Time Tracking Best Practices | Ultimate Guide

Accurate time tracking is critical to maximizing business and employee performance.

Effective time tracking can play a significant role in achieving these objectives, whether the goal is to enhance productivity, cut down expenses, or boost revenue.

Maintaining a work schedule is crucial for all workers, from executives to managers to team members.

Initially, time tracking seems pretty simple. 

But once you begin implementing time tracking, several additional questions arise, such as whether to track break time separately or organize time entries effectively.

Let’s discuss the best time tracking practices to help you:

• Function efficiently
• Gain useful insights
• Maintain a healthy workflow

Why Is Time Tracking Important?

Time tracking is a crucial aspect of productivity and project management, and it involves recording the time spent on various tasks, activities, or projects.  Time tracking is important for several reasons, including (1.) Time tracking helps individuals and teams be more productive by giving them insights into how much time is spent on each task. It helps identify the areas where they need to allocate more time, streamline processes, or avoid distractions. (2.) Time tracking helps project managers monitor a project’s progress, identify bottlenecks, and make adjustments to ensure the project is completed within the allocated time frame and budget. (3.) For businesses that charge clients based on time spent on a project, time tracking ensures that clients are billed accurately.  (4.) Time tracking helps individuals to manage their time more effectively. Knowing how much time is spent on each task, they can prioritize their work and manage their time efficiently. (5.) Time tracking can help individuals to achieve a better work-life balance. It enables them to be more aware of how much time they spend on work-related activities, ensuring they have enough time for other aspects of their lives, such as family, friends, and hobbies.

Is Time Tracking Trouble?

Time tracking can sometimes be seen as a source of trouble or concern for individuals and organizations, particularly if it is not implemented properly. 

Some potential issues can arise from time tracking:

1. Micromanagement

If time tracking is used to monitor and control employees’ every move, it can lead to micromanagement and reduce trust between old/new employees and management.

2. Time Theft

Time tracking can sometimes be seen as a way for management to identify employees who are not working as much as they should be. However, it can also pressure employees to exaggerate the time spent on a task or “pad” their timesheet.

3. Technical Issues

Time tracking software can be prone to technical issues, such as bugs or glitches, which can cause inaccuracies in time tracking data.

4. Resistance From Employees

Some employees may resist time tracking if they feel it is an invasion of privacy or perceive it as a lack of trust in management.

5. Inaccuracy

Time tracking is only as accurate as the data entered into the system. If employees forget to track their time or input the wrong information, it can lead to inaccurate data and incorrect decision-making.

However, these issues can be minimized or avoided altogether with proper implementation and communication of time tracking policies and practices.

Time Tracking Best Practices | Top 12 Options

Time tracking is a crucial tool for businesses looking to improve their productivity and profitability. 

Here are the top 12 times tracking best practices that businesses should follow:

1. Understand the Ease of Time Tracking

Before implementing a time tracking system, it’s important to clearly understand what you hope to achieve through its use. 

Take the time to consider your objectives and how time tracking can help you achieve them.

Time tracking can provide valuable insights into employee productivity levels, engagement, and the overall ROI of individual or personal projects. This helps make informed decisions and prioritize employee schedules and daily activities more effectively.

By implementing a time tracking system, businesses can better understand how their employees spend their time, which can help identify inefficiencies and opportunities for improvement.

Moreover, tracking the amount of time spent clarifies whether a project is profitable and facilitates selection.

For example, if an IT company is paid $100,000 to complete a project and hires ten engineers at $50 per hour for a 5-day work week, completing the project in four weeks can result in a $10,000 profit. However, if the project runs into five weeks, it could result in a loss of $12,500. 

Time tracking can help prevent such losses by providing real-time data that enables businesses to stay on track and within budget.

This helps keep expenses within the allocated project budget, manage employees more effectively, and achieve a predetermined profit margin.

2. Choose Time Categories and Activities You Want to Track

Now that you know the ease of time tracking, you must choose the time categories and activities you want to track. 

It can be helpful to first focus on project-level activities that are relatively uncomplicated and then shift your attention to other operational activities that may not be directly linked to a specific project. Nevertheless, this is a challenging undertaking.

To begin with, identify the specific projects and deliverables you wish to monitor the time for. 

As you assess one project and its associated daily tasks, consider which time categories will be significant to track. 

