Over the years, I have tried countless different methods for implementing time tracking. The topic has repeatedly come up in all sorts of meetings. The process was reviewed and improved together with employees many times. Yet, there were always those who found logging hours difficult, as well as those who recorded their hours accurately and on time.
Many might think that time tracking is an easy task – one or two entries a day, and that’s it. This is true if you can focus on one or two projects all day. However, in a marketing agency, for example, in the role of a production AD, the day can be filled with small tasks across various projects and clients. Each task requires its own entry, which can make time tracking challenging and time-consuming. A regular routine can help with this. For instance, set aside 10 minutes at the end of the day for time entries, or log your time whenever you switch to a new task.
Why is time tracking important?
If you bill clients based on the time that experts have spent on tasks, the importance of time tracking for the company's business is undeniable. If every employee bills just 15 minutes less per day, it adds up to a significant amount over the course of a year, and this shortfall will be reflected on the bottom line.
In addition to the euros reflected on the bottom line, time tracking provides valuable insight into where time is actually spent – for example, whether it’s internal work or client work, which projects are profitable, and whether projects are being sold at the right prices.
It’s important to recognize the level of time tracking precision that suits your company. For example, at one point in my career, working time was tracked in increments as small as five minutes, which in hindsight wasn’t practical. It’s more advisable to bill in increments of 15 minutes, 30 minutes, or an hour. And remember, time tracking is not a tool for micromanagement, nor should it be used as one.
Leaders of professional service companies, do you truly grasp the importance of time tracking? Time tracking allows you to ensure that you charge a sufficient price for the work and to make future price adjustments. Are you selling at the right price, or have you underestimated the time required for projects? In the worst-case scenario, projects can become unprofitable or even result in losses if the time spent on them doubles.
When time tracking is done correctly, billing for work hours becomes easy, and you may even find grounds for additional billing from client hours. You can also ensure that the ratio between billable and internal work is balanced. The data will also help you identify which clients are the most profitable for your company and where there might be inefficiencies.
On top of all this, time tracking is also a safeguard for the individual. An employee can easily show their supervisor if they are over- or underworked. Time tracking thus serves as support for the employee when discussing time management. Documented time usage—such as how much time a specific project requires—is no longer a matter of opinion.
How to encourage employees to track their working hours?
Below, I will outline ten tips to encourage your employees to track their working hours. It’s important to prioritize a positive approach in these methods. It’s also good to have strategies in place to address situations where time tracking isn’t going as expected.
Clarify the importance of time tracking
Explain to your employees concretely why time tracking is important for the company. Show how it affects the company's profitability and future employment opportunities. Regularly share information about how time tracking impacts projects and customer profitability. For example, billing rate for hours, average hourly rates per client, and sales margins are useful KPIs that should be shared with the entire company. Although these may create pressure, regularly addressing them helps engage employees in time tracking.
Create a clear process and train employees
Ensure that you have a clear process and instructions for time tracking. Review how often working hours should be logged, the level of accuracy required, and how time is logged for different tasks. Offer training and support as needed, such as Q&A sessions, to ensure everyone understands the full picture of the time tracking system. Thorough onboarding of new employees is also important.
Communicate time tracking as a cornerstone of expert work
Emphasize that time tracking is an essential part of expert work. It is not optional, but rather a responsibility for everyone. Time tracking can also be part of the employment contract, further highlighting its importance.
Link time tracking to bonus and compensation models
Tie bonus or compensation models to time tracking. Proper time logging can directly impact an expert's paycheck, which can increase individual motivation. You can also implement various bonus schemes or other incentives, such as gift cards, to reward employees who diligently track their working hours.
Organize friendly competitions
In some workplaces, friendly competitions can serve as motivators and teach proper practices. For example, reward the best billing rate of the week or the most diligent time tracker of the month. Such positive methods can be particularly helpful when implementing a new time tracking software.
Monitor and intervene
In time tracking, it’s important to address any issues promptly. If time entries are missing for two weeks, it becomes difficult to remember them afterward. Ensure that there is clear monitoring and responsibilities in the process. Address problems early on.
Choose the right software for time tracking
Select a user-friendly software that makes time tracking easy. In expert work, it can be especially helpful if the software includes other features, such as project management and resource allocation. This way, the recorded time can be easily invoiced.
Use time tracking as a management tool, but forget micromanagement
Time tracking is a management tool, but it should not be used for micromanagement. The supervisor and subordinate should discuss, for example, whether the time has been used effectively, how the work is progressing, and whether the balance between billable and internal hours is appropriate. However, remember that these should not be the only topics of discussion between the supervisor and the subordinate.
Collect feedback
Regularly request feedback on the time tracking process and make adjustments if necessary. Taking employee feedback into account improves engagement and fosters a sense that the entire work community is being heard.
Summary of time tracking
Time tracking is an essential part of expert work, and its proper implementation requires a clear process, training, and commitment. When handled well, time tracking supports profitability, improves project management, and helps ensure correct pricing. While time management may initially seem burdensome, it is a necessary tool for ensuring business success in the long run. Remember to approach the topic positively and constructively, so that all employees understand its importance and commit to following it.
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