The Complete Guide To Time Tracking
Are you ready for some horrifying news? The average employee spends 2.6 hours every day reading and replying to emails.
To make matters worse, over 40% of employees don’t track this time at all. For businesses that use timesheets to bill clients, this untracked work time results in a loss of $52,500 per employee every year.
Let’s look at another controversial time-waster: meetings. Nearly 21% of employees never track the time they spend in meetings, which costs businesses another $32,000 per year in lost revenue.
Accurate time tracking can help businesses stop leaking money. It can also enable them to improve employee productivity by giving them more insight into how they work.
You can use time tracking to identify workflow bottlenecks and find out who your most productive team members are. This, in turn, can help you learn what works and recognize top performers.
Time tracking is especially important now as remote work is more common than ever.
Having an idea of what your in-office team is doing isn’t that hard. All you need to do is drop by someone’s desk and ask if they’re on track for that 3 PM deadline. Things are a bit more complicated when you’re operating remotely. “End of day” can mean any time of day depending on where you are.
Before we go on, let’s clear something up: time tracking is not about micromanaging. In fact, it’s about the opposite. Its purpose is to help you make data-driven decisions so that everyone can work smarter. Time tracking helps you avoid the disruptive check-ins, and it saves your team from having to stop what they’re doing just to give a progress report.
It also promotes transparency for both managers and employees. With time tracking, leadership gets insight into how remote employees spend their work hours. Employees get a way to prove that they’re actually working without constant check-ins.
But time tracking isn’t without its challenges. There’s a reason ad agencies resort to positive reinforcement like free beer or more dire consequences for not submitting timesheets.
Most offices are fine with the old way of working: filling out paper timesheets and sending vaguely threatening emails when it’s time to bill clients.
However, once you understand the direct line from timesheets to profitability, you’re going to want to assess how much you could be learning from better time tracking.
Let’s dive in.
What is time tracking?
Time tracking is the process of tracking and recording the time that everyone within your company spends working. It helps businesses understand what employees are doing during work hours, which can be used to create client invoices and pay hourly staff or freelancers.
1. Stop leaking revenue and bill clients more accurately
Time tracking helps you to assess your biggest culprits of revenue loss, such as:
- Inefficient workflows
- Overstaffing (your team is bigger than it needs to be)
- Failure to quantify your marketing efforts
- Late payments from your clients
- Fees from services you’re not using or don’t really need
- Rent, physical supplies, and other office-related fees
Many of these issues work in unison. For example, having inefficient workflows might make you think you need seven people to do a five-person job, leading to overstaffing.
Hiring too many people adds to your overhead, sometimes without bringing in more revenue. This, in turn, leads to higher costs for your business. The more employees you have, the more services you end up using and the more equipment you need… and the cycle continues.
Luckily, the fact that these problems stem from a common source means you can fix them with a common solution.
Here’s how time tracking can help you address these common issues:
Inefficient workflows: This one’s a big deal. Time tracking can help uncover bottlenecks in your system. Without knowing where your team’s time is going, it’s impossible to identify what’s holding things up.
Let’s look at one example. A front-end designer on your team is assigned seven tasks and working 40 hours a week while you have a part-time developer waiting on assignments.
If this is the case, you either have staffing issues or a project plan to correct. It’s possible that your workflow isn’t as smooth as it could be, and projects pile up with your designer because they all reach that stage at the same time.
You can look at the steps before design and determine whether your project timelines are off, or if you need more designers for the volume of work you have.
Overstaffing: By monitoring how productive each person on your team is, you can easily determine whether the resources assigned to a project match the amount of work and project scope.
You can also see who is underutilized, and move them to different projects as needed.
Some software options provide activity rates that give more context to time tracking.
If one person who usually works at a level of 60% activity has dipped to 20%, they might not have enough to do. This can prompt a check-in so you can avoid overstaffing or bringing on new hires without having enough work for them to do.
Unquantified marketing efforts: Time tracking helps you figure out ROI.
