What Is Time Tracking?

What’s Time Tracking and Why It Matters for Businesses

Exploring the Role and Benefits in Modern Workplace Efficiency
What’s Time Tracking

The concept of measuring work has always been important. For instance, Hammurabi's Code, a legal document composed from 1755-1750 B.C., set specific pay rates for different jobs. It said a tailor would earn five grains of silver per day, while a farm laborer would get six grains.

Despite its long history and importance, time tracking has always faced challenges, from methods and tools to simple human errors.

Today, time tracking remains just as crucial as it was in the past. Labor is now the biggest cost for businesses, making up about 70% of their expenses. Surprisingly, 82% of people don't use a formal system to manage their time. This statistic underscores a significant opportunity for improvement in how we approach and value time in the workplace.

What Is Time Tracking?

Time tracking, at its core, is a methodical approach to recording and analyzing how hours are spent in a workplace. It involves more than just the start and end of a workday; it's an insightful process that helps managers understand employees' tasks and activities. This method serves several purposes:

  • Understanding Workloads: It reveals how time is allocated across different projects and tasks;
  • Efficiency Analysis: By tracking time, businesses can identify areas where processes can be streamlined; and
  • Accountability and Transparency: Time tracking fosters a sense of responsibility among employees and provides clear insights into work habits.

Time tracking is a subset of time and attendance; it specifically focuses on recording and detailing an employee's daily activities and accomplishments. To accomplish this, there are several methods for time tracking, each with its unique features:

  • Manual Timesheets: Traditional, paper-based logs of work hours;
  • Digital Time Clocks: Electronic systems for clocking in and out; and
  • Mobile Apps: Convenient, on-the-go solutions for modern, dynamic workplaces.

The method chosen for time tracking often hinges on a business’s specific needs and structure. For instance, smaller enterprises, or those with a more traditional approach, may lean toward manual timesheets. These are straightforward and simple, but they can be prone to human error and require additional time for data entry and analysis.

Tip: An online time clock can help you understand workloads better and keep everyone accountable. It's an easy way to make sure everyone is on the same page.

The Importance of tracking time in modern business

Time tracking plays a crucial role in business management, especially when considering labor is the highest cost for many companies. Accurate tracking of work hours helps not only manage these costs but also enhances overall operational efficiency. It provides project managers with the data they need to allocate resources effectively, identify potential bottlenecks, and keep projects on schedule.

Additionally, time tracking is vital for legal compliance. Adhering to labor laws, such as those regulating overtime and minimum wage, is crucial for any business. By accurately recording employee hours, companies can ensure they are following these laws, thereby avoiding potential legal issues.

infographic: 82% of people don't use a time tracking system

Key Components of Time Tracking

Time tracking involves several key components that work together to ensure accuracy and efficiency. Each of these elements plays a significant role in time tracking. Let’s dive into these components to understand how they work.

Time entry

Time entry, the foundation of time tracking, involves recording employees' start and end times along with any breaks. These records, known as time stamps, can be made on a physical timecard or electronically via time tracking software.

Commonly referred to as "clocking in and out," this process is essential for accurate payroll and workload management. It's a simple yet vital step in ensuring fair compensation and efficient work scheduling.

Timesheet approval

Timesheet approval is a critical step in ensuring payroll accuracy and compliance. This process allows both employers and employees to review and sign off on time cards, verifying that all hours worked are correctly recorded.

This approval stage is key to maintaining error-free payroll records and adhering to Fair Labor Standards Act (FLSA) regulations, which require retaining payroll records for three years and time cards for two.

Payroll and reporting

Payroll and reporting are integral aspects of time tracking. Accurate tracking ensures reliable payroll processing based on approved hours.

Reporting, on the other hand, extends beyond payroll. It involves analyzing time tracking data to identify trends in employee productivity, project costs, and resource allocation. This analysis is crucial for making informed decisions about budgeting, project management, job costing, and overall business strategy.

Exploring Time Tracking Software

Next, we will compare different types of time tracking software to understand their advantages, limitations, and ideal use cases. Each variant offers unique features catering to various business needs.

The Bundy clock

The Bundy clock is a mechanical time clock that operates by stamping arrival and departure times on a paper time card as employees begin and end their shifts.

