Three out of five construction businesses face increased costs, over which they don’t have any control.
This article will guide you through one of the reasons that cause inflated costs – ghost employees.
Read ahead to learn:
First, let’s understand what is ghost employees and how they appear.
To put it simply, these are workers who just don’t exist. However, they appear on the company’s payroll system and get paid.
Your company’s payroll department will include fake credentials of the ghost worker, such as name and surname, address, job site name, and salary amount.
This type of payroll fraud usually involves the Project Manager who establishes the fake credentials for a non-existent field employee. The check is created for the fake employee and paid every pay period, constituting fraudulent conduct.
Sometimes, ghost workers can create two identities on huge remote job sites and get paid twice. They just lose themselves in the crowd and get in line twice to receive their checks, cheating honest employees.
The phenomenon of ghost employees is popular in the construction industry because a lot of the labor force works remotely, far away from the main office where the Executive and HR departments are located.
Thus, it is very difficult for the managers and executives to detect the number of employees participating in these schemes.
Usually, companies with a large number of employees face this problem. The bigger your construction crew gets, the harder it becomes to track every employee.
This is why having a system that uses face recognition is necessary. It drastically reduces the number the ghosts employees company has.
Another type of scammer is the Buddy Puncher. This is when one worker clocks in or out for another fictitious employee who was a no show. Time systems using fobs, fingerprints, and pin numbers are easily cheated with buddy punching.
For instance, a common way buddy punching happens in construction is when family members work on the same job site. One of the family members shows up and punches for the other.
Ghost employees create uncontrolled labor costs.
The problem can go undetected for a long time gradually leading to profit fade. In other words, labor costs start eroding profit and become more evident in the last several months of the project.
This also has effects on estimating projects in the future. If your company continuously has a lot of fraud in the labor numbers you either become less competitive in your bids or you hand your profits to your onsite labor.
You are never guaranteed immunity from ghost employee fraud. However, you can take steps to reduce the risks of having fictitious employees.
Regular payroll audits can help detect ghost employees. Someone from the team should check the payroll system and compare it with employee files present in the company, a responsibility usually of the payroll department.
Additionally, you should evaluate your company’s HR policies including ethical standards against fraudulent conduct. The HR managers need to constantly be up to date with who is entering and leaving the workforce. Consequently, they will update the payroll system and other relevant reports.
MobiClocks is one of the leading employee time tracking software packages that aim to combat labor fraud and its negative impacts on the company’s health.
The solution is powered by the most recent face recognition technology that will ensure the accurate punch in/out of the employees. The managers can easily see who enters the job site and how long they work in a day.
Moreover, MobiClocks integrates with various accounting software. You can easily connect your payroll to the MobiClocks system. Simplified reports will accurately tell who has worked during the pay period and produce timecards.
The solution provided by MobiClocks can save you time and money!
The Flag Alert feature quickly alerts you to potential Ghost employees and Buddy punchers and keeps a photo verification record of the punches. The easy-to-use dashboard provides a quick and easy way to view employee time logs for every job site.
You can explore every feature of MobiClocks to better understand how it will benefit your construction business.
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