Employee Time-keeping: The Effects of Clock Rounding on Corporate Profit

by

Bradley Harris Lott

A Graduate Capstone Project Submitted to ERAU Worldwide

in Partial Fulfillment of the Requirements of the Degree of Master of Science in Management

Embry-Riddle Aeronautical University Worldwide

Worldwide Online Campus May 2015

Employee Time-keeping: The Effects of Clock Rounding on Corporate Profit

by

Bradley Harris Lott

This Graduate Capstone Project was prepared under the direction ofthe candidate's Project Review Committee Member,

Dr. Wayne Harsha Adjunct Associate Professor, ERAU Worldwide, and the candidate's Project Review Committee Chair,

Dr. Wm. Francis Herlehy III, Professor, Emeritus, ERAU Worldwide, and has been approved by the Project Review Committee. It was submitted

to ERAU Worldwide in partial fulfillment of the requirements for the degree of Master of Science in Management

Project Review Committee:

Wayne Harsha, Ed.D. Committee Member

Dr. Wm. Francis Herlehy III, Ph.D. Committee Chair

11

Wm. Francis Herlehy III

iii

Acknowledgement

I take this opportunity to express gratitude to Dr. Wayne Harsha, Associate Professor at

Embry-Riddle Aeronautical University for his guidance in completing this project. I also thank

my son Brandon, for inspiring me in his pursuit of earning a bachelor’s degree from Embry-

Riddle Aeronautical University to pursue my dream of obtaining a graduate degree. He and I

shared our learning experiences and will graduate on the same day at the Embry-Riddle Campus

in Daytona Beach. I am also grateful to my partner and soulmate Tricia, for providing me with

unceasing encouragement, support and attention throughout this educational venture.

iv

Abstract

Researcher: Bradley Harris Lott

Title: Employee Time-keeping: The Effects of Clock Rounding on Corporate Profit Institution: Embry-Riddle Aeronautical University

Degree: Master of Science in Management

Year: 2015

Employee time-keeping systems operate such that the rounding rule is mathematically and

empirically unbiased, performing consistently to established federal and state laws. Employees

have the potential to “game” corporate time-keeping systems, utilizing time clock rounding rules

for the purpose of self-gain. This study surveyed a large sample of United States employees to

establish time clock gaming attitudes and behaviors. This study also collected seven months of

recorded employee timecard data to identify and analyze potential time-keeping clock rounding

behaviors within the total population of 139 employees at a research, development, and

manufacturing company. The combined results of this survey and time-keeping analysis

established there is a significant difference in time-keeping attitudes and behaviors for a sample

group of employees condoning or actively participating in time clock rounding behaviors, when

compared with beliefs and random time-keeping behaviors practiced within the general

employee population.

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Table of Contents

Page

Project Review Committee ii

Abstract iii

Abstract iv

List of Tables viii

List of Figures ix

Chapter

I Employee Time-keeping: The Effects of Clock Rounding on Corporate Profit 1

Background of the Problem 1

Researcher’s Work Setting and Role 2

Statement of the Problem 3

Significance of the Problem 4

Assumptions 4

Limitations 5

List of Definitions 5

List of Acronyms 6

II Review of the Relevant Literature 8

Background 8

Employee Attitudes and Behaviors 8

Impacts to the Employer 11

Legislation and Legal Case Rulings 12

Summary 13

vi

Statement of the Hypothesis 15

III Research Methodology 16

Research Approach 16

Survey Population 17

Sources of the Data 18

Data Collection Device 18

Pilot Study 19

Instrument Pretest 19

Distribution Method 19

Instrument Reliability 20

Instrument Validity 21

Procedures 22

Assumptions 25

Limitations 26

Treatment of the Data 27

IV Results 29

Timecard Employee Data 29

Employee Timecard Analysis 31

Employee Survey Data 35

V Discussion 39

Measured Behaviors of Clock Rounding 39

Determined Attitudes from the Survey 39

VI Conclusions 42

vii

Clock Rounding 42

Survey 43

VII Recommendations 44

Round by Pay Period, Not by Clock Event 44

Employee and Management Attitude Adjustment 45

References 46

Appendices

A Bibliography 49

B Permission to Conduct Research 51

C Data Collection Device 61

viii

List of Tables

Table Page

1 Data Totals for All 139 Employees 29

2 106 of 139 Employees Not Practicing Rounding 30

3 33 Employees Practicing Rounding 30

4 Lott, U.S. Worker Survey 37

5 Holmquist, U.S. and South Korean College Survey 37

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List of Figures

Figure Page

1 Disselkamp’s Payroll Leakage Chart 11

2 Single Employee Practicing Clock-Rounding 31

3 Employee Timecard Activity at :00, :15, :30 and :45 33

4 Clock-in Employee Timecard Clipped at 300 on Y-axis 34

5 Clock-out Employee Activity Clipped at 300 on Y-axis 34

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Chapter I

Employee Time-keeping: The Effects of Clock Rounding on Corporate Profit

Background of the Problem

Time-keeping systems are typically established to process employee activity after the fact

with the potential effect being that employers might suffer from overspending for labor that was

not performed, resulting in reduced productivity and diminished profit. Numerous employees

choose to repeatedly “game” the system by taking advantage of time-clock rounding rules (also

known as “gaming” or “time mooching”) throughout the workweek. This clock rounding

becomes a ploy to game or take advantage of, or abuse, existing payroll time-keeping systems.

A 15-minute-rounding rule will give employees an extra seven minutes each time they clock-in

and out, which will compound over the course of a week allowing those “gaming” employees to

work fewer hours than the typical 40-hours required for all full-time employees.

Analysis of recorded time-keeping data was conducted in a manner similar to the efforts

performed by Dr. Ali Saad, a labor economist, and statistician, retained to analyze the impact of

labor costs associated with time rounding in the wage and hour class dispute between See’s

Candy Shops, Inc. and the Superior Court of San Diego County. Dr. Saad computed the hours

worked for each employee shift by comparing the actual (unrounded) time entries and the

rounded time entries, and then determined the difference for each of the shifts. Based on this

mathematical analysis, Dr. Saad concluded that

…the total impact of rounding actual time punches to the nearest tenth of an hour for all

shifts worked … produced a net surplus of rounded over actual shifts of 2,230 employee

work hours [which] … resulted in a net economic benefit to the employees as a group …

Per shift, the rounded shifts exceeded actual shifts by on average .002 hours, which is

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equal to 0.12, minutes, or 7 seconds per employee, per shift. (See’s Candy Shops v.

Superior Court of San Diego County, 2012, p. 16)

In a case involving Hernandez and Overhill Farms, Inc., the employer was charged with

rounding time worked at the beginning of employee shifts and the end of employee shifts to its

own advantage (Hernandez v. Overhill Farms, 2013). Similar analysis was performed to

determine time rounding activities but unlike the charges in the Overhill Farms case, exploration

of clock rounding behaviors was evaluated by employees rather than the employer to determine

if time rounding activities were pursued for the purpose of self-gain.

Researcher’s Work Setting and Role

This researcher is a Master of Science in Management (MSM) student at Embry-Riddle

Aeronautical University (ERAU) and has a Bachelor of Science degree in Computer Science

from Fitchburg State University. This researcher has completed all required MSM coursework at

ERAU, to include Management Science, Applied Regression Analysis, Planning and Execution

of Strategy, Managerial Communications and Federal Regulation, Ethics and the Legal System

and is projected to graduate in May, 2015.