For example, if you paid a freelancer $200 to write a blog post and your content marketer $40 to edit it, and your average client is worth roughly $480 a year, having each post bring in one customer means you’d have a 200% ROI.
Late payments from your clients: Most time tracking tools offer integrations so you can manage invoices and reminders from the same dashboard, making it much simpler to get paid on time.
Which means you don’t have to waste time digging through your emails anymore. You’ll have a record of when the invoice was sent, and if it was opened or paid. Some apps even let you auto-send reminders — which can be a pesky but necessary action to ensure money comes in as expected.
Fees from services you don’t need: Keep track of which applications your employees are using to see which programs are actually worth the subscription fee.
Some tools allow you to see the apps and URLs visited while tracking time. Your team may claim to depend on that pricey analytics and reporting dashboard, but when you check the URL reports, you see that it’s barely being used.
The reverse is also true. If one task is taking a team member hours each week, there’s likely some automation tool that can speed things up and take work off their plate.
Rent: Time tracking also gives you the confidence to hire remote employees, freelancers, and contractors, allowing you to dramatically reduce your overhead. You won’t feel tethered to an office when you have the tools to make remote work possible.
Most companies understand the benefits of remote work by now, so giving up an office space and the expenses that come with it can seem less risky than in the past.
2. Increase transparency and trust
Time tracking can help increase trust and transparency within your organization, which can go both ways.
Trust through transparency
Feeling micromanaged by a boss or like you have to micromanage (as a boss) can happen in any office and any industry.
It can happen with remote work, as well.
With time tracking, managers can stay in the loop and know that the right projects are being worked on. Employees start to feel trusted and empowered in their roles. They won’t need to report back as often because there’s built-in visibility into how projects are progressing.
Further, if both managers and their team members track time, everyone plays by the same rules. All of this combined helps create more trusting relationships.
If you’re using a time tracking tool, it’s important to tell employees what information is collected. Solutions such as Hubstaff make it easier for employees to trust their employer because they know exactly what data they’re providing when they track time through the software. The app makes it clear when time is being tracked or when a screenshot is taken (if that feature is turned on). On top of that, everyone has access to their own data.
You might be unaware of issues that cause employees to spend more time on tasks and projects. Most managers don’t spot a bottleneck until work has piled up, and project delivery dates have been missed.
Unaddressed bottlenecks can result in unhappy customers and clients, stressed out team members, wasted time, and lost revenue.
Here are a few signs you have a bottleneck in your workflow:
- Tasks frequently get stalled in a particular department, often in quality control
- You experience delays when you assign tasks to a specific team member
- Some departments or team members are constantly busy while others have a lot of down time
These are all signs that your process could be running more efficiently. Time tracking helps you spot underutilized and overloaded team members.
3. Improve productivity
Have you ever heard the expression, “If you can’t measure it, you can’t improve it”? It’s a quote by Peter Drucker, who’s widely known as the founder of modern business management.
This is one of the main ideas behind time tracking and productivity measuring. Measuring your productivity allows you to work on improving it.
The average employee is productive for only 2 hours and 23 minutes in an 8-hour workday. Time tracking is not about setting unrealistic expectations, it’s about learning from your own habits and using data to make decisions.
By tracking your team members’ time, you get an idea about how much time it takes them to complete a particular task. This allows you to plan timelines that are accurate and manageable.
4. Create better project estimates
No one likes feeling rushed. But that’s exactly what happens when you give a marketer two hours to complete a project that might take 12.
Having an accurate record of how long a past project took will give you a better baseline moving forward.
You might be tempted to ask a team member how long a task might take when preparing an estimate. It’s easy enough, they’re sitting right next to you or they’re on Slack.
But instead of pulling them out of their work to think back to a previous project and guess a number of hours, you can use time tracking data. Reference similar projects you’ve completed in the past to determine how long it will take your team to complete this new project.
This saves you and your team from a ton of unproductive back-and-forth. Not to mention the blame game later on when the estimate doesn’t end up being right.
Let’s look at another example. You might estimate that it’s going to take your team six weeks to build a new website.
