The Benefits of Tracking Your Employees’ Time & Why It Matters

What are the benefits of time tracking? Like many things in life, the answer to that question depends on one’s perspective:

• Employees may feel like time tracking is a tool for monitoring their every move, but a key benefit is freedom. Freedom to work remotely, live as a digital nomad, work flexible hours,
  
• For employers, the key benefit is visibility — especially when managing remote teams. Managers can use time tracking to keep projects on track and ensure work is done efficiently. 

As you can see, when done right, time tracking can benefit both sides.

Whether you’re a team lead trying to get individuals on board with time tracking or an employer worried about resistance, the key is discussing it openly. Without proper knowledge, time tracking can easily be mistaken for spying or create unnecessary fear among employees.

When implemented thoughtfully, time tracking can positively impact the entire organization. But what makes it so valuable that businesses worldwide continue adopting it?

No matter the size or type of business, tracking employees’ time is often complicated and messy. That’s why we’ve put together this guide to:

• Walk you through the benefits of time tracking
• Why it matters for teams
• How time tracking software makes it easier
• How to use it correctly. 

By the end, employers and employees will clearly understand how time tracking can work to everyone’s advantage.

What is employee time tracking?

Employee time tracking is a systematic process of tracking employee work hours. Companies usually use time tracking software to track how much time individuals spend on specific tasks and projects. Employee time tracking can be used for:

• Generating accurate timesheets
• Getting better visibility into work patterns
• Ensuring accurate payroll processing
• Improve resource allocation
• Better workflow management with productivity insights

We now know the what, let’s dig into the why.

Why is time tracking important to companies & organizations?

Time tracking is essential for companies of all sizes (particularly those with remote or distributed teams) because it provides critical visibility into time spent across individuals, projects, and departments. With this visibility, organizations can make smarter decisions, increase operational efficiency, and more effectively support their employees.

Here’s how time tracking benefits organizations:

• Billing accuracy through tracked project hours
• Budget control with real-time project tracking
• Productivity insights from work pattern data
• Burnout prevention by identifying overwork
• Accurate payroll and streamlined invoicing

In short, employee time tracking is a management tool and a strategic asset supporting more thoughtful planning, healthier teams, and better financial outcomes.

Why is it important to track employees’ time?

Tracking employee time is important for ensuring accurate timesheets and payroll, meeting legal and compliance standards, and saving businesses time and money. It’s also beneficial because it leads to more accurate budgeting and project scoping, helps teams spot employee burnout, and builds trust and transparency. 

As a manager or boss, you’ve probably said the age-old phrase, “Don’t forget to log your hours this week.” Trying to get everyone to log their time can sometimes feel like herding rogue sheep — and manual timesheets can bring up dishonesty, excessive overtime, and even time theft. Yikes. 

These are just a few of the several benefits of time tracking. Let’s take a look at some more benefits and how time tracking can be used in many industries. 

Sixteen outstanding  benefits of tracking your team’s time

Beyond simply understanding how long someone has worked, tracking your team’s time using time tracking apps like Hubstaff provides many benefits. 

For instance, according to The Lean Advantage Report, Hubstaff users who integrated AI tools cut down 30 minutes of unproductive time per person per day. For a 50-person team, that translates to over 500 hours saved each month and an annual cost savings of $150,000. 

Here are sixteen reasons time tracking could benefit your business and employees.

1. Increase profitability

Accurate time tracking directly correlates to profitability. With accurate time tracking, timesheets, and payroll, you can gain better visibility into billable vs. non-billable hours, cut down on unwanted overtime costs, provide better project estimates to clients, ensure compliance standards are met, and avoid expensive repercussions.  

By providing a detailed overview of how individuals allocate their time and resources, time tracking software can also help you eliminate time-wasting activities, prioritize tasks effectively, and optimize workflows. 

Further, data from online time reporting empowers organizations to identify areas for improvement, allocate resources strategically, and create a more productive culture that contributes to overall success.

2. Enhanced billing accuracy 

Billing is one of the most delicate aspects of running a business—even a small error can lead to legal repercussions or financial loss. 

An astounding 98% of upper management is pulled into payment disputes. In fact, a Versapay report found that even over 60% of C-level executives have dealt with lawsuits or threats due to invoice disputes.

Employee time tracking plays a pivotal role in preventing these headaches. Capturing exact hours worked on specific tasks or client projects ensures accurate billing, transparent records, and fair compensation.

3. Data-driven decision making

You can also use your team’s time tracking data to make better business decisions. 

Time tracking facilitates data-driven decision-making by giving organizations details on how time is allocated across various tasks, projects, and teams. The data generated through time tracking allows for a comprehensive analysis of resource utilization, project progress, and individual performance. 