Professionally, this researcher has more than 30 years of experience as a contractor

supporting the U.S. Department of Defense. He spent nine years enhancing our national

technical means of verification monitoring foreign intercontinental ballistic (ICBM) missile

testing to ensure compliance with the Strategic Arms Limitation Talks (SALT) treaties. During

that period, he also contributed to the analysis of domestic ground-based missile intercept

capabilities in support of the Ballistic Missile Defense Organization (BMDO) anti-ballistic

research and development efforts. He spent another 18 years enhancing and upgrading metric

tracking capabilities for the Eastern Range space launch program at Kennedy Space Center and

3

Cape Canaveral in Florida as well as for the Western Range space launch program at

Vandenberg Air Force Base in California. The researcher is presently employed as a program

manager at a small Research and Development (R&D) firm in Florida, developing new and

technically innovative capabilities for the U.S. Department of Defense (DoD). The timecard data

analyzed for this time clock rounding study was collected from this researcher’s current place of

employment.

Statement of the Problem

In 1938, the U.S. Department of Labor adopted regulations addressing time clock

rounding under the Fair Labor Standards Act (the "FLSA"), permitting businesses to employ

time rounding policies. It is fairly common practice for businesses where time clocks are used,

to record employees' starting time and stopping time to the nearest one-tenth or quarter of an

hour. It is assumed that this rounding activity averages out over time so that employees are

compensated for all time they worked. This employer practice is accepted provided that it does

not result in a failure to compensate the employees fully over a given period.

Existing federal and state legislation attempts to protect employees by restricting

potential employer abuses of time clock rounding policies that do not provide full and accurate

compensation to employees. Furthermore, established case law addressing employee time-

keeping and clock rounding behaviors primarily enforce employer abuses against employees. It

is within the constraints and guidelines of governmental legislation and judicial enforcements

that some employees seek the opportunity to exploit established clock rounding rules to

maximize personal financial benefit.

Some employees learn very quickly how to “work the clock” by employing established

rounding rules to their favor. These clock gaming activities, typically performed by a fraction of

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the total employee workforce, have an adverse effect on corporate profits and efficiency.

Companies are at risk to lose substantial profit and productivity when employees work the time

clock for self-gain. There is an adage that “time is money” and if that is so, an employee can

steal it from an employer (Franklin, 1748).

The problem being researched is the degree to which clock rounding occurs and the

associated costs to the employer. An analysis of time-keeping data was conducted to determine

the extent to which employees use clock rounding on a regular basis. The principal of

randomness would lead one to expect that employees will have an equal number of early and late

clock-in and clock-out activities. Additionally, this study attempted to determine if clock

rounding is a universal practice or limited to a sample set of the total employee population.

Significance of the Problem

Payroll is typically one of the largest expense areas for businesses and is also one of the

most difficult to reduce. A recent study of overtime pay estimates that companies tend to

overpay employees by an average of 1.2%, at least partially resulting from the application of

time-keeping rounding rules established within corporate time-keeping software systems (ADP

Advisor, 2008).

Assumptions

It was assumed that employees immediately ‘clock-in’ when arriving at work, and other

employees do not clock-in or out for other colleagues. Further, it was assumed that employees

do not often neglect to clock-in or clock-out as this would require manual correction and would

not capture or reflect the actual automated time clock recording event. Also, for any one

employee, the clock timing should typically fall within a normal distribution with a small

number of early and late clock events.

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Limitations

Limitations of a study include elements of which the researcher had no control.

Concerning this particular study, one limitation was the number of people that could be surveyed

as part of the data collection and also the number of employee’s timecards that could be

analyzed. Another limitation was the limited span of seven months of timecard data that were

available for analysis. Resources, access to participants, and time limitations likely affected the

number of participants that could be surveyed. Honesty, consistency, and reliability of research

participants were additional limitations in this study. If truthful and accurate data had not been

provided, then this certainly might have resulted in a limitation. No threats to external validity

were identified.

One potential internal validity threat was selection. This was due to the possibility that

the people surveyed may not have been within a normal and random distribution. Selection

could also have played a factor in the timecard analysis in that corporate values, employee ethics

and leadership styles may have influenced current timecard rounding practices. Another threat to

internal validity was maturation. It is possible that employees might have changed their time-

keeping behaviors during the course of this study because they matured, their behavior could

have changed as a result of leadership changes, promotions, pay raises or a change in personal

conscience.

List of Definitions

Clock-in - The act of an employee recording the time of arrival at work on a special machine.

Clock-out - The act of an employee recording the time of departure from work on a special

machine.

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Game the clock (aka gaming or mooching) - The act of an employee purposively clocking-in or

out for a financial gain at the expense of an employer.

Google Scholar - A web-based search engine that provides a simple way to search broadly for

scholarly literature.

LexisNexis - A web-based provider of computer-assisted legal research offering the electronic

accessibility to legal and journalistic documents.

Sage - A software company that offers the Master Accounting Series (MAS) software and other

employee resource planning software to businesses.

Survey Monkey© - A web-based independent survey company that provides data collection and

data analysis services.

Timecard Rounding - Companies round up or down on employee timecards prior to processing

payroll. A company might round to the nearest quarter-hour, 5 minute or 10 minute

increments. Corporate time clocks generally perform the rounding function using

automated timekeeping equipment.

List of Acronyms

ANOVA- Analysis of Variance

APA - American Psychological Association

DoD - Department of Defense

ERAU - Embry-Riddle Aeronautical University

FLSA - Fair Labor Standards Act

MAS - Master Accounting Series

R&D - Research and Development

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TRUSTe - True Ultimate Standards Everywhere is a company that offers online privacy

management services

US-EU Safe Harbor - The United States and European Union’s framework for the protection and

safeguard of personal data

US-Swiss Safe Harbor - The United States and Switzerland’s framework for the protection and

safeguard of personal data

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Chapter II

Review of the Relevant Literature

Background

Timekeeping systems are typically established to process employee activity after the fact

with the potential effect being that employers might suffer from overspending of labor that was

not performed, reduced productivity and diminished profit. Employees who choose to repeatedly

“game” the system by taking advantage of time clock rounding (also known as “gaming” or

“time mooching”) rules throughout the workweek to play to their advantage can abuse existing

payroll timekeeping systems. A 15-minute rounding rule can potentially give employees an

extra seven minutes each time they clock-in and out which can compound over the course of a

week allowing those “gaming” employees to work fewer hours than the typical 40-hours

required for full-time employees.

Employee attitudes and behaviors. Unethical employee behavior can be defined in a

variety of ways and Lewis (1985) offers a very concise definition stating that unethical behaviors

are those behaviors that violate the moral guidance of rules, standards, principles or codes.

Perhaps the most commonly adopted definition of unethical behavior is Jones’ (1991) definition

that unethical behavior is any harmful behavior that is morally unacceptable to the larger

community. For the timekeeping data analysis portion of this study, the community was the

workplace or business employing this researcher.

In a survey conducted by Harris Interactive, a market research firm best known for the

Harris Poll, more than 700 hourly paid employees were asked if they had ever cheated on their

timecard to increase their paycheck. Twenty-one percent admitted to cheating and of those, 69%

admitted to clocking in earlier or clocking out later than what they worked. Another 22% stated

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they have added additional time to their timesheet while 14% failed to get off the clock during

breaks or meals and 5% had a co-worker clock-in or out for them (Maroney, 2009).

The Work Force Institute, a think tank that addresses human capital management issues,

conducted a recent analysis of a 6,800 employee manufacturing location. That study revealed

that clock rounding or “gaming the clock” resulted in a loss of more than 1.3% of total wages

paid by that firm. Four departments within that firm were identified as the most significant

“clock-rounder” abusers resulting in a $3.6 million annual cost (Maroney, 2009). Given that

some departments within a company were identified as greater clock rounding abusers than other

departments, there is a reason to believe that environmental factors within the workplace might

contribute to clock gaming behaviors. Some of these factors might include styles of leadership,

environmental factors, methods of compensation, and peer influences and attitudes amongst

colleagues.

