What is Time Tracking?

The honor system

Otherwise known as the honor system. For example, maybe you’re the owner of a SEO consulting agency. You just wrapped up a month-long job that involved you and three of your team members. To figure out how much you should bill the client, you ask them how many hours they spent on the project. Then, you take their answers, come up with a rough estimate of how many hours you worked, and prepare your invoice accordingly.

Pros: This method is quick and easy.

Cons: It’s also fairly inaccurate; plus, if your clients want a break-down of how you spent your billable hours, you won’t have one. And if you want to know how your employees spent their time, they won’t have a detailed break-down, either.

The paper method

Do you have a notebook, a pen, and a phone? If so, you’ve got all the tools you need to implement this approach. Simply time yourself using your phone and write down the results in your notebook.

Or, if you want more structure, print out a timesheet and fill it out as you go.

Pros: Physically logging your time makes you hyper-aware of how you’re spending it. You can use this approach literally everywhere: whether you’re in the office, surrounded by technology, or out in the middle of nowhere, working in a wifi-less wooden cabin.

Cons: If you lose or damage your written timesheet, you’re out of luck. If you forget to use it, you’re also out of luck. Moreover, if anyone else wants to see the timesheet (a client wants to view yours, or you want to look at your employee’s), then you’d have to take a picture or scan it. Also, why would you be working in a wifi-less wooden cabin?

The spreadsheet method

Excel is endlessly flexible, and can easily be used to record how much time you’re spending on projects or individual tasks. As TechRepublic Mary Richardson explains in this Excel time tracking tutorial all you have to do is create five columns: Date, Activity, Start Time, End Time, and Hours Worked. (We’d also suggest adding a column for Client Name and Hourly Rate, if applicable.) Hubstaff also has free timesheet templates that you can download and use as needed.

Anyway, every time you work on something different, just log it in your spreadsheet. You can ask your workers to do the same.

Pros: Although this approach is obviously more labor-intensive than the previous one, it’s still pretty darn easy. Plus, you don’t have to spend a time on equipment: Just use Google Sheets and a clock.

Cons: It’s a more sophisticated version of the honor system, which means ultimately, there’s a large degree of trust involved.

Furthermore, even if this system isn’t being used for billing purposes, manually entering your time can get tedious, quickly—and become its own time-suck.

Software

We’re definitely moving up in terms of sophistication. A time tracker app like Hubstaff makes recording your time almost effortless. Simply open the app, click the timer, do your work, and click the timer again.

You won’t just learn how long you (and possibly your employees) are spending on each task, you’ll also learn which applications you’re using the most and when and where you’re wasting time.

Pros: With greater knowledge comes greater efficiency. Also, when you use this method, you don’t have to wonder whether your employees are being 100% honest about their time reports: You’ll have objective proof.

Cons: Let’s be honest: some employees will view time tracking as an invasion of privacy or as a sign you don’t trust them.

Install an automatic time tracker

If you don’t want to manually start and stop a timer, you can download passive timekeeping tools like RescueTime or Chrometa. These desktop apps are on all the time. Plus, both RescueTime and Chrometa offer companion iOS and Android apps — meaning you can record every minute you spend on a device.

Pros: You’ll never have to think about pressing a timer again.

Cons: Overall, it's less accurate. Since there’s no way to signal when you’re working versus when you’re spending time on personal tasks, it’s really difficult to use this data to bill clients. Especially because you’ll have to go back through and ask yourself questions like, “Was I on Twitter to promote my latest blog post, or was I just wasting time?”

Plus, you obviously can’t ask your workers to use an app that logs everything they do.

Project management time tracking

If you use a project management app (like Trello, Asana, Wrike, Podio, etc.), then you can seamlessly track the time you’re spending on each task.

Pros: Figuring out exactly how you and your employees spend your time has never been so straight-forward. Maybe you thought you spent roughly five hours per week placing your virtual assistants with clients, but after you use Hubstaff to enable Trello time tracking (or an alternative time tracking app), you realize you actually spend 15. Or, once you ask your development team to integrate their GitHub accounts with their time tracking app, you realize the average bug takes three hours to fix—and you need to raise your rates.

Cons: The drawback to this method is the same as above: Some of your employees are going to push back. However, their objections might fade away when they realize time tracking benefits them, too.

Your customers are happy, your monthly revenue is stable or increasing, and judging by the increasing number of hits on your website, your marketing efforts are paying off.

In other words: Business is good.

But before you send a congratulatory Slack message to your entire team (and start thinking about your next growth stage), check out your operating expenses.