However, during the course of the project, you realize that implementing all the features you want will take twice as long. One of your front-end developers gets sick during the project, which overloads your other developer and pushes out the timeline.
These things happen more often than you think. There’s actually a term for it — planning fallacy. People tend to underestimate the amount of time it’s going to take them to do something.
Time tracking helps you avoid this.
While inexpensive and easy, this method is prone to errors since it relies on human memory of everything that was done that day, and for how long.
Another disadvantage of this method is that timesheets need to be distributed and collected physically. This can be difficult to do, especially if you have employees working in different locations.
Then there’s the challenge of getting team members to actually fill out timesheets.
Paper timesheets can be time-consuming when everyone on your team has to sit down at the end of the day and think back to what was accomplished. There’s also the possibility of making a mistake when entering a team member’s time into your company’s accounting system.
Further, timesheets can get lost or damaged, which can present challenges for record-keeping.
But that’s just when using paper.
Digital timesheets using spreadsheets must be better, right?
With this approach, you manually add your start and end times to a spreadsheet. There might be some functions built-in to automatically calculate daily or weekly hours, or to auto-fill client or project data.
The benefit of this approach are:
- You can save time entries for all of your employees in a single place
- You can build timesheets to your specifications
- You can use cloud-based file sharing so timesheets can be accessed anywhere (and thus, harder to lose track of)
However, since employees are still adding their entries manually, there’s still a lot of room for error. And times are added after the fact, which opens you up to the possibility of forgetting hours and tasks.
In terms of costs, spreadsheets and paper timesheets are comparable since there’s very little device or software investment required.
Simple time cards are a click away br | You can use our free time card calculator to add up your hours automatically.
Swipe card systems
Swipe card systems are a modernized version of the traditional punch card system. They offer a lot more features compared to using punch cards, though the concept is the same.
These types of time tracking systems can track employees’ time and regulate access to specific work areas. They can also monitor attendance, breaks, and departure times.
You can even integrate them with your payroll system to simplify the process of paying workers for their time.
With swipe card systems, employees swipe their card when entering and leaving the workplace. The system then calculates the time worked by looking at the difference between the times when an employee started and ended their shift.
Swipe card systems are frequently used in agriculture, engineering, healthcare, and even retail.
The main benefit of swipe card systems is that they’re fairly easy to use. There are no codes or passwords to remember. You won’t need to provide employees with special training to get them to use swipe cards effectively.
The whole process is in the name: swipe card.
Using a swipe card system can also reduce your administrative workload. No human on your team has to upload timesheet data to another system.
This helps managers and HR teams focus on more important tasks such as assessing employee performance or improving your onboarding process.
The downside of swipe card systems is that they’re not really suitable for tracking remote employees’ time. They also rely on being in one or a few locations, such as a corporate campus.
It’s not ideal for a landscaping company, for example, that often has staff at different locations throughout the day.
Time tracking software
If geofencing is primarily for teams on the go, think of general time tracking software as a solution for anyone.
Mobile teams, remote companies, desk-based employees — everyone can use time tracking software because it often includes various apps for web, desktop, and mobile devices.
Time tracking software allows you to record employees’ time automatically. A time tracking app can be a standalone solution or a part of project management or accounting software.
These tools are often feature-rich, combining various financial tasks into one comprehensive workforce management platform.
Time tracking software can provide you with a detailed breakdown of how employees spend their time at work. You can use it to automate employee attendance and absence. Most solutions also offer the option of generating timesheets and invoices.
Some time tracking tools even allow you to use them to manage payroll and pay your employees for their time.
Then, some apps start to break away from the rest. The more advanced platforms offer reporting features that allow businesses to analyze their team’s performance in great detail.
Businesses in a wide variety of industries use time tracking software to improve productivity and reduce revenue leaks. Agencies, ecommerce, finance, marketing, software development, and manufacturing are just some of the industries that take advantage of time tracking software.
It can help you make more accurate project estimates and allow you to meet deadlines more consistently. You can also use it to distribute work more effectively by identifying which team members have downtime and which ones are overworked.
The cons here come with how you use it. Some tools offer more invasive features, which can harm team morale.