A recent survey conducted by Dimensional Research indicates employees believe as

many as 4% of all employees deliberately enter incorrect time tracking information for unethical

purposes of self-gain (Dimensional Research, 2013). According to Nucleus Research, a provider

of investigative information technology research, companies tend to overpay employees by an

average of 1.2% due to inaccurate application of pay rules, as well as human errors, intentional

and otherwise as cited by ADP Advisor (2008). Recent estimates from the Association of

Certified Fraud Examiners suggests that various forms of internal fraud, including employee

time clock rounding, cost American companies as much as $400 billion per year (Wells, 1999).

Another recent case study of employee timekeeping behavior revealed time clock

rounding was one of the methods employees used to increase their wages (Holmquist, 2013). A

survey regarding the perspectives of time clock rounding was administered to students at

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colleges in the USA and South Korea. This cross-cultural analysis revealed American

participants somewhat disapproved of employees committing this timekeeping behavior for the

purpose of financial gain at the expense of their employers whereas Koreans somewhat

sympathized with this practice (Holmquist, 2013).

Ms. Disselkamp, Director at Deloitte Consulting, is a leading authority on timekeeping,

compensation, scheduling, and labor analytics systems. In her book Working the Clock: How to

Win the Race for Productivity and Profits with Workforce Management Technology, Ms.

Disselkamp provided a clock rounding example in which an employee applies some savvy in

clocking in and out, arriving to work at 8:07 rather than 8:08 so the time clock rounds to 8:00

rather than 8:15. She applied this same concept for punching in and out at lunch time and at the

end of the day and states that an employee would have the opportunity to steal up to 130 hours in

a work year (Disselkamp, 2007). In a company that might employ hundreds or thousands of

employees, the potential financial impacts on corporate profits and efficiency might be

significant. Ms. Disslekamp further stated this same rounding scenario could play to the

company’s advantage but reminds the reader the significant difference is this would only be true

if the employee behavior where random. Unfortunately, Ms. Disslekamp states people quickly

learn how to work the clock and often do so with abandon.

Ms. Disselkamp referenced the clock rounding issue again in her other book, No

Boundaries: How to Use Time and Labor Management Technology to Win the Race for Profits

and Productivity. While conducting an audit of employee clock punches, she found a consistent

daily spike in activity at the 23 minute mark, establishing that employees punch out in large

numbers at that mark to take advantage of the rounding rule to the 30 minute half hour mark as

indicated in Figure 1. Similar spikes in employees punching the clock at these similar change

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points (8, 23, and 53 minutes) were identified for the gain of 7 minutes per punch (Disselkamp,

2009).

Figure 1. Disselkamp’s payroll leakage chart.

Impact to the employer. Many organizations are facing an increased financial threat

from employee’s stealing from the workplace, ranging from fictitious sales to the theft of

common office supplies (Needleman, 2008). Along with the financial costs to organizations, this

negative employee behavior can also adversely affect morale and lead to lower overall

productivity (Dunlop & Lee, 2004). Conversely, when employees regularly engage in a

productive behavior, organizations enjoy a favorable work climate with increased productivity

(Podsakoff, MacKenzie, Paine, & Bachrach, 2000). The subtle employee theft issues, such as

employees using company property for personal use, web surfing and time clock rounding, were

cited as a growing problem by 24% of all companies in the down economy, with 13% of large

organizations considering time theft to be a problem ("Study: Down Economy Sparks Rise in

Workplace Theft - i4cp," n.d.).

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Legislation and legal case rulings. The Fair Labor Standards Act (FLSA) was passed in

1938 to protect employees from long-standing employer abuse. The United States Code of

Federal Regulation 29 section §785.48(b), defines the use of time clocks and discusses time

clock rounding as a practice that has been exercised for many years by the employer “of

recording employees' starting time and stopping time to the nearest five minutes, ten minutes or

quarter of an hour” (eCFR - Code of Federal Regulations, n.d.). It was assumed this practice

would average out over time, so the employees were fully compensated for all the time they

worked.

There have been numerous legal rulings addressing the time clock rounding rule as

defined in the FLSA. The case most often referenced by other legal rulings is the 2012 landmark

ruling involving See's Candy Shops versus the Superior Court of San Diego County. One of the

claims included See’s timekeeping policy that allowed the rounding of time up or down to the

nearest one-tenth of an hour (every six minutes) on the company’s time clock system. For

example, if an employee clocked in at 7:58 a.m. the timekeeping system would round up the time

to 8:00 am. If the employees did not ‘clock-in’ until 8:02 a.m. then the timekeeping system

rounded down the time to 8:00 a.m. See’s claimed their policy did not violate state or federal

law allowing the rounding of time. See’s lost in the trial court based on the ruling that this

practice was not lawful in California. That decision was overturned when the Court of Appeal

considered the federal regulations and concluded that an employer is entitled to use the nearest-

tenth rounding policy if the rounding policy is fair and neutral on its face. The Court of Appeal

went on to state that an employer is entitled to use a rounding policy so long as “it is used in such

a manner that it will not result, over a period of time, in failure to compensate the employees

13

properly for all the time they have actually worked (See's Candy Shops v. Superior Court of San

Diego County, 2012).

That holding was consistent with federal law, and the net effect was to permit employers

to calculate hours efficiently without imposing any burden on employees. The Superior Court of

San Diego County determined the employees had not met their burden of showing that

employees were not paid fully for their work because of the rounding policy. The court also

established that the employer's expert presented conflicting evidence, concluding that the

rounding rule was both mathematically and empirically unbiased, most of the class members

were fully compensated, and the majority of class members were paid for more time than their

actual working time (See's Candy Shops v. Superior Court of San Diego County, 2012).

Another recent ruling from California’s 4th Appellate Court involving Hernandez versus

Overhill Farms ruled in the employer’s favor concerning allegations that the employer, Overhill

Farms, had a common practice of rounding time worked at the beginning and end of each shift to

its advantage. The trial court denied the plaintiffs’ motion, and it was again denied on appeal.

Also, the plaintiffs’ class action complaint claimed that an Overhill Farms stipulation prevented

employees from punching in on the time clock any earlier than 7-minutes before the employees

scheduled start time or any later than 7-minutes after the employees scheduled hour to leave

effectively requiring the employees to remain in the plant under defendant's control, but not be

paid for the so-called "waiting time" (Hernandez, 2013). The trial court denied the plaintiffs’

motion for class certification and this opinion was upheld in the court of appeals.

Summary

In summary, the purpose of this research was to examine the processes by which

employee attitudes and behaviors affect timekeeping clock rounding practices. The current

14

literature and case law suggests employee attitudes and behaviors provide many opportunities for

a sample of the employee population to abuse the timekeeping system established under the

guidelines of federal and state legislation.

Based on the literature, previous surveys and legal cases that have addressed the topic of

employee time management, it is clear the topic of employee timecard rounding should be

explored more closely. The available research presented in this literature review regarding

employees’ time theft or “time mooching” suggests this type of behavior is potentially prevalent

in the workplace. Existing research on timecard gaming provides a substantial indication that

some employees intentionally game their timecards for the purpose of self-gain.

This study contributed to the literature in three different ways. First, this study compared

the results of survey data with the analysis of actual time card data collected from a corporate

timekeeping system used by 139 employees during a period of 7 months. Second, a scenario

presented in a 2013 survey of American and South Korean college students as a cross-cultural

analysis was resubmitted in 2015 to employees within the United States workforce force. The

results obtained by United States employees in 2015 were contrasted with the results of the

original 2013 study submitted to the American and South Korean college students. Third, this

survey was presented to those same United States employees to establish time mooching

attitudes and behaviors based on gender, employee age and experience brackets. This study also

contributed methodologically to the advancement of timekeeping analysis in the workplace by

conceptualizing and measuring time clock rounding as an employee behavior, which until now,

has not been empirically examined in the current literature.

