Thumbs up: using biometrics to keep your employees honest and save you money

Entrepreneur, April, 2005 by Mark Henricks

DAVID KARPMAN knew his payroll was too high. And he even knew the reason: Some of the 30 employees of Del Rey Nut Co. were filling out phony timecards and cashing paychecks for hours they hadn't worked. "We were paying for people who weren't there," says the 48-year-old owner of the Los Angeles food and promotional products company, which has $3.5 million in annual sales.

Karpman didn't know what to do about it--until he tried a biometrics time-and-attendance system that requires employees to scan their thumbprints when punching in. Says Karpman, "You have to have a thumbprint, so unless they bring in a cadaver, we're covered."

Biometrics is the use of body measurements to identify people. The technology has been around for a long time, but it got a big push after 9/11 when it was promoted as a tool for preventing acts of terrorism. Now, experts say the post-9/11 hoopla was overblown. Limitations such as lack of interoperability, error rates and high costs are keeping biometrics from the widespread adoption that was predicted.

But measuring people's fingerprints and other body parts does have a place in business as a tool for controlling "buddy-punching"--when employees have a friend clock them in early or out late--and other abuses of time-and-attendance systems. Karpman's fingerprint-reading system, for example, cost just $400 and quickly paid for itself in labor cost savings, he says.

If you're interested in looking at biometrics as a way to control time-and-attendance scams, fingerprint readers are probably what you'll use, says Kyoko Kaneda, a consultant with New York City-based biometrics consulting research and integration company International Biometric Group LLC. Other biometric approaches measure hand geometry, voice patterns, facial patterns and the eye's iris.

No matter what technology is used, it won't always recognize every legitimate user--or recognize impostors. "Biometrics aren't 100 percent accurate," says Kaneda. Some people, for instance, have naturally faint fingerprints that are difficult for scanners to read--that can be a serious issue if you are trying to identify thousands of people.

That's one reason small employers may lead in implementing biometrics for time and attendance. "When you have an error in a small database, it's not a problem," notes Maxine Most, principal of Boulder, Colorado, technology consulting company Acuity Market Intelligence. In practice, that means a company with a work force of fewer than 100 people may rarely or never encounter someone whose fingerprint can't be read.

Still, you'll need to have a backup system for the occasional problem. Karpman, for instance, says he sometimes hires a worker whose fingerprint can't be read by the system, and in those cases he uses a signature-authenticated paper timecard. Needing such a secondary system eradicates some of the cost savings, but for Karpman, it's a modest compromise.

Other biometrics issues concern interoperability and privacy. The lack of standards keeps many large potential users, such as government agencies, from adopting biometrics for identification. Right now, the field features many competing vendors using proprietary hardware and software systems that won't work together. Privacy issues arise when employees fear misuse of biometrics information stored in employer databases.

A movement to implement common standards is materializing, however, and Most says that designing systems so biometrics data is kept separate from other identifying information can enhance rather than impair privacy. With improved technology, better standards and wiser use, Kaneda is projecting that total biometrics revenue will rise from $1.2 billion in 2005 to $4.6 billion by 2008. Says Kaneda, "It's no longer science fiction."

MARK HENRICKS writes on business and technology for leading publications and is author of Not Just a Living.