Deep Dive into Time Tracking: Definition, Benefits, Best Solutions in 2024

In this article, you’ll get a better understanding of the practice of time tracking, learn how it can improve team productivity and overall business efficiency, and find out more about the best time tracking solutions currently available in the market.

In recent years, Time tracking has been growing increasingly popular over the recent years. And while just a few decades ago, the practice of time tracking was used mainly by employees to keep track of their daily activities, currently, it is also utilized by employees and employers alike to monitor and enhance their company’s performance.

And while adding time tracking to your organization’s daily work routine can be rather challenging and it’s usually an extra job that most employees don’t want, tracking working hours actually helps both managers to easily understand their team members’ productivity levels and employees to actually perform their jobs better.

Accelo’s “Time is Money” study found that the leaked time lost to email, meetings, calls and memory loss not being captured in timesheets across all US professionals was estimated at 59 million hours every single work day – which (if billed out at $150/hour) would come to $8.8 billion. That’s a staggering cost of poor time tracking habits. 

The question is, since keeping track of worktime seems to be such a hard and strenuous task, how can a manager or even an employee do it well?

In today’s article, we’ll share with you the most comprehensive guide into time tracking, from its main benefits and ways it can improve your team productivity to best time tracking solutions and helpful practices to help your organization achieve business goals and objectives. 

By understanding the importance of time tracking, exploring its different methods, choosing the right tools, implementing it into your daily work practices and analyzing the data, you can actually take control of your time and optimize your productivity.

What Is Considered Time Tracking in the United States?

Time tracking is the process of tracking and recording the time that each employee spends working. It helps businesses understand what everyone in the company is doing during working hours. And whether your business is an IT company, a digital agency, or a construction company, you most likely use time tracking in some way. And now, when remote work is more common than ever, time tracking is especially important.

Accurate time tracking can help businesses stop leaking money. It can also enable them to enhance employee productivity by giving more insight into how they work. You can use time tracking to identify workflow bottlenecks and find out who the most productive team members are, which, in turn, can help you learn what work practices would be best to implement.

Before we go on, let’s clear something up: time tracking is not micromanaging. In fact, it’s quite the opposite. Its purpose is to help you make data-driven decisions. Time tracking helps you avoid all the unnecessary check-ins and saves your team from having to stop what they’re doing just to give management a progress report.

Time tracking also promotes transparency for both managers and employees. This way, leadership gets insight into how remote employees spend their working hours. And employees get a way to prove that they’re actually working without constant disruptions of doing a check-in.

All in all, time tracking provides a number of benefits for businesses. Let’s discuss the seven biggest ones next.

What Are the Benefits of Time Tracking?

Inefficient workflows might be costing your company. Time tracking can help you narrow down exactly where you’re missing out, and how to take action. 

Here are the seven main benefits you’ll see from accurate timekeeping.

1. Better resource allocation

   By tracking the time your employees spend at work and how much time is spent on productive tasks, managers can identify areas where they need to allocate additional resources, such as more or less staff, money, and equipment, or make required changes to the schedule to help projects stay on track.

2. Enhanced efficiency and accountability

   Time tracking serves as a fundamental tool for employees as well, helping them comprehend how they distribute their time among various tasks. By identifying and addressing time-wasting activities, they can substantially enhance their overall efficiency

3. Improved accuracy

   With the help of time tracking, managers can better estimate the time required for similar tasks in the future rather than navigating blindly in the dark so to speak, thus ensuring more accurate project resource planning moving forward.

4. Precise payroll management

   For businesses that bill clients based on the actual amount of time spent on a particular project, time tracking plays a pivotal role in maintaining accurate records. It guarantees that the invoicing aligns with the actual work performed, helping managers avoid both underbilling and overbilling errors.

5. Better budget management

   By understanding the amount of time employees spend on certain work-related tasks, managers can identify areas where they need to reduce costs or adjust the project’s spending, ensuring it stays within budget.

6. Optimized project management

   Time tracking enables managers to effectively allocate tasks, which, in turn, aids in meeting project deadlines and ensures that every team member’s time is utilized efficiently, which is indispensable for streamlining project workflows.

7. Compliance with labor laws

   Adhering to labor laws is of paramount importance, and so by accurately recording employee working hours through time tracking managers can proactively mitigate potential legal issues associated with wage and hour compliance.

How Can Time Tracking Improve Team Productivity?

Time tracking goes beyond simply keeping track of the hours everyone on your team has worked. It is about understanding how time is being spent and identifying areas where improvements can be made. Thus, one of the key benefits of time tracking is its impact on productivity.

Delving deeper into the world of time tracking helps uncover a plethora of insights that can revolutionize the way daily work tasks are approached. By meticulously recording employees’ time, managers not only gain a better understanding of their team’s work habits but also unearth hidden inefficiencies that may be hindering overall progress.

