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Historically, time-tracking has been being used as the simplest way to measure work and calculate payments. In today’s world, it is often used as a source of essential data on how work is performed, what can be improved, and what trends of the work process require closer attention. Advanced time tracker tools are used for collection and analysis of this vital information.
In this guide, we’ll take a look at the evolution of timekeeping methods and purposes, its current trends, and benefits that modern time-tracking tools and techniques can bring to companies, teams and benefits of timekeeping.
Counting time spent on work has been one of the most popular ways to measure performance and, subsequently, calculate payments. Already in the ancient Egypt, the Hammurabi’s code established minimum wages for workers. Some of them were calculated per days, months and years; some were paid per work done. The wages depended on professions and types of work: a doctor’s wage was higher than a field worker’s.
Egyptian workers received their salaries in meals, as the economy was based on redistribution of goods. On clay tablets, the “payrolls” of the ancient times, workers’ daily wages were recorded in cuneiform writing: bread, grain, radishes and even beer.
Did you now try to calculate how much you’ve earned today in beer equivalent?
As industrial technology advanced, time-tracking became a necessity. The famous Benjamin Franklin’s phrase, “Time is money”, is probably the best description of the relationship between employees and employers starting from the Industrial Revolution. And, as time recording technology advanced, time-tracking methods developed.
In 1888, Willard Le Grand Bundy, a jeweler from New York, invented time clock, a machine that recorded hours worked by the employees. Since then, many companies, mostly in the manufacturing field, have been using similar machines to manage attendance and calculate hours worked by their employees.
Like any other device, first time clocks were bulky and hard to use – both for employee and employer: they involved lots of manual work that required focus and attention. The employee had to insert their card to the machine and get a time stamp, and the employer then needed to collect cards and track time records.
Not surprisingly, it led to errors and consumed enormous amounts of time. Today’s attendance tracking systems help avoid this: they use biometric data, RFID tags and other technologies to automate data processing and prevent such types of fraud as “buddy clock-in”.
Time clock only works for those fields where attendance is the key. In many fields today, the number of worked hours is crucial for client billing and payroll calculation. But that was not always the case: the history of detailed timekeeping began in the early 20th century, when Reginald Heber Smith introduced the paper timesheet.
Law was the first business area where timesheets were introduced. First timesheets were ruled rectangles, divided in six-minute increments. Lawyers were required to write there their client’s name, time they spent on the case, and task description for each day. And, of course, it involved a long and cumbersome process of calculating billable amounts based on the collected time records.
Timesheets that allowed account for literally every minute represented the mentality that professionals sold their time – not a product and not a skill. Some argued that this system served “time sellers” only and no buyer ever asked for the billable hour system, but eventually this model was accepted as more fair and transparent than any other.
However, the idea of selling time did not propagate quickly. Only in the 1950s, the American Bar Association issued a pamphlet called “The 1958 Lawyer and His 1938 Dollar” that promoted billable hours for lawyers in order to increase their income. After that, the idea of billable hour started replacing fixed fees first in law and later in consultancy and other fields.
Today’s timesheets are used in architecture, construction, law, IT services, and many other fields. Paper timesheets have been replaced by electronic systems that automate timekeeping, help avoid calculation errors, and include additional functionality that provides managers and company owners with vital business data.
If you don’t bill your customers by hour, you’re not required to fill in timesheets, right? However, many companies that use fixed fees instead of hourly rates, still include timekeeping in their work process. Why?
As we already mentioned, timesheets provide management with essential data and insights on business processes and productivity dynamics within teams. What’s more, timekeeping also has benefits for personal performance of each employee.
Worked hours are listed among 10 key business metrics, as they allow to understand current processes and important trends in the team. Among its effects on project management and communication with customers, the following are worth mentioning:
Just having that data is, however, not enough. Its careful analysis is necessary to make the right conclusions and decisions. Summarized time-track data reveals the full picture of our time expenses, performance, and workday breakdown. By comparing similar data for current and previous periods, it’s easier to understand important trends and see work dynamics. This information helps understand possible weak points and increase productivity and efficiency.
Speaking of productivity, keeping track of worked hours helps improve individual results. Here’s a list of its major effects on individual performance.
As informative as time-track data can be for managers and business owners, some companies still prefer not to introduce this practice in their workflow. Some of the reasons why they choose not to keep track of time spent on work are:
Does any of this sound familiar to you and your team? Actually, these reasons indicate that the time-tracking procedure needs improvement. Adopting a convenient tool for time-tracking and developing better timekeeping habits creates positive experience of time-tracking and allows to collect necessary data without spending too much effort or facing negative effects on the work environment.
To sum up, timekeeping provides companies, teams and individuals with essential data, helps in planning and forecasting, and improve overall work results. Two crucial factors here are organizing the process properly and making sure that the employees understand why keeping track of time spent on work is important for everyone.
Well, we’ve figured out that time-tracking brings a lot of benefits for each employee individually and for the entire team or company. So how to get the most value out of time-tracking data and what exactly can be achieved, improved and amended in your company’s work?