Common cash leaks

Most companies – even the ones doing really well – are leaking cash. These avoidable costs might fly under the radar for a while, but eventually, they’ll add up.

Here are some of the common culprits:

• overstaffing (your team is bigger than it needs to be)
• rent, physical supplies, and other office-related fees
• inefficient workflows
• failure to quantify your marketing efforts
• late payments from your clients
• fees from services you’re not using or don’t really need

Many of these issues work in unison. For example, having inefficient workflows means you think you need seven people to do a five-person job, leading to a bloated staff. Hiring too many people requires you to upgrade to a bigger office: more money down the drain. The more employees you have, the more services you end up using… And the cycle continues.

Luckily, the fact that these problems stem from a common source mean you can fix them with a common solution. Time tracking is a great way to find and plug all of these cash leaks.

Overstaffing: By monitoring how productive each person on your team is, you can easily determine who’s contributing to the common goal and who’s holding you back.

Rent: Time tracking also gives you the confidence to hire remote employees, freelancers, and contractors, allowing you to dramatically reduce your office budget.

Inefficient workflows: Discover the bottlenecks in your systems and finish projects faster.

Un-quantified marketing efforts: Time tracking technology helps you figure out the costs of your inputs. 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 convert 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.

Fees from services you don’t need: Keep track of which applications your employees are using to see which programs are actually worth their subscription fee. Your team may claim to depend on that pricey analytics and reporting dashboard, but then you discover it’s barely being used.

Under-billing your clients

We’ve actually saved one of the most destructive leaks for last: under-billing your clients. But good news: This leak is also one of the most fixable.

If you’re doing work without knowing exactly how long it takes, there’s a good chance you’re underestimating your time. There’s actually a scientific explanation for this–it’s called the planning fallacy.

Studies show we have no sensory receptors for perceiving time, making it a uniquely intangible sensation. Which is likely one of the reasons cognitive scientist Douglas Hofstadter postulates that any given task will always take longer to complete than you expect (also known as “Hofstadter’s Law.”)

So, you tell the client a job will take 10 hours, bill accordingly, and then spend 12 hours getting it done.

Psychologists say there’s a work-around to Hofstadter’s Law. First, reflect on a similar project, task, or assignment that you completed in the past. Then, use the time it took you to do that task, and extrapolate a finish date for the current task.

Of course, the only way to accurately gauge how long a project took you is to look at an objective measure – which a time tracking tool will provide.

Kevin Sterling, of ktsterling.com, runs a strategy consulting agency in New York. After integrating time tracking with his project management workflow, Kevin quickly realized he was under-billing on certain types of jobs. He immediately adjusted his rates and started charging his clients accurately for the time his team spent working.

Read more about Kevin's business and how he uses time tracking >>

However, monitoring your time is helpful even before you establish any baselines for comparison. Let’s imagine you’re using a time tracking solution for the first time ever. Midway through the project, you realize that you’re not going to finish on time, because the client’s requests have proliferated, additional details have come up, and roles have been reassigned.

Rather than eating those costs, you can go to the client, point out exactly where you’ve lost time, and say, “Given the expanded project scope, there are two options. A) we can increase the project budget to X amount, or B) we cut these features or requests and stick to the original rate our team quoted you.”

By giving them clear evidence, as well as a choice, you’ll earn your client’s trust and get the rates you deserve.

The bottom line

You can instantly improve your gross profits by identifying and solving your cash leaks. Implementing a time tracking tool isn’t the only method, but it’s a quick, cost-effective, and relatively simple one.

Good communication is undoubtedly the foundation of a well-run project. But how do you define “good communication,” and more importantly, how do you implement it?

Increasing transparency

Whether you’re supervising an on-site team, a partially remote one, or a fully distributed group, giving your workers more information will improve trust, cut down on mistakes, boost autonomy, and create unity. That’s a lot, so let’s look at each aspect individually.

Trust: The more info you provide your team members, the more trusted they feel. Not only should you provide them with notes about the client, but you should also share updates on company financials and operational updates. At Acceleration Partners, the leadership team puts everything out into the open during their bi-weekly all-hands meeting. The CEO of the company even answers anonymous questions.

Even when you’re working with freelancers, have a bias toward honesty and candor. At Hubstaff, we have many long-term relationships with freelancers. These relationships are friendly, productive, collaborative, and cooperative–and they wouldn’t exist if we didn’t treat our freelancers with respect and openness.

Mistakes: Collecting information in a public place (like, say, a Slack channel or Asana file), makes the likelihood someone will make an error go down. Let’s say you put everyone’s separate tasks in a team-wide document, rather than distributing them individually. Without this document, Ravit might’ve gotten confused and done Task A. However, he reads that Task A is actually assigned to Sean – and the mistake is avoided.

