According to a new analysis by Deloitte, the average U.S. employer spends between 0.5 percent and 2.5 percent of its payroll on what the consulting firm calls “payroll leakage,” or money that is not actually paying for the service the labor is supposed to provide.

Payroll leakage is a result of poor oversight and inefficient systems management, the report found.

"From technology and measurement to policies and design, many organizations are managing timekeeping, labor utilization, and compensation in a way that is fundamentally outdated," says Lisa Disselkamp, managing director in Deloitte’s workforce strategy and insights practice.

Part of the problem is because of the difficulty of keeping track of increasing mobile employees, many of whom spend much of or all of their time out of the office and away from supervisors.

Another issue is the way employers track the hours of part-time or contingent workers. According to the report, only 19 percent of business executives said they believed supervisors fully understand the laws regarding contingent workers.

But some of the same technological forces that are driving changes to the U.S. workplace offer employers the opportunity to better understand how much their employees are actually working. Deloitte, for instance, used the study to market its own software, LaborWise, that tracks “paid worked hours” as well as “paid non-worked hours.”

"As the makeup of the workforce transforms and new regulations come into play, measuring and monitoring how much is spent on labor can no longer be left as a periodic budget exercise. Today, the right analytics can give an organization insight into the front-line causes of labor challenges, saving money that can be redirected into strategic initiatives and sustainable objectives,” Disselkamp explains.

How employers respond to the conclusions they draw from LaborWise and similar technology will likely vary widely. Although employers certainly want to reduce the amount they’re spending on employees who aren’t working, they also run the risk of demoralizing or offending employees by implementing a monitoring system that will hold them accountable for every glance at Facebook throughout the day.

Instant Insights /

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