The best time tracking tools provide valuable, real-time data that can be analyzed to make informed decisions. Whether hiring additional resources or optimizing workflows, the data provides a foundation for strategic choices.

4. Set clear objectives

More accurate time tracking aids in setting clear objectives. By providing a detailed understanding of how time is utilized within an organization, you’ll have an easier time scoping projects, developing budgets, and setting goals. 

Project management and tracking costs are simple when you have more employee data. By analyzing time data, teams and individuals can identify priorities, assess task durations, and understand where efforts are most impactful. 

5. Increase productivity

In the business world, productivity is king. Anything you can do to increase team performance will directly impact your bottom line. For business owners, employee productivity tracking can be a great way to see which projects move the needle.

A time tracking app like Hubstaff allows teams to stay on task with ongoing projects. See where any potential hiccups are in the day-to-day, and use that data to create strategies that help your team be more productive in the workplace.

Additionally, you can access performance metrics beyond just a basic record of your employees’ time. With the best productivity time tracking tools, you can see: 

• Activities that consume the most time
• Times when team members are most active
• The apps and websites that make teams most productive (or become distractions)
• Insights into utilization rates and time spent in meetings vs. working independently

With an advanced workforce management tool like Hubstaff, you can access advanced insights like focus time, industry benchmarks, and productivity trends. Employees can leverage this data to:

• Identify the work they excel in 
• Areas of inefficiency 
• Adjust their workflows with data 

6. Improve work-life balance 

More and more companies are shifting to remote work, and the 9-to-5 is becoming less prominent. Modern workforces are prioritizing flexibility, so it’s up to businesses to accommodate that need.

With more accurate time tracking, businesses can see what work is getting done, manage idle timeout settings, and prevent money leaks. This allows them to offer perks like remote and hybrid work, asynchronous work schedules, and the ability to work from anywhere. 

Individuals can use this same data to establish boundaries around their work hours to prevent overwork and burnout. 

Time tracking contributes to an improved work-life balance by providing individuals with:

• A clear understanding of how they allocate time for projects
• Set realistic goals, prioritize tasks effectively
• Identify potential areas for increased efficiency

Time tracking not only makes that flexibility possible; it makes it work. A time tracking tool lets employees keep track of their work and create timesheets anywhere and anytime.

7. Manage projects better

Project management can’t exist in a vacuum. For businesses to be successful, they’ll need people with strong collaboration skills, superb time management, and a great project manager to oversee everything. 

Time tracking manages projects better by providing:

• A structured framework for monitoring and allocating resources efficiently. 
• A granular analysis of how teams spend time on various tasks
• Insights into potential bottlenecks that are causing project delays
• Better resource allocation ideas for project managers 
• Help make informed decisions to keep projects on track

With a clear understanding of time investment, project timelines, and individual workloads, managers can proactively address challenges, optimize workflows, and ensure team members work on tasks that align with project priorities. 

The best time tracking tools make life easier for project managers and businesses. They ensure every team member can track time for projects and tasks to gauge real-time project spending and adjust project scope as needed.  

8. Provide transparency

Time tracking allows stakeholders to see a detailed breakdown of how much time is allocated to specific tasks within a project. This transparency provides insight into the progress of different project components, enabling better decision-making. You can establish trust with an accurate record of how much time is spent on tasks. 

With tracking software like Hubstaff, team members can log hours automatically and give transparency into their work, which can help managers keep team members accountable.

9. Communicate progress better

As team members track time, they’ll be able to let their managers know if they can hit deadlines before it’s too late, making it easier for teams to communicate their needs to co-workers and managers.

Beyond individual contributions, the collective benefits of employee time tracking extend to strengthening team collaboration. As team members communicate their progress and potential challenges, it fosters a culture of openness and mutual support. 

10. Improve client communication 

Time tracking serves as a powerful collaboration tool for client-facing projects. Detailed breakdowns of time spent not only foster trust but also facilitate open communication between your team and clients. Clients gain a clearer understanding of the intricate details of project development, allowing for more informed discussions and collaborative decision-making. 

This transparency strengthens the partnership, as clients appreciate the ability to track project timelines, milestones, and progress in real time. By sharing insights from time tracking, your team can actively involve clients in the project journey, ensuring their expectations align with the efforts invested and adjusting for a successful outcome.

11. Reduced time on administrative tasks

Beyond payroll, time tracking tools help businesses reduce time spent on other admin tasks. The ability to track time for specific tasks and even see real-time spending on a project-by-project basis helps companies visualize how much it costs to add an employee to a project.

That said, leadership can also apply this same logic to employees’ time when they are not working on core tasks. This work might include things like: 

• Filling out timesheets
• Responding to emails and Slack messages
• Staying up-to-date on security and compliance training 

Employee pay rates don’t usually change based on the type of work you assign to them. Therefore, classifying tasks is a great way to ensure employees are properly utilized. 