If you use time tracking software to micromanage or to make your team worried about their jobs, you’re probably going to see some clear downsides to this approach.
Being able to choose features on a user-basis and implementing this software properly (which we’ll cover later on) can help you avoid this.
Geofenced time tracking
Things get more complicated when you have people out in the field or part of a mobile team. There’s more than just hours to keep track of. You also need records of work locations, routes taken, and arrivals and departures at different job sites.
In a recent survey, 56% of construction company owners said they spend an average of 11 hours each week traveling between job sites to check on their crews.
Geofenced time tracking virtually eliminates this need. Geofencing technology uses a device’s GPS location to track time or send an alert when an employee enters and leaves a job site.
To do this, you need to set up a geofence, which is a virtual barrier around a physical location.
GPS-based systems are designed to track employee attendance for scheduled shifts. It can alert managers when employees pass the geofence and enter the work area, or when they leave for the day.
These types of systems automatically start and stop tracking time based on location.
This allows employees to clock in and out easily. It also prevents inaccurate time tracking and timesheet errors. By using a geofencing system, you can reduce or completely eliminate buddy punching and time theft.
Most GPS location-based time trackers are installed as an app on each person’s device. The app then tracks their location and the time they spend working, generating detailed timesheets you can use for invoicing and payments.
These types of systems are especially suited for companies with a mobile workforce. They’re used by delivery and moving businesses, construction companies, and landscapers, to name a few.
Geofencing is particularly useful for construction and landscaping teams, for example. It allows managers to know if workers are on-site during scheduled hours. It also saves them from having to drive from one job site to the next to check on workers.
One potential drawback might be in the form of battery drain. Though many apps disclose this and aim to run without major disruption to your employees’ days.
How to choose time tracking software
Ready to give new software a try? There are three main factors you should pay attention to when choosing a time tracking tool.
- How easy is it to use?
- Does it have all the features you need?
- Does it integrate with the solutions you already use?
How to get employee buy-in for implementing time tracking
Now that you know the benefits, how to choose the right tool, and how to make the most of your time tracking software, it’s time to bring it to your team.
In many cases, you’re already using a time tracker and just need to get your team acquainted with a new software and process.
Other times, it’s all new, and you need to onboard your team appropriately to ensure engagement.
Here are four steps to get buy-in when implementing a new time tracking tool no matter what you’re currently doing.
1. Explain the importance of tracking time
Let employees know all about the benefits of time tracking. Explain how it can help show off their progress, prevent them from burning out, and improve their productivity.
Time tracking provides a record of everything employees do so there’s no question about their contribution.
In many cases, you can schedule a demo or share a walkthrough video that helps explain the purpose of the software.
2. Address common concerns
Assure employees that you’ll protect their privacy and give them access to all their time tracking data. Let them know that you’re not implementing time tracking because you don’t trust them. Instead, you’re looking to uncover bottlenecks and give everyone more dedicated focus time.
To help with this, contact your software’s customer support or sales teams for materials you can provide to employees.
3. Train employees on how to use time tracking software
It’s crucial that you provide employees with training on how to use the software. This will ensure they’ll know how to track their time accurately.
This goes beyond an initial setup. Plan to check-in around five and fourteen days after you start, as questions may come up once your team gets more familiar.
Don’t forget to reach out to customer support with any questions. You might even want to schedule a walkthrough for your team during this phase.
Creating an FAQ and drafting a specific time tracking policy are also good steps to take. You can distribute this to your team and ask for their feedback to make the process more collaborative.
4. Lead by example
Start by tracking your own time and sharing your findings with employees. This will help encourage them to start tracking their own time.
With daily recaps and reports available, it should be easy to screenshot or forward your own time tracking to reinforce what you can learn about your own habits.
Get started with better time tracking today
By putting the steps outlined here into practice and finding the right time tracker for you, you can:
- Avoid unnecessary revenue leaks
- Increase transparency
- Improve productivity
- Create more accurate estimates and increase profitability
Ready to get started?
Track your team’s time with Hubstaff
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