Time Tracking Best Practices

Managing employees’ time allows for efficient resource use and improved performance. One of the primary benefits of tracking the time and productive hours of your team is saving money.

The average daily productive time for employees is around 83 minutes.

Employees spend nearly 8 hours each week on non-work related tasks, which range from checking their phones to being interrupted by others. Since the average hourly wage in the US is currently around $25, US companies could potentially be losing more than $10,000 per employee every year.

money lost stats from lack of time tracking
Source: Finances Online

Time theft and unrecorded work activities account for billions of dollars lost annually. Therefore, it makes sense that over 66% of companies track employee time.

While time management is beneficial for both employees and employers, not everyone will want to have their time tracked.

This guide will help you get everyone engaged in time tracking, follow the best practices, and fully leverage the benefits of time tracking for your business.

1. Understand the Importance of Time Tracking


What do you want to achieve with time tracking? Do you want to know more about which projects or which tasks are most profitable for your business? Which employees are more efficient than others? 

Prepare for deploying time tracking by understanding what it can do for you first. 

Time tracking brings insights into employee productivity levels, engagement, and an overall ROI for individual projects. Such intel will help you make better decisions and better prioritize employee schedules and daily activities.

A typical day at the office involves 8-9 hours of work. Employees use this time differently, so their daily productivity varies.

This is where time tracking comes in.

Time tracking can improve your employees’ productivity and help them work together toward the same goal.

Moreover, tracking the amount of time spent clarifies whether a project is profitable or not and facilitates the project selection process.

Let’s study an example:

Suppose you’re the business manager of an IT company hired by X to complete a project, and there’s no time limit for the deliverable. Let’s assume they’ve paid you $100,000. You hire ten engineers and pay them $50 per hour. With a 5-day work week, if you complete the project in four weeks, you can make a profit of $10,000. But if it runs into five weeks, you lose $12,500.

Time tracking can prevent such squandering. 

Tracking time helps you understand if you’re on the right track, and it enables you to change course if not.

Additionally, the time tracking system allows you to modify your approach in real-time to keep expenses below the allocated project budget, manage employees effectively, and meet a predetermined profit margin.

2. Choose Time Categories and Activities You Want to Track

Now that you know why tracking time is imperative, you must select the time categories and activities you want to track

Think about project-level activities that are more straightforward, and then consider other operational activities you can’t necessarily tie to a particular project. 

time categories to track However, this is not an easy task.

First, determine the projects and deliverables for which you want to track time. Go through one project and related daily activities when identifying time categories that will be important to track.

Then, include supporting tasks like training, support, or maintenance work. You can even group activities into a joint category, named “other” or something similar.

Lastly, plan to include other activities related to work, like business trips, mandatory training, meetings, or conferences.

Once you identify the time categories, use the right time tracker for the following:

  • Get real-time updates on employee hours
  • Use GPS and webcam to track activities
  • Create one or more job codes for employees and map time spent on each one
  • Track workplace locations of employees

3. Explain The Value of Tracking Time to Your Team

To reap the maximum benefits of time tracking, all employees should be on-board. Without a company-wide adoption, the initiative is likely to fail. 

Hence, it’s important to tackle challenges and help employees understand that time tracking will serve the company’s greater good.

Demonstrate the benefits of time tracking by using cost-benefit analysis and turnaround time statistics to create a conducive environment where your team will be aware of and understand the value of tracking time.

Some of the ways to do this are:

Case Studies

You can support your point by showing the example of a peer company that’s recognized the value of tracking time, and demonstrate how it’s helping them. For better clarity, use numbers. 

Personal Adoption

True leaders lead from the front. If you are trying to get your team excited about time tracking, you can start by tracking your own time and prove how that’s helped you achieve more in less time. Transparency is a valuable tool in team management.

Q&A Sessions

People generally don’t want their work times to be tracked. Many might see it as a violation of their independence. Thus, it’s helpful to have open Q&A sessions to address any doubts and explain the productivity and business benefits of reducing inefficiencies. Instead of making time tracking about the company’s bottom line, draw focus on the benefits your employees will have. For instance, you can explain to your sales representatives how accurate timesheets lead to increased profits, which can eventually lead to bigger bonuses.

