No One WANTS to Track Their Time But...

The idea of time-tracking brings a lot of negative connotations with it. When people hear that their time on the job is going to be tracked, they tend to think they’re going to be micromanaged or spied upon.

It’s true, some managers do use time-tracking like a noose around the necks of employees. But better managers — like you — use it as a tool to increase profits and highlight the skill sets of their team.

Successful companies track time because they understand how valuable time is. It allows them to estimate better, deliver more accurately, and charge for changes. In other words, they make a lot more money for the work they put in.

Time-tracking isn’t the evil villain of the story. It can be your fairy godmother — if you know how to use it.

Manage Your Company Like an Agency

Before the pandemic, most companies in our space were time and materials companies. We charged for the materials needed for the job and how many hours it took to get the job done. However, the time required to plan those activities was considered overhead: the inherent cost of doing business.

But things have changed. The value today is in WHAT we get done, not HOW we get it done.

Teams now spend more time managing OTHER teams and suppliers in the supply chain for the benefit of customers. This takes time, and this kind of time is extremely valuable.

We’re not just trying to cover the cost of four hours of Vectorworks drawing that the project manager does. We’re trying to capture the value of the Vectorworks drawing itself, not the length of time it took to create it.

This is a shift toward value-based selling. When you sell value rather than time plus materials, time becomes even more valuable because of its potential uses in other areas. It’s true across your entire team, from sales operations to warehouse management to guys prepping shows in.

So if the value is the drawing, why track the time it takes to produce it?

If your team doesn’t understand how much time it should take to carry out a task, they’ll use all the time they have available to get a task done. It’s human nature, but it creates a false sense of busyness that keeps your capacity from increasing.

If you can deliver value that’s worth $500 an hour, then spending three extra hours working on something you’re charging the client $150 for doesn’t make any sense.

When your team over-delivers on time, it essentially steals that time from the company. And, as everybody knows, time is money.

Benefits of Time Tracking

Track Costs Realistically

You don’t know what something costs until you measure it. But you need to know what something costs in order to determine how to sell it.

A lot of companies have been doing so many things well for so many years that they forget to measure them. They charge for things that are easy to measure (like hours on-site), but they don’t charge for things that are difficult or inconvenient to measure.

But the aspects of the job that are difficult and inconvenient to measure are often the most valuable.

The hard-to-measure tasks are generally executed by your most valuable personnel with their significant expertise. They’re doing extremely important work, but no one observes them performing the tasks.

Sometimes what they’re doing actually exceeds the value of the job you’ve sold, and their expertise is subsidizing lower costs for the customer.

You need to measure this expert-level input, too.

Understand Your Time Subsidies

The biggest benefit to time tracking is that you know exactly how much it costs to do what you’re doing. Then you can decide if you really want to give that much time away.

Sometimes a company will opt to subsidize lower prices for customers as a strategic choice. Maybe you’re trying to create a value-add situation for the customer. Maybe you need to cover up a mistake. There are a lot of good reasons for creating a time subsidy.

At some point, however, it stops making sense. You won’t know where that point is unless you measure.

Estimate Scope of Work Accurately

One way of calculating value is to ask the customer for a budget, and then deliver a solution they can afford.

Too often, companies dance to the familiar tune of bidding and quoting in the hopes of magically figuring out what customers want and need. There’s a lot of wasted energy in that kind of dance.

If you know the customer’s budget and what it takes to meet their criteria, you’ll know whether you can afford to do the job before ever writing a proposal.

If the customer’s budget is $1,000 and they have $5,000 worth of expectations, that should be a hard stop. But if much of our cost is tied up in things we haven’t measured, then we won’t know when we’ve crossed that line.

For example, I once knew a project manager/salesperson who did the same show year after year. It wasn’t a huge project, maybe a $20,000 show. But the reason it was a $20,000 show is that the project manager did $15,000 worth of work to keep it at $20,000.

If he hadn’t done the work, the show probably would have cost $50,000.

Of course, we often do that sort of thing for charity work or a nonprofit. But you have to shine a light on the work you’re doing so that you know exactly how much you’re giving away — and if you should keep doing it.

Sometimes, we don’t want to tell customers the true cost because we don’t want to have that uncomfortable conversation. We just eat it. But listen to how the client I just mentioned responded when they found out what the project manager was doing:

“We were wondering why the price never changed! How much should we be spending? We don’t want you to work for free.”

Forecast Your Time

It’s easy to feel like the sky is falling and you need to hire more people when you feel busy, but that’s a qualitative response.

Once you’ve measured and have a better understanding of how much time it takes to deliver a service, you can have a quantitative response to busyness.

By tracking your team’s time, you know that based on what you’ve sold, you need such-and-such hours on jobs for the next five weeks. And you can find personnel accordingly.

Pricing a job is making sure you understand what you’re going to do, what it costs to do it, and then adding margin on top of that.

Then, when you’re trying to meet the customer’s budget, you have levers to pull on price. You can change the cost by changing the margin or by changing the scope. If you change the scope, you reduce the cost because you reduce the number of units that go into the estimate.

What Time-Tracking Should NOT be Used For

As soon as employees hear the phrase time tracking, they think a witch hunt is coming. They assume you’re trying to pinpoint a problem and pin it on a person.

Imagine a call center where management records how many seconds it takes each telemarketer to get to a certain point in a call. They do exist. And they’re a living hell for everyone involved.

But you’re not running a sweatshop. You’re not in business to micromanage. You’re just gathering data.

Using time-tracking to insert yourself into the employee process isn’t a very smart management tool. Your employees are professionals. They’re production managers, salespeople, operations managers, and finance people.

But how their hours are used speaks volumes about how well the business runs.

You’re not out to change how the employee works. You want to change how the value of their work is perceived.

If, for example, an employee says it takes 12 hours to create a drawing, you’re not going to micromanage that down to 10 hours. You’re going to take that information and make sure the company recovers the value of 12 hours of work.

You’re not out to change their process. You’re just making sure you’re valuing that process correctly. Ultimately, I believe this leads to valuing your employees more.

What if that drawing would take the average person 20 hours to produce? Isn’t the employee that can do it in 12 worth more?

Time Tracking Benefits Employees

I once worked with an integration firm, and their bottleneck was always the design engineers. They spent a lot of time drawing and working at the computer.

The average design engineer was working an 80-hour week. They were in the office maybe 50 hours, but worked 30 hours at home.

We started tracking their time and found that a full third of it could have been done by somebody else, and more cheaply. The idea was to take away those excess 30 hours so the engineers could work a quality 50 hours.

That’s really what it’s all about. Time tracking will get you and your team the properly allocated resources you need.

Tips To Track Time

Time tracking is fairly simple, and I think anybody can do it themselves. They just need to know that it’s important.

If you don’t feel comfortable starting this yourself, though, you can engage a coach for time tracking.

Find an expert who can give you the tools and processes you need to be more productive.

Or, if you want to try it on your own, there are numerous apps out there that will help you track time. Do a bit of exploring and find what works for you. A time coach can help with this as well.

A time management course may also help. I’ve seen some available on LinkedIn.

Better data leads to better decisions, but understanding the importance of time tracking data is the first step toward reaping the benefits.