Additionally, include supporting tasks such as training, support, or maintenance work. It may also be useful to group certain activities under a category such as “other” or something comparable.

Finally, consider other work-related activities such as mandatory training, business trips, meetings, or conferences in your planning.

After identifying the appropriate time tracking categories, use the appropriate time tracking tools to perform the following tasks:

• Get real-time updates on employee hours
• Use GPS and webcam features to track activities
• Create one or more employee job codes and record the time spent on each.
• Keep track of the workplace locations of employees, especially if you are managing a remote team.

3. Explain The Value of Tracking Time to Your Team

To fully realize the benefits of time tracking, it is essential that all employees participate. Such an initiative is likely to falter without widespread adoption throughout the company. 

Therefore, addressing any challenges and ensuring employees recognize how time tracking can benefit the organization is crucial.

One effective approach is to demonstrate the advantages of time tracking by conducting a cost-benefit analysis and providing statistics on turnaround time. 

Doing so can create an environment where your team will appreciate and understand the value of tracking time.

There are several ways to accomplish this goal:

1. Holding training sessions to educate employees on the benefits of time tracking and how to use the system effectively.
2. Providing regular updates on the progress and success of the time tracking initiative, highlighting its impact on productivity and efficiency.
3. You can support your point by showing the example of a peer company recognizing the value of tracking time and demonstrating how it’s helping them. For better clarity, use numbers.
4. Offering incentives or rewards to employees who consistently track their time accurately and efficiently.
5. 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.
6. Encouraging open communication, Q&A sessions, and employee feedback regarding issues or concerns with the time tracking system. For instance, you can explain to your sales representatives how accurate timesheets increase profits, eventually leading to bigger bonuses.

By taking these steps, you can help your team recognize the importance of time tracking and motivate them to participate in this initiative. 

4. Make Time Tracking a Part of Employees’ Objectives

Time tracking is important for managing employee productivity and performance. 

By making time tracking a part of employees’ objectives, businesses can ensure that their employees are accountable for their time and are working efficiently towards achieving their goals.

When employees are given clear objectives and goals, they are more likely to be productive and focused during their work time. 

By incorporating time tracking as a part of these objectives, employees can better manage their time and ensure they stay on task and meet deadlines.

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.

Initially, requesting more frequent updates on time tracking is recommended to ensure employees are aware of its importance and increase adoption. 

By maintaining continuous dialogue and open communication, managers can address employees’ doubts or concerns regarding time tracking and clarify its purpose.

Incentives can also be a valuable tool in encouraging employees to take time tracking seriously and comply with it wholeheartedly. 

By recognizing and rewarding those who consistently meet or exceed expectations, employees are motivated to prioritize time tracking and embrace its benefits.

Over time, acceptance of time tracking is likely to reach 100% as employees begin to see the value of its insights. 

More and more businesses are moving towards automated time applications instead of manual timesheets for real-time monitoring of daily work activities and better time management.

Cloud-based time tracking can feed data into a central database in real-time, which managers can access whenever needed.

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

5. Create a Project Framework Before Starting Time Tracking

Before starting time tracking, creating a project framework that outlines the project’s scope, objectives, and timelines is essential. 

This framework should include a detailed breakdown of the tasks and subtasks involved and any dependencies or constraints that may impact the project timeline or resource allocation.

By creating a project framework, small businesses can ensure that everyone involved in the project is on the same page regarding its goals and requirements. 

Moreover, a project framework enables small businesses to establish a baseline for tracking progress and measuring success. 

By setting clear milestones and deadlines, businesses can monitor their progress against the project timeline and adjust to stay on track and meet their objectives within the established timeframe.

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

How To Create A Structured Time Tracking Framework?

Here are the steps to create a project framework:

1. Create roadmaps for your projects, break down the project into tasks, and set specific activities for each job. 
2. When you break down each task into specific sub-tasks, employees can log their times, and tracking begins.
3. 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

Having clear and standardized rules for time tracking is crucial to ensure accurate data and consistency across the team. 

If employees track activities differently, it can create confusion and hinder the effectiveness of time tracking.

To avoid this, it is important to establish time tracking rules that apply to all employees. This includes defining how activities should be tracked and tagged, what tools should be used, and how often time should be logged.

Documentation of these rules is essential, and sharing them with the team will ensure everyone is on the same page. 