12. Adherence to compliance requirements

Certain industries like health care, manufacturing, or government contracting must adhere to compliance requirements that mandate accurate timekeeping. Time theft and fraudulent timesheets (even accidental instances) are punishable by law and could result in expensive penalties. 

13. Promote accountability

Time tracking is an excellent tool for increasing employee accountability. Especially when businesses have distributed teams across the globe, time tracking becomes a tool for visibility. 

Hubstaff survey data shows that 67% of leaders reject the myth that holding remote or outsourced employees accountable is harder. Transparency tools play a key role in maintaining that trust.

When time tracking is in place, employee accountability increases because:

• Expectations are clearly defined. Employees understand their expectations and how their time should be allocated.
  
• Performance becomes measurable. Managers can objectively assess productivity and progress based on tracked hours and task completion.
  
• Work patterns are visible. Teams gain insights into how time is spent, helping identify inefficiencies or areas for improvement.
  
• Focus and ownership improve. Knowing their time is being tracked encourages employees to stay on task and take ownership of their work.
  
• Support and recognition are easier to provide. Time data helps managers spot where assistance is needed and who deserves praise, positively reinforcing accountability.
  

14. Helps you identify & retain top talent

Leading time tracking software includes detailed performance and activity monitoring features for productivity measurement. This information is especially valuable for managers when identifying high-performing team members. 

As a result, time tracking becomes a powerful tool for recognizing and rewarding top performers. This not only boosts morale but also helps retain top talent — and drives long-term success for the business.

15. Eliminates inefficiencies

Tracking employee time can help you see the big picture — whether that’s the time it takes to complete certain tasks or what’s causing delays. 

For instance, when a knowledge worker is pulled into too many meetings, time tracking tools like Hubstaff will reveal how their focus time has decreased due to these interruptions. 

In this instance, managers can help protect the employee’s time by carving out more time for core work. 

instead of focusing on core work, this worker spends significant time in meetings. This provides a clear signal of inefficiency. Additionally, time tracking sessions often include activity data, allowing you to spot time wasters more easily.

With time tracking tools, you can:

• Identify how much time is spent on specific tasks or projects
• Highlight interruptions like excessive meetings
• Gain insights into lost productivity or inefficiencies
• Detect patterns of low activity or common time-wasters

16. Better task documentation

Another advantage of time tracking is improved task documentation. When employees log their time against specific tasks/projects, it creates a clear, chronological record of what was done, when, and for how long. This helps teams better understand workflows, track progress, and provide accountability—especially useful for billing, reporting, or reviewing project timelines.

What are the potential downsides of time tracking?

While time tracking can benefit many businesses, some disadvantages still need to be considered when deciding whether or not to implement time tracking. Here are a few potential drawbacks to be prepared for if you choose to implement a time tracking tool for your business: 

• Inaccuracies. Manual time tracking is prone to inaccuracies, time theft, and even buddy punching issues in specific industries. If you’re planning to track time manually, consider software instead.
  
• Micromanagement. Giving businesses the power to track their employees’ time is one thing, but many tools offer employee monitoring features. While these tools can be helpful, they can easily fall into the wrong hands and be used as a weapon for micromanagement.
  
• Misunderstanding metrics. Time tracking tools are great, but not if managers aren’t adequately trained. Seeing tracked time on a task-by-task basis is pretty black and white, but employee productivity tools are where it gets interesting. You can’t equate success in every profession to keyboard and mouse movements.
  
• Legal and ethical concerns. Time tracking and employee monitoring are legal in the United States, but staying informed on the changing legislature is crucial. If you’re located in Europe, read up on GDPR and compliance.
  
• Damaged morale. Anytime you suggest time tracking to your team, you’re inviting the possibility of morale taking a hit. To some employees, turning to a time tracking tool can imply that you don’t trust them to track time accurately or work efficiently.

If you’re concerned about how discussions around time tracking and employee monitoring will be received, check out some of our tips on motivating employees to track time here.

What are the best ways to track your employees’ time?

Many services offer time tracking templates and software that make tracking your team’s work time easier. We’re biased here, but we think the best time tracking software is Hubstaff.

Using our desktop, web, or mobile apps, Hubstaff allows you and your team to automatically track time spent on specific tasks and projects while everyone works. 

Our apps will automatically track each employee’s activity levels, and you can even set them up to take automatic screenshots so you’re always in the know.

If you run a more on-the-go team with remote or traveling employees, they can use our iOS or Android apps to track time wherever they are. 

The Hubstaff mobile apps will automatically track GPS locations, and you can even set up geofences to have team members clock in automatically when they’re on a physical job site.

At the end of the work week, Hubstaff will automatically notify you to pay your team, which you can easily do with a button based on the predetermined pay rates you’ve set up.