Below, we’ve listed the most common problems that managers and employees face in their workflow, solutions that time-tracking data can provide, and positive changes that it brings to the work process.
Problem: Too much manual work, which results in calculation errors
Solution: Process data automatically and get accurate figures in less time
Collected timesheet data allows getting accurate calculations of billable totals and payroll amounts. Automating their calculation helps not only free up employees’ time, but also avoid possible errors. This brings benefits for all parties of the work process:
Problem: Cumbersome time-off management procedure
Solution: Manage leaves and compensations efficiently with your time-tracking tool.
If your timekeeping software allows to record both work and leave time, it can turn into a helpful tool for leave management. Keeping leave balance values up-to-date after regular accruals, manual adjustments and spent leave time is another task where automation not only saves time, but also increases accuracy of resulting data.
Exact data on overtime and overworked hours also simplifies calculation of overtime payments or compensatory time. This also applies to salaried employees, whose payments don’t depend on hours spent on a work assignment.
Make sure that your time-tracking tool allows keeping record of leaves and time off and, ideally, has a built-in module for calculation of time off balances.
Problem: Lack of transparency in time and payment calculations
Solution: Get transparent data on work and leave time
Clear calculations of working hours, overtime, and leave balances is another advantage of using time-tracking data for team management. Fair and transparent rules for payments and time off accrual create a healthy work environment.
Problem: Estimation errors, poor planning
Solution: Using previous data to increase estimation accuracy
It’s hard to get an accurate estimate for a task you never performed before, but using previous data for estimation of similar tasks dramatically increases accuracy of new estimates. This contributes efficiency of work management and helps better plan for future. Besides, the full picture of time actually worked allows to detect and avoid previous workflow drawbacks.
Below are listed some ways to use time-track data for planning capacities and workloads.
Obviously, time-track data for previous periods isn’t the “all-in-one” solution to achieve accurate estimating and realistic planning. Only typical tasks can be estimated on the basis of past results, and unpredictable things happen. So it’s important to allow time for them and to monitor the estimated/ actual time proportion in the course of project work.
Problem: Difficult calculation of profit/loss
Solution: Understanding profitability of your work with exact time data
How to measure the value of your time? As easy as it can seem, calculating the resulting profit of your work is not that easy when calculations need to be done manually. And in big teams, it can literally turn into an accounting nightmare.
That is why it’s reasonable to consider using a time-tracking tool that has cost & billing functionality to account for the company’s internal expenses and project-related revenue.
Some argue that having time-track data at hand tasks doesn’t help understand the profitability at all, as you know anyway how much time you need to accomplish an assignment. What’s important here is the difference between a rough estimate and the exact data, automatically calculated by the time-tracking tool and compiled in an informative report.
Problem: Productivity decrease
Solution: Using timesheet data for work on productivity
It has been said a lot about how time tracking helps break the habit to be easily distracted. But how does it work in practice? There are two basic levels where time-tracking data help boost productivity – and here’s how.
On the personal level, time-track summary allows to:
On the team level, this data helps increase productivity in the following ways:
Timesheets can work as a proof for specific activities when taking advantage of different privileges. For example, when applying for the R&D tax credit in the US, the company should prove that an essential part of its activities is research, development and innovation.
Time logs are part of the proof records, as they show the detailed breakdown of hours spent on R&D projects. And, as it’s possible to apply for R&D tax credit retroactively for three past years, accurate previous records can be of huge help here.
To sum up, time-tracking data helps optimize work process, get rid of time-consuming manual work, and making basic work procedures more clear and transparent for all participants.
The key to getting the most value out of its results is organizing the process properly. This means choosing an adequate method, selecting the right tool, and implementing the procedure so that it is clear and easy for the employees. Below, we’ll discuss how to achieve that.
The method of time or attendance tracking that you choose for your team depends on your field, your particular purposes, and common practice. We won't discuss such multipurpose tools as Excel here, because they lack a lot of special features offered by tracking software. Looking for software to track time, be prepared to choose from a wide variety of types. The major defining feature is the way you can enter time.
Systems with swipe cards. At the beginning of each working day employees register their arrival by swiping a badge card against the reader. The same is done when they leave the office. These systems are perfect for registering absence or late attendance.
Clock-in/clock-out systems. These solutions can be rather sophisticated and offer different possibilities of clocking in and out: with special equipment on production site, in the office, by dialing a toll-free phone number, via PC or mobile apps. Some of them even offer special timeclock devices for extreme outdoor conditions, in case they’re used by field workers.
Timer systems. The simplest timesheets with timers allow recording total hours worked. To start tracking, an employee simply has to press a button. More complex tools let you allocate time to different job assignments (e.g. projects or tasks).
Geolocation/geofencing systems. These solutions are installed on the employee's mobile phone. They make use of GPS monitoring, so that when a worker arrives at a job site, the system performs a punch-in. Some timesheets let you track mileage as well. Needless to say, this type of time-tracker is perfect for companies with field workforce.
Background tracking systems. They are based on desktop monitoring which limits the target audience to office workers. Running in the background, the solution automatically captures time spent on particular tasks. Additional features include taking screenshots and registering keyboard activity.