It is also important to provide guidance and support to employees who may have questions or need further clarification on time tracking standards.

Opening a communication channel such as Skype or email can help address any concerns or questions. 

It is also beneficial to revisit these rules periodically to ensure they are still relevant and effective.

Standardizing time tracking rules will improve accuracy and create a more productive and efficient work environment. 

With everyone on the same page, team members can focus on their work without worrying about discrepancies in how time is being tracked.

7. Keep It Simple and Avoid Chaos 

By utilizing time tracking software, you can make it easier for your employees to log their work hours accurately. 

However, avoiding too many categories is important, as it can lead to confusion and unnecessary decision-making. 

Instead, you can use activity tags or job codes to ensure that all work is correctly categorized.

It is also recommended to set up user roles within the software, which will limit the ability to add new categories to only the administrators. 

By simplifying the business processes of logging the total number of hours worked, you can save your employees valuable time and reduce the likelihood of errors, especially during the onboarding and training of new employees.

This will allow them to focus on their work and increase their productivity. 

Additionally, accurate time tracking can provide valuable insights into employee performance and project management, which can help identify improvement and optimization areas.

The aim is to make time tracking:

• Straightforward
• Effortless
• Quick
• Responsive

How To Use Tags?

To enhance personal time-tracking, you could create tags such as #writing and #publishing to differentiate whether the time logged under the “blog articles” sub-category was used for writing or publishing a post. 

These tags serve as a useful supplement for keeping track of your time and help to remind you of the specific tasks you worked on.

8. Do not Track Every Detail

With so many activities to keep track of, monitoring and organizing every minute of an employee’s day can become a complex task. 

To simplify the process, it’s crucial to identify and track only the specific activities that are important. 

As a rule of thumb, tracking activities that are 15 minutes or longer can serve as a useful approximation.

However, the decision on which activities to track ultimately lies with you. 

It’s important to remember that striving for excessive precision can make the time tracking process tedious and cause individuals to lose focus and interest in the task. 

Instead of fixating on minute details, keep the process straightforward and track only the essential information.

9. Track Even Non-Billable Activities

While some individuals may not see the need to track non-billable activities, a seasoned business manager understands their significance. 

These activities directly impact a company’s hourly service rates and should not be overlooked.

For example, Let’s say you have a project that requires 150 hours to complete, and you’ve set the hourly rate at $60 to generate a revenue of $9,000. 

However, if you factor in non-billable time like brainstorming or responding to client emails, the total time spent on the project may increase to 180 hours. 

In such a scenario, your hourly rates would decrease to $50, impacting your overall revenue.

Tracking non-billable hours is crucial as they are significant in overall project management. 

Although you can’t invoice clients for these activities, you can still categorize and log them for future reference. 

By including non-billable activities in your time tracking, you can adjust your hourly rates if these activities increase, ensuring you maintain a fair and profitable pricing structure.

10. Choose Who’s Responsible For Reviews And Audits

When managing a project, assigning one person to oversee its progress, keeping track of key performance indicators, and reporting to management regularly are essential. 

Similarly, it’s crucial to have one designated person to be accountable for the team’s time tracking. 

This ensures the process is organized, consistent, and efficient, allowing for accurate tracking and management of team members’ time.

What The Responsible Team Member Should Do?

1. Review Frequently 

During the initial phase of a project, it’s crucial to review your time-tracking progress at least once a week, and even better if you can do it once daily for the first two weeks. 

This frequent review allows you to ensure that everyone is logging their time accurately and in a timely manner. 

2. Provide Guidance

Adjusting to a new time-logging framework can be challenging initially. Having a designated person available to assist others in the process is helpful to ensure a smooth transition. 

This person can provide guidance and answer any questions team members may have, helping everyone become comfortable with the new time tracking system.

3. Constantly Improve The Whole System

It’s important to constantly seek ways to improve your time-tracking system based on feedback from other team members, personal notes, and suggestions. 

Look for opportunities to enhance the system by adding new project or task categories or creating new types of time reports (format: CSV, Excel, PDF, Print). 

11. Leverage the Data

Time trackers for timekeeping present 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 show how the company is performing. On the other hand, with graphs, charts, and diagrams, you can pinpoint problems of different activities at an individual level.

You can discover actionable insights into employees’ work patterns with data about work hours available at your fingertips.