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Statement of the Hypothesis

This research affirmed that a sample of the total employee population behaved differently

in “gaming” the time clock when compared to the overall employee population. The variables

used for the time clock observation were the actual clock-in and clock-out times for each of the

139 employees employed at a small engineering and manufacturing company. Specifically, this

refers to whether the employee was clocking in and out according to a particular pattern to

increase the time recorded on the employee’s timecard. This was determined by observing

employees’ clock-in and clock-out behaviors over an extended period to establish trends in

certain employees attempting to maximize the clock-rounding effect (i.e. 8 minutes before and

after their scheduled clock-in and clock-out times, respectively). Based on a review of the

literature, as well as personal and professional experience, the following hypotheses were

posited for this study.

1. H0 - Null Hypothesis: Employees behave randomly when “clocking in” and “clocking

out” of the corporate timekeeping system, with no distinguishing clock gaming activities

measured.

2. H1 – Alternate Hypothesis: Employees do not behave randomly when “clocking in” and

“clocking out” of the corporate timekeeping system, with distinguishing clock gaming

activities measured.

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Chapter III

Research Methodology

Research Approach

The hypothesized relationships outlined in Chapter II were examined using survey

research methods and a correlational research design. As opposed to being manipulated in

experimental research, this correlational research examined variables as they naturally occur. It

was advantageous to examine the employee timekeeping clock-in and clock-out variables that

are not easily manipulated and complex multivariate models.

Chapter III provides an overview of the research design, sample characteristics, and

procedures for data collection. In addition, this study presents the measures as well as the data

analysis techniques that were used to test the hypotheses. This quantitative research study began

by examining previously published studies in the area of workplace time management,

specifically relating to timecard rounding. After reviewing the literature, a survey was prepared

to address the important questions needed to support or reject the hypotheses presented.

Employee timecard data were also collected from the researcher’s workplace for analysis of

potential clock rounding behaviors. The survey data, analyzed timecard data, and previously

published literature were triangulated and correlated to identify similarities, as well as potential

deviations.

Data were collected by sending surveys to a sample population using a quantitative

approach. Directions were provided to the respondents that explained the background of the

study and also the careful measures that were taken to ensure confidentiality. In designing the

research questions, the goal was to highlight the issues related to timekeeping management

within the workplace by surveying men and women of various ages, education, and work

17

experience. The survey questions focused on the participants’ feelings and perspectives

concerning the issue of timecard rounding. The rationale behind the research questions involved

narrowing the purpose of the study to identify and focus on perceptions relating to: favorable or

unfavorable timecard rounding attitudes, actual employee timecard rounding behaviors and also

employee’s perceived timecard rounding behaviors of other colleagues in the workplace.

This quantitative exploratory research closely examined previously published studies in

the area of employee time clock rounding or gaming. Further, analysis of the existing legislation

limiting the employer’s ability to round the time clock to its favor was also reviewed to

determine the potential effects on employee clock rounding behaviors.

Survey Population

For the survey, this researcher sent out a survey via SurveyMonkey© to a convenience

sample of 100 participants within the American work force. Given the limitations provided for a

free SurveyMonkey© membership, no more than 100 survey participants were allowed to

respond to a maximum of 10 survey questions allowed within a single survey. All participants

received the same survey and instructions, and the participants were instructed the survey would

take approximately 10 minutes to complete.

For the timecard timekeeping analysis, a 7-month sample of 139 employees’ time clock-

in and clock-out activities was collected from the Sage MAS automated timecard system. This

amounted to a total of 40,777 recorded clock measurements spanning a period of 188 work days

that was available for analysis. This amount of data was sufficient to determine if there were any

indications of potential clock gaming behaviors within the defined employee population.

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Sources of the Data

For the timecard analysis, employee timecard data were automatically collected utilizing

the computerized Sage MAS time-keeping system from a small engineering and manufacturing

company, spanning a period of 188 work days. This equated to approximately 7 months, from

January 3, 2013 to July 26, 2013 and excluded non-workdays such as weekends and holidays.

Information gathered through the time clock installed on each employee’s computer was

ultimately used by the company to generate the employee's paycheck. The timekeeping system

tracked start of day clock-ins and end of day clock-outs as well as clock-ins and clock-outs for

lunch breaks. The timekeeping system used the employee's weekly work schedule, departmental

work rules, and rounding rules to calculate the employee's pay automatically.

For the survey, all data were collected and securely held on the SurveyMonkey© server.

SurveyMonkey© collected all data from the survey respondents and provided real-time results of

the information collected. This survey addressed important questions for the purpose of

supporting or rejecting the proposed hypothesis. All participants were assured their responses

would remain confidential and anonymous.

Data collection device. The survey included a cross-section of corporate employees

throughout the United States industry and was conducted utilizing SurveyMonkey© as the data

collection tool. The employee timecard data were automatically collected utilizing the corporate

Sage Master Accounting Series (MAS) accounting and business management software system

utilized for employee time tracking. The time-keeping system tracked start of day clock-in and

end of day clock-out as well as clock-in and clock-out for lunch breaks. The time-keeping

system used the employee's weekly work schedule, departmental work rules, and rounding rules

to calculate the employee's pay automatically.

19

Using the online data collection website, Survey Monkey©, the data were collected and

analyzed. By using this tool, the data were collected in real time, and online reports, charts, and

graphs were generated and immediately available. By grouping data by gender responses, age

group responses and work experience bracket responses, it was possible to determine if there

were significant differences in the responses of one group versus another.

Pilot study. Focus groups and/or pilot studies were not used in this study due to time

constraints and the fact the survey was used on such a small sample size.

Instrument pretest. Prior to the survey data collection, this researcher conducted a

specially designed survey instrument upon a small group of peers in the work force. These same

individuals were exempt from the respondent pool when the final survey was released. This

pretest helped to determine if the survey questions were clear and understood by the individuals

responding to the questions.

Distribution method. Survey Monkey© is a web-based survey tool that was used to

distribute the survey and collect the data. By allowing this researcher to distribute the survey to

participants through the secure website, Survey Monkey© was a useful data collection tool. This

website was crucial in collecting data in a timely manner. Participants received a link to the

survey via email and were asked to complete the 10-question survey. The survey took

approximately 10 minutes to complete.

Survey data were collected by sending surveys to a sample population using a

quantitative approach. Instructions were provided to the respondents that explained the purpose

of the study and the careful measures that were taken to ensure confidentiality. The survey

participants were presented with a demographic questionnaire and survey questions describing

timekeeping practices.

20

Instrument reliability. Reliability refers to an instrument’s demonstration of consistent

results over repeated periods of testing (Creswell, 2014). Unfortunately, it is not possible to

calculate reliability, but one can rely on general estimators:

•Pre-Test Reliability: The survey was tested on a small group of individuals.

•Test-Retest Reliability: The consistency of a measure evaluated over time.

For this research project, reliability was assured by making an effort to see that all

research and case studies were well documented and coded. This allowed for consistency

throughout the paper and ensured that the definitions were reliable and constant. The testing

method was assessed using coding, and data normalcy determined the goodness of fit and

expected values.

To ensure reliability, this researcher provided a detailed account of the activities involved

in building this study, the researcher’s role in obtaining the collected timekeeping data, and the

circumstances and conditions from which the timekeeping data were collected. Data collection

and analysis strategies were explained in detail so that an accurate depiction of the applied

method was understood. Further, the studied timekeeping database is included as an appendix to

this research so that others can follow and repeat the described procedures. Weekly timecard

data collected for each employee allowed for the test-retest reliability methodology to be applied

for comparison of employee behaviors across the spectrum of numerous weeks. Qualitative

reliability was assured by documenting analytical approaches applied in previous legal

proceedings and judgments resulting from similar studies and analysis (Creswell, 2014). Finally,

all aspects of this research were subject to scrutiny through peer review and by an external audit

team experienced in quantitative research methods.

