Time tracking is a prickly topic. A lot of people hate it because it’s perceived as an unproductive use of time. Or worse, it’s viewed as a way to micro-manage employees. After all, adults don’t take kindly to being treated like children who can’t be trusted to use their time wisely. However, time tracking is extremely useful for capturing important data that can lead to improved efficiency, better customer service and increased profitability.
Make more accurate estimates. When it comes to marketing/creative agencies, it’s important to know how resources are being allocated to different activities. Over time, the correct reporting of time by resource helps the project manager understand the average time required to complete a particular activity. Use this information to accurately estimate time for future projects. As we all know, accurate estimates can be the difference between profit and loss.
Improve efficiency. .Tracking the time spent on activities will also come in handy when you need to prioritize an activity or project over another, and allocate workloads, thus improving efficiency. Stop wasting hours on client projects that have gone over budget and quit asking clients for additional hours to complete projects!
Adjust accordingly. Proper time entry also enables the project manager to see that the time being spent is not exceeding the estimated time. Make adjustments and mitigate risks well in advance by using this information.
Build trust. On the client side, providing an accurate account of the time spent on a project will improve the billing process and build trust, especially when working on monthly retainers. Let customers know exactly how their money is being spent.
Nobody is 100% Billable
Despite the obvious benefits of time tracking, there are some caveats. When implementing a time tracking system, be clear that accurately accounting for time doesn’t have anything to do with holding people to task. It’s not meant to be a punitive function! Quality work takes time and good employees rarely need that sort of management – particularly if they’re already part of a highly-collaborative and well-led team. View time tracking as a tool to help management make better decisions, which, in turn, leads to a more successful enterprise.
It’s also important to remember that nobody is 100% billable, nor should they be expected to be. First, we are humans, not machines. Second, the nature of the client services industry, which involves a variety of projects, along with peaks and troughs of productivity, makes it impossible to bill every hour to client work. While sometimes the entire company is firing on all cylinders, there’s also some occasional slack while new contracts are signed or internal projects are completed. This is especially true for smaller companies that rely on employees to “wear many hats.” Finally, keep in mind that important internal functions, such as marketing, accounting, prospecting, training and business development are necessary, but not billable. Find the “sweet spot,” between nonbillable and billable time for your company.
Realize, also, that these numbers will also vary depending on an employee’s position. For instance, a graphic designer may have billable hours as high as 80%, while its normal for administrative personnel to bill less than 20% of their hours to client work. Set different goals for different positions within the company, with an average target.
Find a Time Tracking System that Works
The type of activities that are usually tracked include:
- Client project work (billable)
- Internal project work (nonbillable)
- Management activities (nonbillable)
- Meetings (billable or nonbillable)
- Administrative tasks (nonbillable)
- Internal marketing activities (nonbillable)
But, what’s the best way to track these hours? Take advantage of one of the many automated systems that help employees keep track of their time, easily and efficiently. Look for features that allow you to track time by project and alert those involved when hours spent are reaching hours estimated. Use these systems to compile hours and generate reports, identify potential problem areas such as “meeting overload,” and more.
Take your time when researching systems. Begin by determining who will be primarily responsible for managing the program. Next, list the most important elements you want in a program (i.e., which functions are a must and which features would be nice, but not critical). And of course, determine how much are you willing to spend? When deciding on a system, ask yourself:
- Does it fit well with the size and scope of our company?
- Is it compatible with the type of projects we handle?
- Is it easy to use?
- Does the company provide training for employees and ongoing help for the administrator?
Ease of use and training are critical, because a system that doesn’t get used by employees consistently is useless! And speaking of compliance, make sure management is on board. Encourage management to be part of the roll-out. He or she should emphasize the benefits of accurate time tracking and the necessity of consistent usage, as well as support the system administrator.
Tracking and managing time can be one of the most challenging parts of running an agency. Yet, accurate resource allocation and project management is vital for keeping projects on time and on-budget. As the saying goes, “time is money.”
Lennen Chance is Operations Administrator and All-Around Awesome Organizer for Spry Ideas.