Techniques: Microcases

Problem: Tracking work hours accurately

Solution: Labor-management software

Payoff: Superefficient payroll processing

Every week, payroll administrator Betty Chunco spent Monday and Tuesday totaling work hours from Micro Stamping's 145 hourly time cards and typing that information into a computer. And every week, she'd have to double-check and recalculate the numbers when the totals on the time cards came out wrong because of calculation and data-entry errors.

"There's a lot of number crunching involved with our union payroll," explains human-resources manager Frank Semcer Jr. "We do a lot of calculations based on hours people work." For example, an employee who works an average of 9 hours a day would get 47.5 hours of vacation pay (including time and a half for overtime). And the company has to regularly total all the hours worked by all employees to date. Performing the necessary calculations ate up time for human-resources and payroll personnel at the metal-forming manufacturing company.

Micro Stamping, based in Somerset, N.J., already used bar-code scanning with a software program called Caelus to track work hours billable to particular projects. But Caelus didn't track general hours (spent fixing a machine or attending a meeting, for example), so each employee had to punch a time card upon arriving at and leaving work, and then also scan a bar-coded card when beginning and ending billable projects. To figure out important totals like overtime, accrued vacation, and end-of-year total work hours, Chunco had to turn to the time cards again, typing more numbers into a spreadsheet.

By late 1996 the time spent and the errors introduced by tracking work hours by hand had become too costly for the \$32-million company. So when the newly hired controller, Fred Newhall, submitted a proposal demonstrating that outsourcing paycheck processing would save money, Micro Stamping decided to automate all its time tracking so it could send the computerized data to the new payroll house.

After two months of looking for a time-tracking system, a small management team made up of Newhall and the human-resources and IT managers chose the TC-1 Labor Management System, from Datamatics Management Services ( www.datamaticsinc.com; 800-673-0366; \$4,000 for the first 200 employees). "The others were geared toward specific payroll programs, not flexible enough to go with all types of payroll programs," says Semcer, who spearheaded the purchase.

Now each employee wears a bar-coded identity tag, which he or she swipes through an ATM-like machine to gain access to the building. The employee swipes the tag through another machine at the beginning and the end of each workday. Caelus continues to track job-costing hours as before. (Because the company keeps the TC-1 information separate from that gathered through Caelus, it uses a different scanner for each system.) "One thing we do is compare job-costing hours with total hours tracked on the Datamatics system," says Newhall. "We can see labor problems a lot faster."

"It took a few months for the new system to really work," Chunco recalls. "People had to get used to swiping or sometimes lost their swipe cards." Once employees began connecting the cards with getting paid, though, they paid more attention to the process. "Now it's really good," says Chunco.

"I can print a report that gives me total hours worked by all employees," Semcer says. "Datamatics will divide the hours out by, say, weeks in the year or number of hours in the year. I can copy that to disk and put it in Excel. So I have everything right at my fingertips."

Chunco has cut her payroll-processing time in half. Instead of two days, it now takes only one to get the work-hours information ready to upload to the check-processing company. Not only is the information accurate, says Newhall, but "we save a day a week in accounting labor." That amounts to about \$300 each week.