21

Instrument validity. Without rigor, this research would be worthless and lacking utility.

For this study, validity concerns the degree to which inferences about employees timekeeping

behaviors based upon samples of recorded timecard data are warranted. This researcher’s goal

was to produce a valid, reliable and authentic assessment providing a rich and thick description

of employee timekeeping behaviors (Creswell, 2014). Triangulation of data was achieved with

the collection through numerous sources to include surveys, observations and analysis of actual

timekeeping data.

Timecard data were collected for the entire employee population base and encompassed

the same consecutive span of time for the entire study. Content validity was assured by utilizing

the same calibrated time collection device for the entire employee population and by employing

accepted methods of statistical analysis with a reasonable correlation of test results. For survey

data, face validity was established via peer debriefing, with external auditing to ensure relevance

of the test for measurement, and review by the Project Review Committee (Creswell, 2014).

Finally, any discrepant information that might run counter to the central theme was identified

and discussed.

Survey instruments cannot be 100% valid, but validity can be measured in degrees.

According to Creswell (2014), one form of validity is:

Face validity – does the instrument give the appearance of collecting the data for which it

is being used.

For this study, validity was assured by researching and referencing accurate and precise

information from reliable, credible sources such as scientific journals, authoritative books, and

legal briefs. Also, by discussing ideas or information that may go against the data collected via

the researcher’s survey, validity was ensured.

22

Instrument validity is dependent, in part, on the accuracy and thoroughness of the survey

questions. The survey questions are included in Appendix C of this research study. The Project

Review Committee established face validity, and the instrument pretest established content

validity. For the timecard data, validity was assured by extracting all timecard data for all

corporate employees spanning a period of 188 work days from January 3, 2013 to July 26, 2013.

The timecard data are included in Appendix C of this capstone project.

Procedures

A series of literature and legal cases were obtained from different electronic databases

such as LexisNexis, The Advanced Scholar Search feature in Google Scholar™, and ERAU

Hunt Library Data Base using the keywords "time clock rounding", “clock gaming", and "time

mooching". Timecard rounding falls under defined employee practices and procedures and for

this reason it was also important to search for various human resource journals, such as the

International Journal of Human Resource Management, The Journal of Human Resources,

Human Resource Management Journal, and Journal of Human Resources. This researcher

determined this electronic search yielded a sufficient number of articles and legal briefs to

determine the current state of research for this area of study. The obtained articles and briefings

were read, and some of the articles and briefings are included for reference based on relevance

and quality of content.

Only one survey was used during this study, and all questions were close-ended/multiple

choice and participants were conveniently sampled from the Unites States. Survey questions

were provided to establish time mooching attitudes and behaviors based upon gender, employee

age brackets, education and years of work experience. Prior to taking the survey, the reader was

provided with a brief description of “clock rounding” concepts. The survey asked six questions,

23

establishing key demographic data and attitudes and also presented the respondents with a

written scenario asking them to rate their level of agreement or disagreement with four

statements about a described time clock rounding behavior in the workplace.

For the six survey questions, a one-dimensional chi-square goodness of fit test with α <

.05 was utilized to determine statistically if opinions and attitudes had a relationship or were

random. This one chi-square test was performed using Microsoft Excel for the survey questions

in Appendix C.

For the four scenario statements, Microsoft Excel was used to carry out a statistical

analysis with descriptive and inferential statistics with ANOVA testing. The results of the

scenario question were categorized and analyzed using dummy variables. The possible values

for responses to each item ranged from 1 (strongly agree) to 5 (strongly disagree), as explained

in Appendix C, Data Collection Device.

In addition to the survey and scenario questions, a data sample comprised of 7 months of

timekeeping records for the entire population of approximately 139 employees of a small

company was analyzed. To allow some flexibility in recording the time used for a time clock

punch, the following FLSA rounding rules are followed: Punched time was automatically

rounded to the nearest 15 minute increment using a 7-minute window. If the employee punched

in for up to 7 minutes before he or she was scheduled to start work or up to 7 minutes after the

scheduled start time, the automated timekeeping system rounded the punch-in time to the

scheduled start time. If the employee punched in 8 minutes prior to the start of the schedule, the

timekeeping system rounded to the lower quarter and deducted 15 minutes of recorded time. If

the employee punched in 8 minutes after the scheduled start time, the automated timekeeping

system rounded to the later quarter and deducted 15 minutes of recorded time.

24

Using Microsoft Excel pivot tables, identification and comparison of the collected

timecard data was made by contrasting a sample of the most prolific time-clock ‘gamers’ against

the total employee population. Pivot tables were built into Excel to identify clock-in and clock-

out activity as it pertains to the 15-minute rounding rule. The pivot tables were used to identify

and correlate spikes in employees punching the clock at similar clock transition points (7, 23, 37

and 53 minutes) that would provide the maximum gain to the employee of 7 minutes per punch.

These timekeeping data were then compared with standard Microsoft Excel data sorting

routines to evaluate 40,777 clock events for this population of 139 employees, spanning 188

working days, over a period of 7 months so that potential clock rounding trends could be

identified. Trends relating to clock rounding activities were identified with spikes to employee

time clock recording events, indicating a cumulative effect of employees punching out in large

numbers at key change points on the time clock. These spikes in the time clock occurred at

similar change points of 7, 23, 37 and 53 minutes for the maximum possible gain of 7 minutes

per punch (Disselkamp, 2009).

Specifically, data filtering was conducted to establish the following patterns for employee

clock-in activity: If an employee clocked in from :01 to :07 or from :31 to :37 on the time clock,

clock rounding benefited that employee. The closer the time punch got to the :07 or :37 mark on

the clock, the greater the rounding benefit during the clock-in to obtain the maximum gain of

seven minutes per punch. If an employee clocked out from: 23 to :29 or from :53 to :59 on the

time clock, clock rounding benefited that employee. The closer the time punch got to the :23 or

:53 mark on the clock, the greater the rounding benefit during the clock-out to obtain the

maximum gain of seven minutes per punch.

25

This project is the very first to correlate employee attitudes obtained through scenario and

survey data against actual behavioral data collected from employee timecards. This study sought

to test the alternate hypothesis that clock rounding is practiced by a sample of the employee

population. Using a correlational approach, this researcher established a quantitative and

statistically significant difference in time-keeping activities among the sample group and the

total employee population. If the MAS time-keeping rounding data had been found to be largely

random, it would have been determined that the hypothesis was not correct because the rounding

rule was applied fairly and neutrally and was used in a manner that would not result, over a

period of time, in failure to compensate employees properly for all the time they actually worked

(eCFR - Code of Federal Regulations, n.d.). If on the other hand, because a portion of the MAS

time-keeping rounding data does not appear to be random, it has been determined that the

hypothesis is correct because a sample of the employee time-keeping rounding activity was

intentionally “gamed” for the purpose of employee self-gain.

Assumptions

For the survey portion, it was assumed that the survey participants were honest and

provided insightful information and data that could be used to test the hypothesis of this study.

The data gathered from the surveys was compared to the data gathered from previously

published literature to determine if the majority of participants were candid regarding the

information requested in the surveys.

For the analysis of time-keeping data, there were explicit assumptions within the research

focus of this study; specifically it was assumed that the time clock was correct and calibrated on

a normal basis. It was also assumed that the vast majorities of timecard entries reflected the

employees’ actual arrival and departure and were not hand edited after the fact. Each employee

26

hand edit might potentially perturb the time-keeping data as it might not reflect the employees’

actual arrival and departure activity for each recordable instance manipulated.

Limitations

Limitations of a study include elements of which the researcher has no control. With

regard to this particular study, one limitation was the number of people that responded to the

survey as part of the data. Another limitation was the total number of employee’s timecards as

well as the limited span of 7 months of timecard data that were available for analysis.