Systems with manual recording. A user logs time against a task manually, either as an interval or amount of time. Built-in notifications will remind employees when it's time to fill in the timesheet. They take things a step further with advanced options — such as leave time tracking, overtime and PTO calculation.
Carefully consider what benefits of a specific time or attendance tracking method are crucial for your purposes and what drawbacks are not acceptable. After that, start choosing the right tool for your team – let’s walk through the most important features that define your final choice.
Vendors offer different systems designed for time-tracking, time management, and attendance monitoring. As we showed above, different time-tracking methods can be implemented depending on the company’s needs and employees’ positions. We can divide time-tracking systems into three groups by the method used in them:
When choosing the right method for your company, consider the purpose of time-tracking in your particular case: managing attendance, preventing improper use of work time, or getting detailed data on performed work.
You can also combine time-trackers of any type with other productivity tools to increase individual productivity and teams’ performance. There are many productivity apps available on the market, and you can choose what suits best for your personal purposes or for your team’s performance goals.
Independently of the method used, it is important where the tool and all its data is located. There are several implementation options:
Today’s trend is online solutions, as they provide better availability and release the staff from all installation, maintenance and upgrade works. However, some still prefer internally hosted software if the company’s internal regulations require to store the data on own servers.
When choosing a time-tracking tool to be used in your company, you need to take into account many aspects. To help you save your time, we made a checklist of features you might consider important.
The cost of the time-tracking solution is often the crucial factor. Small teams tend to opt for free solutions, but quite often they turn out to be very basic or buggy. Also, many of them require unreasonably big effort when installing and configuring the system. So when comparing prices for available solutions, also consider their resulting cost efficiency for your business.
Although cloud solutions seem to be more expensive than on-premise systems, many companies opt for them, because they don’t require any maintenance efforts. Many vendors include all installation, upgrade and data backup works in the fee, so the software is easy to access and use. Keep this in mind when considering the reasonable costs of a time-tracking system.
For self-employed individuals who don’t need to track team’s working hours, affordable standalone applications are available that work on Windows, Mac OS, or Linux. If you need a very basic solution, you probably should consider using a free browser extension with time-tracking and distraction-blocking functions.
When evaluating costs of implementing a time-tracking tool, not only take into account the price itself, but also consider the benefits that optimization and automation will bring by freeing up employees’ time. Also, make sure you haven’t overlooked any hidden costs, such as costs of technical works and maintenance.
While many companies implement time-tracking, there’s still skepticism about it. Employees consider it yet another office chore, and managers rarely observe positive effects of tracking time. Why?
As we mentioned above, time-tracking only makes sense when implemented properly. Otherwise, it turns into a time-wasting activity, which ruins the very idea of work optimization. Below, we collected some simple but helpful advice on how to organize the process to be efficient.
Explain to your team why you’re implementing time-tracking and what is the ideal result of using it in the workflow. People are often reluctant to adopt new procedures – not only because it’s yet another task that needs time and attention, but also because they don’t understand clearly enough what is the purpose of the new activity.
As for time-tracking, there’s another thing that makes people not welcome it: the feeling of being micromanaged. Having to record everything you’ve accomplished and account for every minute of their workday often makes people feel uncomfortable and adds to their reluctance to adopt this practice.
This is why it is essential to explain how the data will be used: it’s not about penalizing people for being too slow or having advanced cyberloafing skills, it’s about optimizing time expenses, or accurate billing and invoicing, or figuring out and getting rid of work process flaws – that depends on your primary purposes.
Even when it’s all clear with your goals, many employees would still have the key question: why do I need this to be done? While sometimes it’s about accurate payroll data and timely payments (although those employers who delay payments for turning in a late timesheet are on slippery ground), time-tracking has various positive effects for each of them personally:
Ironically, it’s not uncommon that time-tracking involves significant time and effort. If your purpose is optimizing work process for both individuals and teams, make sure that tracking time does not consume too much time.
A few tips on how to achieve that:
During the early implementation phase, expect to notice mistakes and gaps not only in the employees’ time-track, but also in the procedure itself. See that not as a sign that time-tracking is not an adequate solution for your problems and purposes, but as an invitation to gather feedback. This step helps you see potential flaws in your implementation of the procedure. Knowing what the problem is, you can make necessary adjustments.
For example, if your colleagues forget to fill in their timesheets, a possible solution is to set up automatic reminders to be sent out to their email address. Or, if they struggle with interfaces, a good idea would be to share documents describing the step-by-step procedure, or have your vendor organize a training session.
If everything seems to be running just fine, it’s still not time to be complacent. Collect feedback from your employees and see what can be improved. That is important to make sure there are no problems being overlooked.
Throughout the years, time-tracking has evolved from the easiest and generally understandable way to calculate work amounts to a source of vital data, bordering on business intelligence. Today, many special tools are available to organize the time-tracking process and optimize work. They allow collecting data that is helpful for all involved participants: regular employees, managers, and customers. By simplifying data analysis, they also allow getting valuable data with minimum effort.
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