Additionally, making the time tracking process automated and straightforward will also help you convince your employees to make it a part of their routine.

4. Make Time Tracking a Part of Employees’ Objectives

Use positive reinforcement techniques to ensure every employee tracks their time correctly, but also make it a part of their job.

If you explained the benefits of time tracking and if you have clear instructions, this part will be more comfortable. However, habit-forming takes some time, so be sure to repeat the importance of daily time tracking in the beginning until it becomes a habit that everyone does perfectly.

In the beginning, ask for more frequent updates on the status of time tracking, which will help employees be more aware of the importance of tracking their time and secure better adoption.

You can quickly solve doubts your employees have about time tracking through continuous dialogue and proper communication.

Consider providing incentives to employees who took time tracking seriously and complied with it wholeheartedly. Over time, acceptance is likely to reach 100% when employees realize the value of insights that time tracking will bring.

For real-time monitoring of daily work activities, more and more businesses are now moving towards automated applications instead of timesheets. Cloud-based time tracking can feed data into a central database in real-time, which managers can access whenever they need it.

Such simplification and automation represent additional ways to secure company-wide adoption of time tracking.

5. Create a Project Framework

A goal without a plan is just a wish.

You need a plan and a clear vision of your business processes to efficiently track time for a particular task. Documenting project scopes, deliverables, and workflows is a foundation for implementing time tracking across the board.

This is where the creation of a meticulous framework based on activities can help immensely. Let’s look at this example of making new toys.

Here, the tasks are market research, product design, product development, production planning, marketing, and project management. You can further break down each task into sub-tasks.

project framework for time tracking

Create roadmaps for your projects and break down the project into tasks and set specific activities for each job. 

When you break down each task into its specific sub-tasks, employees can log in their times, and tracking begins.

Strive to make a difference at the operational level. Carefully managing and tracking productive hours every workday can enable the project to be completed within the stipulated budget and timeline.

6. Standardize — Set Up Clear Rules for Activities, Projects, and Categories

Now that you have an overview of your business, projects, and associated activities, you will be able to set up rules for time tracking.

Standardization and setting up clear rules is essential for activities and projects. 

Likewise, if you want time tracking to work, make sure that the rules for how employees should track time are the same for everyone. 

The last thing you want is two employees tracking the same activity in different ways, tagging it with different names. 

If you don’t set up directives, this will happen, especially with activities that are not related to a specific project—John will log replying to emails as “administrative,” while Anna will record it as “other.” 

To keep things in order, you will have to document time tracking rules explaining how you want activities to be tracked and share these standards with your team. Also, you will likely have to answer additional questions regarding time tracking standards in the beginning, so it might be wise to open a Skype (or whatever channel you use) thread for this matter and address concerns on time.

7. Keep It Simple and Avoid The Chaos 

When using a time tracking software, you can simplify punching in and out to your employees. 

While you should curb the number of categories as they might cause confusion and unnecessary decision making, you can also leverage activity tags or job codes to make sure everything is appropriately categorized. 

Then you can set up user roles, so only administrators can add new categories.   

The goal you want to achieve is that time tracking becomes:

  • Simple
  • Easy
  • Fast
  • Responsive

We mentioned the importance of rules and standardization, but you should also prepare documentation to account for anomalies

Sometimes, employees will also forget to track their time. We are all human, and such mistakes happen. It is helpful to create an FAQ sheet to address all common problems and questions about time tracking.

Procedures covering situations like these will help you address all employees’ questions and simplify their time tracking process.

8. Don’t Track Every Detail

There are so many activities to track. 

It becomes complicated to track and map every single minute of the employee’s day at the office. Therefore, it’s essential to identify specific activities that are important and track only those.

As an approximation, track activities that are 15 minutes long or more.

The decision about which activities should be tracked is yours. But keep in mind that trying to account for every little detail makes the time tracking process tedious. It causes people to lose concentration and interest in the process.

