We look at the pros and cons of tracking employee time and offer 10 tips for getting the most out of time logging.
Time Logging...[queue the collective groan]. In the world of digital agencies, logging time is a hotly debated topic and one of the more difficult parts of the job to manage. Nobody, and I mean nobody, likes to log their time. When you’re under a tight deadline, neck deep in code or trying to squeeze the creative juices from your brain, recording everything you do every day can be an exceptionally annoying chore. But it can also be the lifeblood of an agency’s accounting and billing practices, and it's often a required component of the agency/client relationship.
On the other hand, if an agency quotes fixed amounts for project work, the amount of money paid for a particular service is going to be the same no matter how many hours are put into the effort. Therefore, logging the specific number of hours doesn’t really mean anything in terms of the bottom line.
And finally, how can you ever be sure that all the time logged is accurate, or if it has all been logged in the first place? All of this begs the question: is logging time more trouble than it's worth?
To Log or Not to Log
There are strong arguments on both sides of this question. At Diagram, we fall on the “log it” side, but not without acknowledging some of the flaws and dangers of time logging. Author and speaker Blair Enns has been one of the more vocal opponents of time logging, or, more specifically, of selling creative services by the hour. One of his primary arguments is that charging by the hour tends to devalue the work of the agency.
A good example of this would be a project to optimize the checkout process of a major online retailer. If the design and programming involved in the project resulted in saving the retailer tens of millions of dollars per year, should that effort be valued the same as an equal amount of design and programming for a small business that doesn’t realize much of a financial gain? This is where the idea of value pricing comes in, or charging for the value of the services offered and not the time required to complete the services.
In this scenario, the major online retailer should pay a much higher amount, due to the fact that the financial value they will receive will be much higher. The hours spent are irrelevant. Taken to the next logical step, why should the agency then bother to log the time at all, especially when the morale boost from employees no longer being burdened with the administrative task of logging will provide real benefits to the agency?
This is where the ideas of “selling time” and “tracking time” begin to diverge. Selling time is simple. A client pays a particular rate for each hour needed to complete a service. Having an accurate time log is essential in this scenario. However, even under a purely value-based pricing model, understanding the work effort and costs involved with each project through an accurate time logging strategy can be a critical part of managing the business. True, the dollars earned will not necessarily correlate with hours logged, but critical business insights can be ascertained, including:
- Project profitiability
- Future project estimating
- Employee productivity
- Hourly rate analysis
But rather than turning this blog post into a debate about the pros and cons of time logging*, we’ll just agree that time logging is a major factor in many agencies’ practices, and it will remain so for the foreseeable future.
As one of those agencies that logs their time, we have been through the struggles and hair pulling frustrations of implementing a workable, reliable system that employees will adhere to and produces the intelligence needed for sound decision making. In one form or another, and with varying degrees of success, we’ve been tracking time for nearly 15 years, so we’ve learned a thing or two about making it work. Here are some insights we’ve picked up along the way:
10 Tips for Logging Time
- Use a good time tracking application or platform. There are many systems out there that are useful for tracking time. We use a system called Accelo, but there are a variety of others that are suitable for different types of agencies. The main point is, don’t try to use a clunky system of manually writing down time or using Excel to record activities. Invest in a modern online tool that makes the time logging job easy and provides readily retrievable reports and data.
- Do it EVERYDAY and often. A few lucky people possess photographic memory, but most of us barely remember what we had for breakfast this morning. Rather than trying to remember and record all of your hours at the end of the week or even at the end of the day, log time as you go. It will be more accurate and catch more of the minor, easily forgotten time that can fall through the cracks.
- Don’t be overly specific with descriptions; stick to generalities. Writing a detailed description of every task performed throughout the day will take more time than the actual work. Keep the logs general and short. For example, rather than logging 5 different entries for each programming task performed on a project that day, write a single entry such as “Database programming” and combine the total hours.
- Structure your day in blocks. One of the time logging killers is a chaotic day jumping back and forth between projects, constant interruptions and trying to do multiple things at once. To ease your time logging effort as well as boost overall productivity, segment the day to work on specific items as much as possible. Schedule non-billable meetings and other attention distracting activities for a certain part of the day and divide the rest of the day according to which project/task you need to focus on. This one can be tricky to pull off sometimes, but the effort will go a long way.
- Use a timer. This is more of a personal preference, but it can be useful in getting a more accurate accounting of time spent on an activity.
- Treat time logging as a job requirement and avoid the carrot and stick approach. Getting full employee adoption is essential if you’re going to log time. Unless everyone is on board and participating completely, you’ll get partial or incomplete data, which is essentially useless. Make time logging a non-negotiable requirement, like showing up for work. Also, avoid setting up a reward or bonus system based on people consistently logging their time. It's part of the job…do it or find another job.
- Recognize outstanding individual effort. Previous tip aside, you now have the data to recognize when someone is crushing it and going above and beyond. Take the time to recognize this and make sure the employees knows their efforts are valued!
- Use the data. Don’t let all the valuable data you’re collecting disappear into a black hole. Take the time to analyze your profitability, rates, productivity, etc. Also, let employees see the results of time logging so they feel more a part of the process.
- Don’t just log the billable time. Internal projects have value and should be tracked as well. Just because work isn’t being paid for, it still factors in to overall profitability and productivity analysis. Make sure you track it!
- Don’t worry about the “extra time.” You don’t need to record every little thing that happens throughout the day just to be able to record 8 or 9 hours. Expect an hour or two a day to be lost to things like breaks, chats with co-workers, some Twitter time, etc. If allowing a little freedom is part of your company culture, you shouldn’t have to log that time. Just assume it happens when you’re looking at overall totals.
One final thought about logging time: while it's the primary focus on this blog post, it should never be the primary focus of an agency. All the accurate time logging in the world will never replace quality work and happy, satisfied clients. Logging time doesn’t generate revenue or increase profits. Those are accomplished by continually focusing on what it is you’re good at and making sure your clients realize the value of your expertise. What logging your time will do, however, is allow you to measure your success and help you build a better, more intelligent business.
*Truth be told, I have been on both sides of the argument myself. An agency can function well either with or without time logging, and, as with most major business decisions, the underlying truth has always been “its complicated.” No judgements either way, but post your comments if you feel strongly about it!
Have questions or comments about this post? We'd love to hear from you.
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