Resources, access to participants, and time limitations likely affected the number of participants

that could be surveyed. Honesty, consistency, and reliability of research participants were

additional limitations in this study. If truthful and accurate data were not provided, then this

certainly resulted in a limitation. There were no threats to external validity.

One internal validity threat was the selection. This was due to the possibility that the

people surveyed may not have been within a normal and random distribution. Selection could

have also played a factor in the timecard analysis in that corporate values, employee ethics, and

leadership styles may have influenced timecard rounding practices while these same variables

might not have a similar influence and effect at another company. Another threat to internal

validity was maturation. It is possible employees might have changed their time-keeping

behaviors during the course of this study because they matured their behavior as a result of

leadership changes, environmental changes, promotions, pay raises, peer pressure or a change in

personal conscience.

27

Treatment of the Data

Researchers have an ethical obligation to not harm the subjects in the study. Honesty and

integrity were fundamental concerns while conducting this research and reporting the results.

The American Psychological Association (APA) is concerned with upholding research ethics and

promoting shared knowledge, beliefs and attitudes for ethical and responsible conduct of

research among investigators and students in the psychological sciences with the goal of

maximizing scientific rigor and productivity within the research community (Ethical Principles

of Psychologists and Code of Conduct, 1992).

For this deductive research, the most extreme ethical consideration involved

confidentiality of the studied employee timecard data. The company and the employees have not

been disclosed. Concerning the survey, this was administered anonymously online in the

participants’ free time, and there were no ethical concerns. The survey data collection tool,

SurveyMonkey© is certified by TRUSTe and complies with US-EU and US-Swiss Safe Harbor

Frameworks developed by the U.S. Department of Commerce regarding the collection, use and

retention of personal information from EU member countries and Switzerland ("Privacy Policy |

SurveyMonkey," n.d.). Wording of the survey questions was carefully considered so as to not

lead or influence those taking the survey. Because the survey did not ask for the participants’

names or other personal information, informed consent forms were not necessary. By not asking

for personal information such as name or specific birth dates in the survey, confidentiality

remained intact. Instead, questions including age range and gender were used to allow for

grouping the results of the data. To establish trust with the participants, the survey clearly laid

out in the instructions and heading that confidentiality was of the utmost importance.

28

All researchers must consider that the reporting of results is a part of the research ethics.

Results and conclusions were carefully reviewed before being submitted and/or published. All

of these issues were taken into consideration when thinking about ethical obligations while

conducting this research.

29

Chapter IV

Results

Timecard Employee Data

Analysis of employee time-keeping activity during this 188 work-day period indicated a

sample of employees were motivated to game the clock and were able to affect this activity. The

data also indicate the employees purposefully round the time clock were more able to do so

during clock-out periods with 79.6% of all clock rounding hours lost (518 of the 651 total hours

rounded shown in Table 1) during the clock-out activity.

Table 1

Data Totals for All 139 Employees

Sum of Clock-In Variances (minutes)

Sum of Clock-Out Variances (minutes)

Employee's gain/-loss (hours)

-8,008 -31,071 -651.32

Rounding was not as prevalent during employee clock-ins and this is indicated in Table

1. Clock rounding is likely less prevalent due to the employee’s inability to control arrival due to

unpredictable vehicle traffic light activity as well as variable traffic flow (i.e., random traffic

lights, school bus stops, railway train track stoppage, etc.) interruptions. In fact, total employee

activity indicates only 133 productive hours (-8008 min / 60) for all 139 employees total

recorded clock-in time were lost during the 188 clock-in days.

30

Table 2

106 of 139 Employees Not Practicing Rounding

Sum of Clock-In Variances (minutes)

Sum of Clock-Out Variances (minutes)

Employee's gain/-loss (hours)

3,222 -9,165 -99.05

For the 106 employees not actively practicing clock rounding, total employee activity

indicated 54 hours of employee time (3222 min / 60) was donated to the company during clock-

ins as indicated in Table 2. For clock out activity, these employees had a minimal negative

effect with the company losing an average of less than one hour per employee, approximately

double the hours donated to the company during clock-in events.

For the 23.7% of employees that appear to have actively engaged in time clock rounding,

this group of 33 employees successfully “gamed” the clock to their favor with 187 hours

(-11,230 min / 60) unproductively paid to these employees during clock-in events as revealed in

Table 3. For clock out activity, Table 3 shows these same employees were better able to

influence time- card rounding activity to their benefit during clock-out departures with an

additional 365 hours (-21,906 min / 60) of unearned compensation.

Table 3

33 Employees Practicing Rounding

Sum of Clock-In Variances (minutes)

Sum of Clock-Out Variances (minutes)

Employee's gain/-loss (hours)

-11,230 -21,906 552.27

The total unearned compensation for these 33 employees actively clock rounding during

clock-in and clock-out periods during this study totals 552.27 hours. The time clock gaming

31

activities performed by these 33 employees during a period of 188 work days averages nearly 17

hours per person (552.17 / 33 = 16.74) as shown in Table 3.

Employee Timecard Analysis

Figure 2 reflects clock-out time-keeping data for an individual employee practicing time

rounding techniques over a 7-month period comprising a total of 188 work days.

Figure 2. Individual employee is practicing clock-rounding.

As indicated in the data, there are significant clock-out peaks reflected at :23 where the

time would round forward by 7 minutes to the employees benefit. The employee clock-out data

peaks at the :08 mark and would have rolled the time data forward to :15 for the benefit of the

employee. There is also peak data indicated at the :38 mark, rolling the time clock forward 7

minutes to reward the employee with a measured departure time of :45. There is another spike at

the :53 minute interval where the time clock would recognize and reward the employee departure

as 7 minutes later at :00 for any given work hour.

Clock-out periods are measured as time periods in which an employee would clock-out to

leave the work location for lunch or at the end of a work shift. For this sample data, employee

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32

“gaming” of the time clock to maximize work hour earnings accrual would indicate peaks at

around :07, :23, :38 and :53 minutes for any given work hour.

An unexpected result was determined when analyzing the raw employee timecard data.

Every salaried employee (approximately 85% of the 139 employee population) is granted the

privilege to hand edit their time card data and there are significant clock-in and clock-out peaks

occurring at the :00, :15, :30 and :45 minute intervals. Some of this hand editing might naturally

result from employees entering vacation time or backfilling their timecards after attending off-

site training or seminars. Given the high incidence of manual intervention to the time-keeping

system as indicated in Figure 3, it is also possible that a large portion of these employees might

have been tempted to perturb the time clock data to influence their recorded time favorably at

work.

The input data recorded for these four timecard intervals are significantly outside of what

would be considered a normal and random distribution. The results in Figure 3 make it apparent

that the four time values (:00, :15, :30 and :45) were heavily manipulated via hand entry and not

through automated clock-in or clock-out functions. While some of this hand editing activity can

be reasonably explained, the abundance of these clocked times reflect employees overriding the

automatic data collection process for a variety of other reasons, some of which are likely to be

more justifiable than others.

Figure 3 indicates uncapped timecard entries for the four time periods that are heavily

edited with 12,511 entries at :00, 7,405 at :15, 4,655 at :30 and 4,955 inputs at the :45 minute

interval.

33

Figure 3. Employee timecard activity at :00, :15, :30 and :45.

Figure 4 reflects these same timecard clock-in entries for :00, :15, :30 and :45 but this

time they are capped at 300 total entries on the Y-axis. All other time periods are uncapped and

is representative of clock-in data with a normal and random distribution for 139 employees

spanning 188 work days.

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Figure 4. Clock-in employee timecard clipped at 300 on Y-axis.

Figure 5 indicates these same timecard clock-out entries for :00, :15, :30 and :45 but

again, they are capped on the Y-axis at 300 total entries. All other time periods are uncapped

and are representative of clock-out data with a normal and random distribution for 139

employees spanning 188 work days:

Figure 5. Clock-out employee activity clipped at 300 on Y-axis.

