhanced productivity and cutting edge technology as their larger counterparts without the massive price tag to go along with it. The Issues Labor costs represent the single biggest expense for most organizations, regardless of the industry. In fact, the pinch of overtime compensation has been a key driver in the adoption of advanced time and attendance solutions by businesses big and small. Best-of-breed solutions not only provide comprehensive reporting capabilities, but take labor management a huge step further, offering automatic alert features that proactively warn of impending overtime costs before they hit. A proactive approach to managing labor expense can help businesses reduce overtime by 20% or more. Why are labor costs so high? For many, the answer is simple: constant change. Whether realized through market and industry trends, regulatory mandates, or seasonal demands, change is a demanding thing. As a result, organizations invest time and resources in new technology and process and policy improvement to keep payroll costs in line. In most cases, however, this approach can be expensive and resource intensive especially for small to mid-sized organizations. But what if there was a powerful, yet simple and cost-effective tool that proactively controlled labor costs without any upfront IT investment or need for specialized knowledge? There is. TimeRack s Biz Pro is the leading web-based proactive time clock solution that significantly reduces overtime expense within a small-business budget. TimeRack is the only provider to offer solutions that feature automatic, customizable proactive alerts advanced functionality that provides insight into overtime risk before it actually happens. The result is a 20% or more reduction in overtime, which over the long term can translate into millions of dollars saved. Page : 3
4 The Technology Behind Solution So what is proactive technology? In the context of the time and attendance process, proactive technology offers advanced warning of exceptional events before cost or damage is incurred by the organization. For example, if an employee has reached or will soon reach overtime status, the system automatically alerts management so appropriate action can be taken. Beyond overtime costs, the system can also mitigate compliance risk by warning if an employee has missed a lunch or break, and help monitor and measure employee tardiness and performance. Considering all these factors, most organizations would agree that proactive technology is critical in today s fast-paced, ever-changing business world. The next step, then, is determining the most consistent and cost-effective approach to transition to a proactive time and attendance system. To answer this question, we must first take a brief look at the history of the time and attendance industry. Traditional Focus vs. Timerack Focus The time and attendance industry has traditionally focused on the process of collecting employee hours, calculating timecards, and reporting for payroll. Even with the introduction of innovative webbased products, the core focus has remained the same running standardized reports to identify exceptions. Additionally, the underlying technology of long-standing time and attendance applications is centered on compliance with complex state and/or federal laws, company-specific regulations, and tracking employee exceptions. Though important, the information collected and processed by these systems is after-the-fact, and eliminates the opportunity for proactive corrective action. In the end, that equates to time and money lost. The TimeRack focus is in direct opposition to the traditional approach to time and attendance management. Instead of spewing out after-the-fact information to support reactive management, TimeRack Biz Pro provides before-the-fact data to help control costs proactively. As a result, businesses not only save in labor costs, but are more productive overall because managers are preventing issues before they happen, instead of spending countless hours putting out after-the-fact fires. Page : 4
5 Why is the TimeRack Focus valuable to organizations? The first part of this answer lies in the design of the software. TimeRack was developed from the ground up, utilizing the latest technology and focusing on proactive management. When business applications provide real-time proactive information to all levels of an organization, it enables everyone in the chain of command to make decisions in a timely manner. Second, a proactive approach can also shift management of employee timecards from the payroll/ human resources department to other areas of the organization, including production, warehouse, and front line operations. This provides supervisors, managers, and department heads with up-tothe-hour labor data in order to effectively manage employees time rather than waiting on daily or weekly reports that tend to come after overtime is an issue. In these situations, managers are forced to be reactive in adjusting employee time, further wasting time and resources. Additionally, proactive management shifts responsibility for time management to individual departments, making managers throughout the organization accountable for overtime and other costs that hit the bottom line. Finally, by implementing applications that follow the Software as a Service (SAAS) business model, organizations position themselves competitively in the market place. SAAS provides small to midsized organizations with the same advanced solutions as those used in larger corporations. With access to the same level of functionality, smaller business can reap the benefits of significant labor costs reduction, without spending big-company dollars. Case Study - Thousands of Dollars Saved for One Small Business TimeRack conducted a study with a customer in the grocery industry (Company A). Company A employs approximately 70 employees and runs day and night shifts. On an average week, the company incurs 2,600 regular hours and 400 overtime hours. The company s old time and attendance system supplied managers with reports that identified overtime after-the-fact; therefore, after costs were incurred. After implementing the TimeRack Biz Pro system, Company A was able to automate their process. The system was set up to generate overtime alerts within a 2-hour parameter of overtime being reached. This allowed managers to identify only those employees with a risk of exceeding regular hours and, in turn proactively make decisions to adjust schedules accordingly. By following process best practices provided by TimeRack professionals, Company A was able to effectively, reduce overtime by more than 40% within 8 weeks of system implementation. The reduction in overtime equated to an average labor cost savings of $1,440 per week or $74,880 per year (pay rate per employee: $9.00 per hour). Page : 5
6 For small and mid-sized organizations that typically do not have sufficient resources, budgets,or IT expertise, reducing overtime can be an overwhelming challenge. TimeRack s proactive time clock system is the ideal solution for these businesses, providing a simple-to-use yet powerful tool to reduce payroll costs and minimize risk of operations interruption. Designing smart, proactive, and data rich business applications, combined with a reliable communications platform to deliver information to all levels within an organization is TimeRack s core strategy. While the traditional focus of standardized reporting is still an important component of the time and attendance process, if organizations are to overcome the challenge of rising labor costs, they require a next-generation solution that combines proven methods with proactive data management. Page : 6
7 About the Author TJ Sehmi Chief Executive Officer, TimeRack Since co-founding TimeRack, TJ Sehmi is the national authority on proactive timeclock systems. He has been integral in developing the company s world-class time and attendance product. With more than 14 years of experience in the technology industry, TJ has lead the way in product development, product strategy, defining new market penetration strategies, and addressing unique customer challenges through technology innovations. Prior to his role as CEO, TJ held management positions at Deloitte & Touche, Epicor Software, and Quest Software. Over the years, he is known as an expert on the SAAS (Software as a Service) business model, which was implemented at TimeRack with measurable success. TJ earned a Bachelors degree in Accounting and a Masters degree in Information Technology from California State Polytechnic, Pomona. He is also a member of the Southern California Software council and a regular speaker on the topic of emerging technologies. For more information, contact TJ Sehmi at tsehmi@timerack.com. Page : 7
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