What types of industries benefit the most from time tracking?

The short answer is that virtually every industry benefits from some semblance of time tracking. However, time tracking benefits different teams in different ways. Here are just a few examples:

Agencies

Agencies typically employ a lot of freelance talent to meet their clients’ tight deadlines. Because of this mix of full-time and freelance work, using a time tracking app like Hubstaff benefits any agency. They can ensure they accurately pay all their team members for their work without worrying about pay rates or employment status differences. At the same time, they can easily create accurate invoices with billable hours ready to be sent to clients.

Architecture and law firms

Firms, just like agencies, utilize a lot of freelance talent and have a lot of clients to keep up with. By using time tracking software, firms can properly bill clients and draft invoices while still being able to pay their members and track productivity for ongoing projects.

Freelancers and consultants

As a freelancer or consultant, you’ve got many hourly clients to juggle. Making sure you bill each client for the correct amount of time you’ve spent on their work is vital (considering they’ll only want to pay you for the hours you’ve put in on their projects, not someone else’s). 

By tracking time, you can accurately log timesheets for each client, impress them with your efficiency, and send out invoices to get paid for all the work you do. They’ll know they can expect this level of transparency on future projects. 

Track your team’s time, and you won’t have any guesswork for how long each person was on the job. Plus, you’ll get a better picture of how long certain services take, meaning you can better predict how much everything will cost you and your clients.

Small businesses and startups

Both startups and small businesses have many moving pieces at one time. To balance evolving team members and work schedules, time tracking comes into play to keep tabs on everything a lot more easily. Managers and owners won’t have to deal with manual timesheets, meaning that’s one less thing on your desk to review.

If you’re wondering whether or not your business would benefit from starting to use time tracking, see if your company matches any of the following criteria:

• An office or work setting that bills by the hour
• A business that works with several different clients
• Companies that employ lots of remote or freelance talent
• Managers looking to monitor their teams better
• Teams looking to increase productivity
• People who like to watch numbers count up

What types of roles benefit from time tracking?

Well, once again, pretty much everyone. Let’s look at a few specific team roles and how they can benefit from time tracking.

Project managers

As a project manager, you have to be able to determine who on your team can complete specific tasks. Time tracking lets you more accurately see how long any task takes to achieve and who on your team works most efficiently.

Writers and designers

If you work on a creative team, you’ll be able to see how long each project takes to complete as you work through your to-do list. If you’re designing a website for a law firm that takes 80 hours to complete, you can better estimate how long future web design projects might take.

Producers

As a producer, you’re working with many outside companies to get your work done. With time tracking, you can accurately pay them for their time and bill any clients based on all the hours worked across teams.

Contractors

When you’re working on-site, your attention is more on the job at hand rather than what hour of the workday it is. Using a mobile time tracking app like Hubstaff, your contractor team can better track time on the go while focusing on their work.

Developers

Sometimes, things don’t always go to plan when you’re developing software. By tracking their time, a developer can accurately see how long specific tasks take to complete while still being able to run all their tests. Plus, with a lightweight app like Hubstaff, time tracking will never hinder their hard work.

FAQs on time tracking benefits

What is the main purpose of using time tracking?

The primary purpose of time tracking is to establish more accurate hours logged for payroll purposes. With more precise payments, businesses can establish more accurate budgets, cost estimates, and deadlines for future projects. 

What are the benefits of tracking?

Tracking time is primarily beneficial for more accurate payroll, but it also has a slew of other benefits:

• Better budgeting 
• Improved project planning 
• More accurate client invoicing 
• Preventing employee burnout
• More accurate overtime payments

Is time tracking effective? 

Yes. With the right time tracking software, time tracking can be a very effective way to track employee hours, overtime, project estimates, and more. Manual time tracking, on the other hand, is a lot less effective due to the increased likelihood of inaccuracies.

Time Tracking works best when your team is with you, not watched by you

We might be biased, but the truth is that time tracking plays a vital role in increasing productivity — of course, only when it’s used correctly. 

There is a caveat, though — and one that we stand firmly with. 

If you want to implement time tracking to use fear-mongering tactics to micromanage your team, we don’t condone that behavior. 

Time tracking can make managing everyone’s work much easier, but not if you keep employees in the dark. If you micromanage, studies show that the short-term gains don’t outweigh the long-term impact:

• 75% of employees feel micromanagement is their biggest red flag
• Of that 75%, 46% would leave a job if micromanagement persisted
• 51% of employees view remote work as their ultimate green flag

Creating a culture of trust and transparency is crucial to reap the benefits of time tracking. You’re asking a lot from your employees, so they deserve to know what you aim to achieve with time tracking.

Get on the same page with your team, treat them respectfully, and start tracking time. That’s when you’ll see how powerful this practice can be.