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

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

Spreadsheets have become indispensable daily, making it difficult to picture a world without them. 

However, a startling statistic reveals that 88% of spreadsheets contain errors, highlighting the pitfalls of relying too heavily on them for calculations and administrative tasks. 

With the abundance of advanced technologies and timesheet apps (desktop, web, android, or iOS), using spreadsheets to track time seems like a suboptimal choice.

Luckily, time tracking solutions like Buddy Punch offer a more efficient and accurate alternative.

By leveraging the power of cloud technology, Buddy Punch enables you to store and access real-time data from anywhere while providing high levels of automation and user-friendly dashboards to streamline your workflow.

Also, if you want an optimal solution for outstanding employee monitoring, Buddy Punch can take a screenshot and snapshot of your employee every time they punch in to verify that they are the ones who are punching (obviously, your employee must have a webcam connected to their system to utilize this feature).

Here are some of the most prominent benefits of time tracking software:

1. Having A Central Repository

Gone are the days of emailing each employee for their timesheets and waiting for their responses. 

With this software, you can access individual timesheets from a centralized database anytime without requiring follow-ups on manual time punching to check and track projects’ total downtime individually. 

2. Error Elimination

By automating the time tracking process, businesses can minimize the risk of human error and ensure that all employee time is accurately recorded. 

3. 24/7 Access

Business managers do not need 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, direct from the cloud. 

4. Payroll Integration

Businesses that automate their payroll solutions better comply with the law and regulations.

What Are the 3 Time Tracking Mistakes To Avoid?

Time tracking is a critical aspect of managing any business or project. 

However, even with the best intentions, there are common mistakes that business owners and managers make when implementing time tracking systems. 

These mistakes can lead to inaccurate data, reduced productivity, and increased costs. 

Here are three time tracking mistakes to avoid:

1. Not Having Enough Detail About Employee Work Hours

It’s crucial to strike a balance when it comes to timecard simplicity. Oversimplifying your data could be harmful, but keeping it too complicated may also be counterproductive. 

For instance, it’s a given that employees should clock in at the start of their shift and clock out when they finish. However, federal law requires tracking of break times, lunch periods, and regular work hours. 

Properly monitoring overtime is also critical to ensure employees receive fair pay, help your organization manage resources effectively, and minimize overtime spending. 

Moreover, you can track hours spent on particular projects, job sites, and other aspects with tools like Buddy Punch.

This way, you can collect more detailed information about your employees’ work hours and generate useful data to aid in making informed decisions about your workforce.

2. Not Leveraging Time Tracking Software Features

You do not need to be a tech expert to benefit from time tracking software like Buddy Punch. 

The platform offers easy-to-use features that let your business run more efficiently and extract greater value from your timecard reports – all while assuring data is accurate before approval. 

With Buddy Punch, you can:

• Real-time workforce visibility: By logging in to the app, you can easily see which employees work and if anyone is absent from their designated job site.
• Location-based clock-in: With this feature, employees can clock in only after arriving at the correct worksite, ensuring they are not wasting time at other locations.
• Geofencing for job sites: You can set up geofencing to receive alerts when employees leave the designated work area, enabling you to monitor their movements and take necessary actions.
• Customizable alerts: You can set up alerts to be notified when employees approach overtime or switch job locations, ensuring you can quickly resolve any issues and avoid unnecessary expenses.

3. Not Combining Payroll, Workers’ Comp, And Time Tracking Solutions 

The integration of payroll, workers’ compliance, and time-tracking solutions is crucial for optimizing your workforce management and complying with labor laws.

By incorporating all three into a single solution, you can save time and streamline your documentation processes. Buddy Punch is a unique small business solution that combines payroll, worker’s compensation, and time tracking in one application.

With Buddy Punch, you can easily manage payroll for all workers, including employees, contractors, and freelancers, with just a click of a button. 

By integrating worker’s compensation, you can ensure that your employees and business are adequately protected in case of accidents while keeping all your critical employee information in one place. 

When you add time tracking, you can streamline a significant component of your HR function and simplify your HR processes. This integration can help you to achieve greater efficiency and compliance in all three areas.

Check our Buddy Punch Docs section for answers to FAQs and even templates to get a head-start on using our software.

Wrapping-Up

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

Companies that integrate time tracking with payroll are 44% less prone to costly errors.

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.

Let’s discuss the best time tracking practices to help you.