Autonomy: As Walter Chen explains in the iDoneThis guide to transparency, providing relevant information to workers raises their performanceandtheir happiness. Transparency “gives autonomy to people to do their best work instead of having to stop and hunt down the information they need or wait to receive it from gatekeepers,” Chen says.

Unity: Creating a highly functioning team won’t happen without a sense of unity. Wade Foster, the CEO of Zapier, points out, “A co-located office develops its own personality through inside jokes, shared experiences and a collaborative environment, such as a meeting room with white boards.” Foster believes a remote team needs something similar, which you can recreate with technology. At Zapier, they use Slack, GoToMeeting, Google Hangouts, and P2 to communicate, but there are tons of alternatives, so feel free to explore.

Establishing clear deliverables and deadlines

Here’s the truth: If you don’t give your employee a deadline, and he or she takes an excessively long time to finish the task, and it’s not their fault – it’s yours. The same principle holds for expectations and deliverables. Maybe you ask your product manager to “write a product requirements doc.” If you don’t provide directions on length, complexity, necessary sections, features, and so forth, you can’t blame them for handing you a document that doesn’t fit your expectations.

Sure, the very best employees will ask the right questions and submit phenomenal work whether you provide explicit directions or not – but these employees are rare.

Eva Rykrsmith, an organizational psychology practitioner, has some excellent advice for what you should tell employees and freelancers, specifically, “what is within the scope of work and what is not, what appropriate behavior is and what is not, and what productive work is and what is not.”

If your organization uses Hubstaff, you can make these directions even more clear-cut. Rather than saying, “My expectations are that you’ll stay focused all week,” you can say, “Do you feel comfortable aiming for 90% productivity this week?”

Bonus tip: To increase your workers’ buy-in, don’t just tell them what’s reasonable; get their thoughts, too.

You should also demonstrate how smaller goals and sub-tasks contribute to the overarching team or project goals. For example, if you ask your copywriter to draft four different versions of the copy for a “How it Works” webpage, you should let them know, “We’ll be running tests to see which page gets the most visitors to sign up for a trial subscription, which’ll obviously boost the client’s conversion rates!”

Not only does this clarity give your workers a sense of purpose, it also gives them a more accurate sense of what you’re looking for.

Giving clear feedback

It’s also necessary to be direct when delivering feedback.

Inc. writer Jeff Haden gives some great advice about praise that works, namely:

• Give it ASAP: the greater the length of time between the awesome work and your acknowledgment, the less impact your acknowledgement will have
• Be specific: “generic praise is nice but specific praise is wonderful” (and tells that team member exactly what they should repeat!)
• Look out for good behavior: If you only correct, and never congratulate, you’ll quickly demotivate even the most enthusiastic employees.

When it comes to constructive criticism, many of the same principles apply. Soon after you’ve noticed troubling behavior or sub-par performance, say something. And be specific; for example, “I noticed that the last article you submitted had many simple mistakes and required a lot of revision on my end.”

As career expert Allison Green points out, you should also relate your specific feedback to the bigger picture.

“Managers often skip this step,” Green says. “They talk about individual instances as they happen and assume that the employee will connect the dots and realize that there’s a pattern, but never actually say ‘hey, this is a pattern.’ As a result, employees sometimes truly don’t realize it.”

Setting up “information flows”

To make your communication processes as efficient as possible, automate them with “information flows.” In other words, set up a system in which information moves automatically from one source to the next. Thanks to the huge number of apps out there that integrate with each other, this is more than doable.

To illustrate what we’re talking about, here’s a sample scenario.

You run a SaaS company. As with any technology provider, your team spends a lot of time answering questions, resolving complaints, clearing up confusion, and so forth. The customer support staff relies on Zendesk for these tasks. In addition, they use Wufoo and Google Docs to collect requests for help.

Rather than having them manually take entries from Wufoo and Google Docs and transfer them to Zendesk, you set up a “Zap” to have tickets automatically created for every new Wufoo and Google Doc submission.

Next, you integrate Zendesk with Hubstaff, so you can effortlessly track how much time your team members spend on each ticket.

The whole process is seamless – and, as a bonus, the probability that information will get lost or overlooked drops almost to zero.

This scenario is only one of many. Take a look at the Hubstaff integrations to see the other information flows you can set up.

By now, you’ve probably heard the statistic that remote workers are more productive than their peers who work in traditional offices. They also tend to put in longer hours.