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35

Employee Survey Data

Survey participants were presented with survey questions and a written scenario

describing a clock-rounding practice and asked to rate their level of agreement or disagreement

with four statements about the behavior. There were 100 total participants, all from the United

States. Of the respondents, 61 (62.24%) were male and 37 (37.76%) were female with two

participants choosing to not respond to the gender question. There was significant age diversity

with 4 (4%) people between the age of 22 and 25, 6 (6%) were between 26 and 29, 20 (20%)

between 30 and 35, 9 (9%) between 36 and 39, 30 (30%) between 40 and 49, 22 (22%) between

50 and 59 and 9 (9%) were 60 or over. All respondents had a minimum of a high school

education 10 (10%), while 9 (9%) had completed two years of college, 53 (53%) had finished

four years of college and 28 (28%) had completed graduate school.

A timecard scenario was presented to the survey participants and was followed by four

statements regarding ethical aspects of the time-keeping behavior. Each statement was followed

by five possible answers that were based on a Likert scale. Participants completed the survey

that contained general demographic questions of age, gender and education level. This was

followed by a description of the time-keeping scenario as follows: At your place of work, you

notice a group of employees that always clock in 8 minutes early and clock out 8 minutes late.

When you ask one of the employees why they do this, you are told the clock pays using a 15

minute system. By clocking in 8 minutes early it rounds up to 15 minutes of pay. By doing the

same when it is time to clock-out, those 8 minutes become 15 minutes of pay, for an extra 30

minutes of total pay per day.

Four statements regarding this scenario were then presented. The participants were asked

to indicate their level of agreement or disagreement with each statement based on a Likert scale

36

(a, strongly agree; b, somewhat agree; c, neutral; d, somewhat disagree; e, strongly disagree) by

answering their responses on the survey. The respondents answers were encoded as the values 1

through 5, with strongly agree valued at 1 point and strongly disagree valued at 5 points.

Items 1 and 2 were statements that presented the time-keeping behavior in the scenario in

a favorable light. The items were as follows:

1. This is a smart move by the employees; I will start to do the same. 2. Big companies take advantage of employees. The employees have a right to do this.

Items 3 and 4 portray the behavior in a negative light. The items were as follows:

3. This practice is wrong, and I will not get involved. 4. I need to tell management what the employees are doing.

The results were categorized using dummy variables. Excel calculations were applied to

conduct statistical analyses with descriptive and inferential statistics, including ANOVA, Chi

square and t-test testing. For the Chi square goodness of fit test, the survey data indicate there

are strong and distinct opinions and the responses were not random. The t-tests revealed that

there were no significant differences for responses based on gender. The ANOVA test was

applied for age and education, and no significant differences were identified for the survey

responses

As stated above, the possible values for responses to each item range from 1 (strongly

agree) to 5 (strongly disagree). The overall findings of this study place the opinions for the

fourth item close to neutral (3.0). For Items 1 and 2, the respondents expressed fairly strong

opposition to the concept of timecard rounding as shown in Table 4.

37

Table 4

Lott, U.S. Worker Survey

Participants M SD

Item 1

100

4.15

1.19

Item 2 100 4.14 1.08

Item 3 100 1.97 1.29

Item 4 100 2.6 1.26

This contrasted with the Holmquist 2013 study in that the median response was close to

neutral (3.0) for all four scenario questions which is indicated in Table 5 for U.S. and South

Korean college students.

Table 5

Holmquist, U.S. and South Korean College Survey

Participants M SD Item 1

333

2.95

1.2

Item 2 332 2.89 1.11

Item 3 333 2.89 1.1

Item 4 333 3.26 1.05

For the Lott survey, with 2.00 representing ‘somewhat agree’, 3.00 representing ‘neutral’,

4.00 representing ‘somewhat disagree’ and 5.00 being ‘strongly disagree’, the responses for

Items 1 (“This is a smart move by the employees; I will start to do the same”) and 2 (“Big

companies take advantage of employees. The employees have a right to do this”) fell between

somewhat agree’ and ‘strongly disagree’. The mean response to Item 3 (“This practice is wrong

and I will not get involved”) was between ‘moderate agreement’ and ‘neutral’. Finally, the mean

response to Item 4 (“I need to tell management what the employees are doing”) was very close to

38

completely ‘neutral’. For the Holmquist survey, the responses to Items 1, 2 and 3 were all

between ‘somewhat agree’ and ‘neutral’. The mean response to Item 4 was between ‘neutral’

and ‘somewhat disagree’.

39

Chapter V

Discussion

Measured Behaviors of Clock Rounding

Employees who choose to game the system by taking advantage of time clock rounding

rules can abuse existing payroll time-keeping systems. An unexpected result was determined

when analyzing the raw employee timecard data. Because every salaried employee is allowed to

‘hand edit’ their personal timecard data, there are significant clock-in and clock-out peaks

occurring at the:00, :15, :30 and :45 minute intervals. For salaried non-exempt employees that

qualify for additional compensation after a minimum of 45 hours are recorded for the week, time

clock rounding may be utilized by some of those employees to achieve the minimum 45 hour

threshold.

‘Rounding’ was not as prevalent during employee clock-ins as it was for clock-outs

because of the employee’s inability to control traffic flow and other factors affecting arrival. The

employee is better able to affect and influence clock-out rounding activities because there are

fewer uncontrollable variables that could potentially hinder the ability to game the time clock

system.

Determined Attitudes from the Survey

For the Holmquist survey, the overall results had a mean response ranging from 2.95 to

3.26 across all four scenario survey items. That showed the general consensus across all

participants was one of neutrality on the practice of clocking in 8 minutes early and clocking out

8 minutes late to receive 30 minutes worth of pay for a total of only 16 minutes on the job. The

statement in Item 1 inferred that the participant would be willing to partake in the deceptive

time-keeping behavior themselves. The results show that the U.S. and South Korean college

40

student participants in the Holmquist study are neutral with this behavior (M = 2.95), indicating

that they had no strong opinion relating to an employee taking advantage of the payroll’s time

rounding practice. This differs significantly from the Lott survey of U.S. participants who were

less supportive of this behavior (M = 4.15), and whose responses indicate that they would be less

willing to engage in this behavior themselves. Item 2 stated that big companies took advantage

of employees, thereby giving the employees the right to take advantage of the payroll time clock.

The results show that participants from the Lott study were significantly more in disagreement

(M = 4.14) with this statement than those from the Holmquist study (M = 2.89), who were

neutral with regard to this practice. The responses to Items 1 and 2 showed no relationship with

age, gender and education levels for the Lott study.

Item 3 stated that the time-keeping behavior is wrong and that the participant would not

get involved in it. The Lott study indicated the majority of the responses are in the somewhat

agree to neutral range (M = 1.97), and the Holmquist responses have a distribution in the neutral

range (M = 2.89).

Item 4 conveyed the importance of informing management of coworkers’ unethical time-

keeping behavior. The Lott study (M = 2.60) and the Holmquist study (M = 3.26) were

significantly different, such that the Lott study participants were between somewhat agree and

neutral while the Holmquist participants were in greater disagreement with this statement.

Overall, the mean results showed neutrality regarding unethical time-keeping behavior

when the responses were averaged across all South Korean and U.S. college student participants

in the Holmquist study. Given that the participants were college students and having minimal

exposure to the workplace, this could be a consequence of their lack of experience in these

matters. Consequently, the Lott survey drawn from a convenient sample of the population within

41

the current U.S. revealed different attitudes from the students that were sampled in the Homquist

study.