This system is straightforward and best suited for businesses with a fixed location and consistent shift patterns, such as manufacturing plants or retail stores. Its simplicity makes it a reliable option, especially for companies that prefer tangible records of employees’ work hours.

However, the Bundy clock system does have its limitations. Being a manual process, it's susceptible to human error, such as misreading or misrecording times. There's also the possibility of "buddy punching,“ where one employee clocks in or out for another. This can lead to inaccuracies in time tracking and payroll.

Excel timesheets

Excel timesheets are a digital step up from manual time tracking. They utilize spreadsheet software to record work hours, often including time spent on specific tasks, jobs, or projects.

Excel timesheets offer flexibility and can be customized according to specific needs. However, they still rely on manual entry, which can be time-consuming and prone to human error.

Desktop software

Desktop software for time tracking offers a more advanced solution than manual methods or Excel sheets. It's ideal for businesses that require robust features, like real-time tracking, detailed reports, and integration with other business tools.

This type of software typically runs directly on a company's computers, providing a secure and accessible way to manage time tracking. It’s especially suitable for organizations with a stationary workforce and those that prioritize data security and comprehensive time management features. However, desktop software may not be the best fit for teams working remotely. Since it's installed on specific computers, accessing the software outside of the office or on different devices can be challenging.

Web-based software

Web-based time tracking software, hosted in the cloud, offers flexibility and accessibility for diverse work environments. Ideal for businesses with remote teams or those requiring mobility, this software allows employees to track time from any location using a computer or mobile device.

This type of software is particularly well-suited for businesses that operate across multiple locations or have employees who frequently travel. It's also a great fit for companies that embrace flexible work arrangements, such as telecommuting or varied work schedules. The ability to access the software from anywhere ensures time tracking is not disrupted by employees’ physical location.

Benefits of Time Tracking

Time tracking is a vital tool for businesses, offering numerous benefits that enhance productivity and efficiency. Here's a quick look at the benefits of time tracking:

  • Enhancing Profitability: By focusing on productive tasks, businesses can boost their profitability;
  • Ensuring Accurate Payment: Reduces payroll errors, ensuring fair compensation;
  • Improved Project Management: Keeps projects on track and within budget;
  • Providing Transparency in Processes: Builds trust within the organization;
  • Enhancing Communication of Progress: Improves reporting and deadline management;
  • Accurate Project Cost Evaluation: Helps in effective financial planning;
  • Reduction in Paperwork Time: Saves time spent on manual calculations;
  • Maintaining High Motivation Levels: Increases employee organization and productivity;
  • Resolving Issues and Conflicts Efficiently: Provides clear records for payroll disputes; and
  • Better Task Organization and Prioritization: Streamlines workflow management.

How OnTheClock Can Help You Track Time

OnTheClock provides a comprehensive solution to time tracking challenges. Here’s how it streamlines the process:

  • Accurate and Automatic Calculations: OntheClock saves time by accurately automating time card calculations, reducing the average weekly calculation time for small businesses;
  • Punch Anywhere, Anytime: OntheClock allows time tracking from various devices, including desktop and mobile, reducing the likelihood of time theft and inaccuracies in time tracking.
  • Payroll Integrations: OntheClock offers efficient integration with popular payroll systems, like QuickBooks, Gusto, Paylocity, and more, ensuring a smooth transfer of time card data to payroll.

Make Time Tracking Easy with OnTheClock

Simple, Fast, and Reliable

Time Tracking Across Different Work Environments

Time tracking can be used in a wide range of work environments, from classic office settings to remote teams and freelancers. This section will explore its application in different settings.

Time tracking for freelancers

For freelancers, time tracking is beneficial to their success. Tracking time allows them to gain valuable insights into their work processes and identify areas for improvement. By analyzing time logs, they can identify which tasks are taking up the most time and make necessary adjustments to increase efficiency.

Additionally, time tracking enables freelancers to set realistic deadlines and bill clients accurately. For example, a graphic designer can use time logs to show clients exactly how many hours were spent on different design elements, ensuring transparent and fair billing. This process guarantees they are compensated fairly for every hour of work and ensures they are paid fairly for the work done.