However, remote managers can’t hold their employees accountable in the same way that an on-site manager can. For that reason, you should think about how you’ll promote focus within your team.

We’ve outlined some common strategies:

An organized work-space

Researchers from the University of Minnesota found that having a clean and orderly office not only makes you more productive, it also helps you avoid temptations and make better decisions.

Your digital workspace also matters. Besides the negative mental effects of “online clutter,” being poorly organized causes Americans to waste more than 9 million hours every day.

While you can’t control how your employees set up their desks, you can help them organize their work by using a project management system.

Use a team task logging tool like Asana, Jira, Podio, Redbooth, or Wrike to keep everyone updated, on-track, and organized. Hubstaff integrates with all of them, making it even easier to see who’s handling what.

Prioritized task lists

Do you ever spend a whole day working without feeling like you’ve accomplished anything important? Well, remember that your workers aren’t immune to this situation, either.

The problem is, as Vivek Sri explains on the Asana blog, that “when you go into work, there are an infinite number of tasks you could do.”

Without a good system, your workers will waste their energy on inconsequential tasks.

Sri recommends completing the tasks that fulfill the highest purpose first. To help your reports make this determination for themselves, explicitly communicate your high-level objectives.

Health

Getting enough exercise, sleep, and water has an enormous influence on cognitive ability and focus. You might think you’re pretty powerless to change your team’s lifestyle habits–but several companies have found creative ways of doing so.

For example, every Buffer employee receives a Jawbone UP, which tracks their daily activity and sleep patterns.

“Remote work often means long stretches at the computer, so the additional nudge to get up and moving every now and then comes in quite handy,” explains Buffer employee Kevan Lee.

Over at 3 Birds Marketing, there are “Workweek Hustles,” in which employees wearing FitBits compete to log the highest number of steps.

Twenty percent of companies now offer subsidies for standing desks. If you’re primarily working with full-time workers, gifting them standing desks could be an excellent perk.

The opportunities for promoting worker health are pretty varied, once you start brainstorming. We’d also suggest paying for each employee to enter a race of their choice, tracking who drinks the most water each day and giving out mini-prizes, and dedicating a room or channel on your chat platform to #healthvictories.

Fewer breaks

Taking periodic breaks is a fantastic way for your workers to rest their minds and recharge. Nonetheless, there’s definitely such a thing as too many breaks.

John P. Trougakos, assistant management professor at the University of Toronto Scarborough and the Rotman School of Management, explains pausing too frequently leads to procrastination: “Anything at an extreme level is not going to be good.”

The top 10% of productive people use this ratio: 52 minutes of working, followed by a 17 minute break. The key – according to Entrepreneur contributor Anna Johansson – is to have your employees be 100% focused during those 52 minutes.

With a time tracking and productivity solution like Hubstaff, motivating your team to spend those 52 minutes (or however long they choose their work “sprint” to be) is easy.

Better communication

Poorly aligned goals, a lack of information, and vague directions will unsurprisingly mess with your employees’ focus.

To help everyone communicate more effectively, use the appropriate technology. Groove HQ, which provides customer service software, uses Slack to keep its distributed team on the same page.

Every day, each Groove employee posts a run-down of what they accomplished yesterday, what they’re currently working on, and any obstacles they’re facing. Slack also acts as a hub for the team to chat in real-time.

Hanno, a design team spread out across the world, loves staying in touch with Sqwiggle, iDoneThis, and 15Five, among other tools.

If you choose communication tools that are simple and even fun, your team members won’t need any outside encouragement to use it. And once you’ve gotten into a rhythm, you’ll find most of your communication problems going away–leading to greater focus.

Less distraction

Multi-tasking literally reduces your intelligence. That means every time your workers attempt to do two things at the same time, they’re more likely to make mistakes or overlook important details. Of course, that affects your bottom line, since they’ll need to go back and redo the work.

Distractions are equally dangerous. Gloria Mark, who studies digital distractions, says that the typical employee gets only three minutes of consistent focus before being distracted. Even worse, it takes that employee an average of 23 minutes to return to the task at hand.

And according to the Wall Street Journal, this trend of distraction is only getting worse.

The solution isn’t trying to work on our willpower. “We choose distractions because they’re so much easier than the work we need to do,” writes Len Markidan of Home Office Hero. “If you want to focus, you need to make it hard to get distracted, so that it can’t possibly be your default.”

Markidan stays focused by blocking his distractions with a site-blocking app. You can achieve the same effect by having your workers download Hubstaff; it won’t stop them from visiting distracting sites, but knowing that you’ll see when they visit those sites will skyrocket their ability to stay off of them.