Interestingly, the survey response to Question 4 in the Lott survey “Have you ever

‘gamed’ a time clock or time-keeping device with clock rounding techniques to enhance your

recorded work hours?” showed that 20% of respondents admitted to having previously cheated

on their timecards. This correlates well to the measured time-keeping behavior in the Lott study

that took place at an engineering research and development company located in the USA, where

33 out of 139, or 23.7%, of the employees routinely committed the act. Thus, the measured

unethical time-keeping behavior was not contradicted by the mean response found in the Lott

survey and scenario study that felt this behavior was ‘wrong’ and that they ‘would not get

involved’. Therefore, the conclusion is drawn that ethical time-keeping behavior of a majority of

employees will likely occur but a minority of employees may be highly susceptible to influences

of greed or other unethical practices that would negatively influence timecard record keeping.

42

Chapter VI

Conclusions

Clock Rounding

While employees who choose to game the system can take advantage of time clock

rounding rules, the timecard data analyzed for this study indicated only a fraction of employees

employ these tactics. Similar to the Work Force Institute study previously referenced, a

measured loss of total wages paid is the result of some percentage of employees gaming the time

clock. Given that rounding is practiced by a fraction of all employees, it is worth considering

potential environmental factors as well as how this behavior might affect corporate productivity

and profitability and overall employee morale within this company.

If the time clock gaming activities performed by the 33 employees during a period of 188

work days were annualized, these same employees would reap the benefit of 705 hours in total,

or 21.36 hours for each employee. If each extra hour of pay equaled $45, the employee would be

receiving an extra $961 annually and the company would pay out $31,720 in non-productive

compensation for these 33 employees (23% of the company workforce). If this behavior were

executed by a greater percentage of the employee workforce, then the company’s total

expenditures and losses for this practice would rise proportionally. No matter what the case, it is

a substantial sum over a period of time.

Another conclusion that was not anticipated prior to this analysis was the significant

amount of timecard editing employed by the salaried employees, resulting in a bypass of the

existing automated time collection system. The high occurrence of hand editing captured in the

raw timecard data could be indicative of a broken time collection process within this company

and is worthy of additional future analysis.

43

Survey

The results of the survey show that the US worker compared against the US and South

Korean college cultures are somewhat different, as the mean responses to all items hovered

around neutrality for the college students whereas the surveyed US workers had strong opinions

on the topic of timecard rounding. Being that the Holmquist survey was administered to college

students without much experience in the workplace, this could indicate collectivism of an in-

group or team orientation, such as friends and colleagues, rather than an institutional nature

(Holmquist, 2013). These findings are in general agreement to what was suggested by the

literature review. The expectation that a sample group of workers would seek personal gain

suggests greater support for the time-keeping manipulation and this is reflected in the survey and

scenario questionnaire. In addition, Question 4 in the survey clearly demonstrates that 20%

readily admitted to committing this unethical behavior and that result also generally agrees with

the collected timecard data.

44

Chapter VII

Recommendations

Round by Pay Period, Not by Clock Event

One solution resulting from this research might be to stop rounding for each clock-in or

clock-out event. Instead, it might make better sense for employers to round employee time clock

data for a defined pay period. Rather than rounding each clock-in or clock-out, the employer

could implement a rounding event after totaling all the time worked for a given pay period. For

employers currently rounding to the nearest quarter-hour, rounding by pay period would

eliminate their losses resulting from unnecessarily losing as much as 7 minutes of wages and

productivity with each employee clock-in and clock-out event.

If the practice of rounding by pay period rather than each time clock event was

implemented, it is suggested that the employer always round to the employee’s advantage. The

most bonus time an employee could receive from a rounding event using this scenario is 14

minutes each pay period and the chance of that happening is not great because it would be far

more challenging for an employee to game the clock in this proposed scenario and the limited

return of minutes gained would not be significant enough to warrant the effort.

It is worth reconsidering allowing all salaried employees the privilege of hand editing

time clock activity without management review and approval. The timecard data clearly indicate

an exorbitant number of timecard entries manually edited by numerous employees, rather than

allowing the data to be automatically collected through the time-keeping program installed on

their computers. The result of this exorbitant hand editing has corrupted the intent of allowing

the automatic timecard collection system to collect those data.

Finally, once corrections are implemented, similar clock rounding measurements should

45

be taken in the future to measure the progress resulting from changes to the time management

system.

Employee and Management Attitude Adjustment

The findings from the observation were from a small sample with similar demographics

in a specified industry. Future research could investigate places of employment that contain a

broader base of demographics, such as a manufacturing facility or service industry, to measure

this behavior beyond the engineering research and development business that was studied.

The survey results gave compelling findings from a convenient sample of workers in the

US and provided a contrast to the results of the previous survey of South Korean and US college

students. The results from the college students were notably different from the US workers with

a different age and work experience. The number of participants from these two surveys is likely

too small for testing for significant differences, thereby warranting a future study in which a

greater number of participants are sampled.

46

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48

Appendices

A Bibliography

B Permission to Conduct Research

C Data Collection Device

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Appendix A

Bibliography

50

Bibliography

American Psychological Association. (2010). Publication manual of the American Psychological

Association (6th ed.). Washington, DC: Author.

Department of Business Administration capstone guide. (2010, February). Daytona Beach, FL:

Embry-Riddle Aeronautical University, Department of Business Administration.

Levine, D. M, Stephan, D. F., Krehbiel, T. C., Berenson, M. L. (2011). Statistics for managers:

Using Microsoft Excel (6th ed.). Upper Saddle River, NJ: Prentice Hall.

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Appendix B

Permission to Conduct Research

52

Dear Dr. Harsha & Mr. Lott,

The Chair of the IRB has reviewed your protocol application titled, Employee Time-keeping: The Effects of Clock Rounding on Corporate Profit and has determined that it meets the requirement for exemption. You may proceed with your research. Attached is the Determination Form for your records - best of luck in your endeavors.

Teri Gabriel, MPA, CRA Human Protections Administrator & Research Analyst Research & Graduate Studies 600 S Clyde Morris Blvd Daytona Beach, FL 32118 386.226.7179 Teri.gabriel@erau.edu

53

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Appendix C

Data Collection Device

62

The survey questions are provided:

1. What is your gender? o Male o Female

2. What is your age?

o Less than 18 o 18 - 21 o 22 - 25 o 26 - 29 o 30 – 35 o 36 – 39 o 40 – 49 o 50 – 59 o Over 60

3. What is your level of education?

o Did not finish high school o High school graduate o 2 years of college o 4 years of college o Graduate degree

4. Have you ever “gamed” a time clock or time-keeping device with clock rounding

techniques to enhance your recorded work hours? o Yes o No o I don’t know

5. Do you believe that other employees within your workplace “game” the time clock to maximize your recorded work hours with clock rounding techniques?

o Yes o No o I don’t know

6. Which of the following attitudes do you believe would motivate an employee to take advantage of the time clock?

o They think everyone else is doing it o They believe it is no big deal o They think this is just how we do it here o They assume the work performed here makes the company a ton of money o They don’t really care

63

At your place of work, you notice a group of employees that always clock in 8 minutes

early and clock out 8 minutes late. When you ask one of the employees why they do this, you

are told that the clock pays by a 15 minute system. By clocking in 8 minutes early it rounds up

to 15 minutes of pay. By doing the same when it is time to clock-out, those 8 minutes become

15 minutes of pay, for an extra 30 minutes of total pay per day. How much do you agree with the

following statements?

7. This is a smart move by the employees; I will start to do the same; o Strongly Agree o Somewhat agree o Neutral o Somewhat disagree o Strongly disagree

8. Big companies take advantage of employees. The employees have a right to do this.

o Strongly Agree o Somewhat agree o Neutral o Somewhat disagree o Strongly disagree

9. This practice is wrong and I will not get involved; o Strongly Agree o Somewhat agree o Neutral o Somewhat disagree o Strongly disagree

10. I need to tell management what the employees are doing. o Strongly Agree o Somewhat agree o Neutral o Somewhat disagree o Strongly disagree