Time tracking for contractors

For contractors, time tracking is vital for understanding job profitability. Since tasks vary in duration and billing rates, accurate time tracking helps contractors assess which jobs are most profitable. It allows them to compare the time spent on a task against its financial value.

This knowledge is crucial, especially when deciding on fixed-price projects or varying task rates. By predicting the time investment required, contractors can effectively evaluate the potential earnings of a project before starting, ensuring they make informed business decisions.

Time tracking for small businesses

In small businesses, where resources are often limited, using time effectively is essential. Time tracking enables small business owners to understand where their team's efforts are going and to allocate resources more efficiently. Also, time tracking can help small businesses avoid problems, such as time theft, inaccurate billing, and compliance issues.

Time tracking for remote teams

With the rise of remote work, efficient time tracking allows companies to monitor employee productivity. Despite the perceived freedom of remote work, challenges exist, as highlighted by a National Bureau of Economic Research study, showing an 18% drop in productivity among full-time remote workers compared to in-office employees.

This underscores the need for effective time tracking tools in remote settings, ensuring that work hours are used efficiently and productivity levels are maintained. Time tracking for remote teams is crucial for balancing the autonomy of remote work with the accountability necessary for business success.

Implementing Time Tracking in Your Business

Evaluating time tracking tools and apps

When selecting time tracking tools and apps, the main considerations are pricing and features. It's important to choose a tool that aligns with your specific needs, whether for billing, payroll, or project management. The time tracking tool you select should support your business goals and work processes. For example, one important feature for payroll management is overtime tracking. A good time tracker should accurately record and differentiate regular hours from overtime. This allows businesses to efficiently comply with labor laws and ensure fair compensation for their employees.

Introducing employees to time tracking

Introducing time tracking to employees requires clear communication and support. Start by educating them about the benefits and reasons for implementing time tracking. This includes explaining how it helps in project management, payroll accuracy, and overall business efficiency. It's also important to address any concerns and resistance upfront. Establish your goals and reassure employees that the time tracking software will not be used detrimentally, such as for invasive monitoring.

Another important step is to provide comprehensive training on how to use the time tracking software. This training should be straightforward and accessible, ensuring all employees, regardless of their technical skills, can easily understand and use the tool.

Encouraging time tracking adoption

Motivating employees to adopt time tracking can be achieved with the right strategies. For example, offering incentives for consistent and accurate tracking, such as small bonuses or public recognition, can be very effective. This can provide employees with a tangible reward for their efforts and encourage them to continue tracking their time accurately.

Additionally, sharing success stories of how time tracking has enhanced productivity in similar organizations can also inspire your team. Hearing about the positive impact of time tracking from others can help employees understand the value and potential benefits it can bring to their own work.

Another important aspect in motivating employees to adopt time tracking is creating a positive culture around it. This involves clearly communicating the benefits of time tracking for both the business and individual employees.

Time Tracking Best Practices

Efficient and effective time tracking is key to business success. Here are some best practices to ensure your time tracking is as productive as possible:

  • Automate the Process: Aim to automate time tracking as much as possible. This can include preprogrammed timesheets or allowing employees to duplicate time logs for similar workdays, reducing manual input and focusing on priority tasks;
  • Clear Policies on Time Tracking: Establish clear policies on what should and should not be tracked. For instance, if employees tend to have idle time at the start of their shift, encourage them to clock in after completing these activities. This approach can significantly save on payroll costs;
  • Link Activities to Projects or Clients: As much as possible, tie activities and tasks to specific projects or clients. This helps in accurate billing and understanding how much time is spent on client-related tasks versus internal activities. For example, emails related to a specific client should be tracked under that client's project, and
  • Regular Audits and Updates: Conduct regular checks to ensure the time tracking system is functioning correctly and update it as needed.

By implementing these practices, businesses can make time tracking a more efficient and valuable tool, leading to better project management, accurate billing, and overall enhanced productivity.

OnTheClock Employee Time Tracking

Written by

OnTheClock Team

OnTheClock is the perfect app for business that want to keep track of their employees' time without spending hours doing it. With OnTheClock, you can forget about the old way of doing things.

Do you want to know more about how OnTheClock works?

Leave Your Thoughts...

(required, will be shown)
(required, will not be shown)