Instead of insisting on excessive precision, keep the process light and track only those details that are indispensable.

9. Track Even Non-Billable Activities

To some, tracking non-billable activities may not seem necessary. But an experienced business manager knows better than to ignore them since they have a direct impact on the hourly service rates of a company. 

Let’s take an example:

Suppose you have a project that will take 150 hours to complete. You’re looking at a revenue of $9,000, so you set the hourly rate at $60. If you calculate non-billable activities as well, such as brainstorming or replying to client emails, the time spent on a project can go up to 180 hours. 

In that case, with a revenue of $9000, your hourly rates will go down to $50. 

tracking non-billable hours

Tracking non-billable hours is critical. While you can’t include those activities on a client’s invoice, you can categorize and log them. Including non-billable activities will allow you to adjust your hourly rates if such activities increase. 

10. Choose One Person Responsible For Reviews And Audits

Florence Nightingale once said, ‘To be in-charge is certainly not only to carry out the proper measures yourself but to see that everyone else does so too.’

Similarly, you need to choose someone who can track the timesheets of the employees and periodically review them. This person will be responsible for others, and she will need to make sure everyone follows the same process, provide guidance, and even further improve the system. When you assign one person to the job, productivity rises and time will likely be tracked more effectively.
timesheet auditor When you assign one person to the job, productivity rises and time will likely be tracked more effectively.

A team member responsible for timesheets can address rising issues, collaborate with other employees to solve problems, and act as a bridge between the team and the higher leadership.

11. Leverage the Data

Time tracking presents a means to an end, not the end itself. It’s a discovery tool that will make you aware of performing and underperforming areas of your company so you can improve. 

Active time tracking can help shed light on how the company is performing as a whole. On the other hand, with graphs, charts, and diagrams, you can pinpoint problems of different activities at an individual level.

With data about work hours available at your fingertips, you can discover actionable insights into employees’ work patterns.

Moreover, this intel can identify profitable projects and outline timelines within which they must be completed to retain profitability.

Whatever information you gather, share it with your team, especially if you manage to use data constructively, and improve your business. If you share the charts containing time tracking data in team meetings, you will prove to your colleagues that time tracking apps are indeed valuable. They will get a sense of how the whole company is spending time and realize the importance of their role with daily punching in and out.

12. Forget About Spreadsheets and Automate With Tools

It’s hard to imagine a world without spreadsheets. But did you know that 88% of them have errors?

Over-reliance on spreadsheets quickly leads to miscalculations and administrative errors. And if you think of it, with every possible technology and tools available, tracking time on spreadsheets makes little sense.

Time tracking tools like Buddy Punch help you save real-time data in the cloud and allow high levels of automation.

buddy punch screenshot

Some of the most prominent benefits of software for time tracking are:

Having a Central Repository

You no longer need to send emails to every employee and wait until they share their timesheets. The software lets you have individual timesheets available at the central database and accessible at all times. 

Error Elimination

Automation helps eliminate human errors. It ensures that time is always tracked the correct way for each employee. Thus, the manager can rest assured that every statistic is legitimate, and the project is moving ahead as planned.

24/7 Access

Business managers no longer have to compile all the data onto a single spreadsheet at the office to perform operations. They can now access the data from anywhere, on any device, at any time, directly from the cloud, and refer to it readily.

Payroll Integration

Companies that connect their time tracking software with payroll solutions better comply with the law and regulations. 

time clock software payroll integration

Having more control over employee overtime allows you not only to have an accurate payroll but to manage the company’s cash flow better. Thus, more and more companies are now opting for automated applications.


Implementing best practices in time tracking will help you make the most of it. Here’s what you have learned so far:

time tracking best practices checklist

Companies that use time tracking and integrate it with payroll are 44% less prone to costly errors. And from the employees’ perspective, 81% of them in the US think that tracking time at work improves the quality of work. 

While companies differ in which activities they track and how they categorize work activities, tracking time itself has become essential for every business.

As discussed in this article, every business should have a compelling end-to-end solution for tracking time. It starts by identifying activities to be monitored and ends with drawing insights from gathered data to improve. 


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