Tracking working hours helps gain a clearer picture of where employees’ time is going and how it is being utilized. This allows managers to identify and eliminate time-wasting activities, prioritize tasks effectively, and ensure that everyone is spending their billable hours on the activities that actually contribute to the company’s goals.

Moreover, time tracking empowers managers to analyze current workflows and optimize them for maximum efficiency. By honing in on time-consuming tasks or bottlenecks in the current business processes, managers can streamline the work being performed and overall improve employee productivity.

How Can Time Tracking Positively Affect Company Efficiency?

Businesses in various industries turn to the practice of time tracking to improve team productivity and reduce revenue leaks. Finance, ecommerce, agencies, software development, and manufacturing are just some of the industries that take advantage of time tracking software.

It can help make more accurate project estimates and meet deadlines more consistently. It can also be used to distribute work more effectively by identifying which team members have downtime and which ones are overworked.

Time tracking helps managers to assess the biggest culprits of revenue loss, such as:

• Inefficient workflows
• Overstaffing (a team that’s bigger than it needs to be)
• Late payments from clients
• Failure to quantify marketing efforts
• Fees from services that are actually redundant or unnecessary for the business
• Exuberant rent fees

Many of these issues work in tandem. For example, workflows that are inefficient might make a manager think they need seven people to do a five-person job, resulting in overstaffing. Then, hiring too many people adds to the overhead, sometimes without actually bringing in more revenue. All of this leads to higher costs for the business, and the cycle continues.

Considering that these problems stem from a common source, they can be fixed with a common solution.

Here’s how time tracking can help address these common issues:

• Inefficient workflows: Time tracking can help uncover bottlenecks in the business operation model. Without knowing where the team’s time is going, it’s impossible to identify what’s holding things up.

  Let’s look at the example. A front-end designer on the team is assigned seven tasks and works 40 hours a week while there’s also a part-time developer waiting on assignments.

  If this is the case, there are either staffing issues or a project plan to correct. It’s possible that the workflow isn’t as smooth as it could be, and projects pile up with the aforementioned designer because they all reach the design stage at the same time.

  Project manager can look at the steps before design and determine whether the project timelines are off, or if more designers are required for the volume of work they have.

• Overstaffing: By monitoring how productive each person on the team is, managers can easily determine whether the resources assigned to a project match the amount of work and project scope. Time tracking can also highlight which specialists are underutilized, so that project managers can move them to different projects as needed.

  Some software options additionally provide analytics on activity that give more context to time tracking.

  This way, it can be easily noticed if, say, one person who usually works at a level of 60% activity has dipped to 20%. It could mean that they don’t have enough to do, which can prompt a check-in, helping avoid overstaffing or bringing on new hires without actually having enough work for them to do.

• Late payments from clients: Most time tracking tools offer integrations so managers can handle invoices and reminders from the same dashboard, making it much simpler to get paid on time.

  This means time doesn’t have to be wasted on digging through the emails. Managers can have a record of when the invoice was sent, and if it was opened or paid.

• Unquantified marketing efforts: Time tracking helps companies figure out ROI.

  For example, if a freelancer has been paid $250 to write a blog post and the content marketer $50 to edit it, with the average client being worth roughly $600 a year would mean that having each post bring in one customer would equal a 200% ROI.

• Fees from services you don’t need: Some time tracking tools allow managers to see the apps and URLs visited by employees during the tracked hours. Keeping track of what applications the employees are actually using can help see which digital solutions are actually worth the subscription fee.

  The team may claim to require the pricey analytics and reporting dashboard, but then, once the manger checks the URL reports, they’ll see that it’s barely being used.

  At the same time, the reverse could also be true. If a certain task is taking a team member hours to perform each week, there’s likely some automation tool that can speed things up and take work off their plate.

• Rent: Time tracking gives employers the confidence to hire remote employees, freelancers, and contractors, allowing to dramatically reduce the overhead. Both managers and employees alike won’t feel tethered to an office when they have the tools to make remote work possible.

  Most companies understand the benefits of remote work by now, so giving up an office space and the expenses that come with it can be considered a risk that’s well in the past.

Best Time Tracking Practices

Now that it’s more obvious why time tracking is essential for the business, it’s best to consider carefully which method of tracking time employees spend on work-related tasks your particular business needs based on the insights from the team.

1. Informing employees about time tracking

   Employees tend to fear surveillance from employer during their working hours. To mitigate this fear, it’s better to discuss the implementation of time tracking software with the employees and then implement it after said discussion. The policy for time tracking or employee monitoring should stipulate that workers’ privacy will not be endangered. Employees should clearly understand the benefits of time tracking for both them and the business alike.

2. Using simple and user-friendly time tracking software

   Time tracking software performs a significant role in a company because with this tool, not only clock-in and clock-out time is measured, but also users can get the timesheet report, productivity analysis, find out the apps that tend to be the most often cause of workplace distractions, and so on. Software that has a clear dashboard, is easily accessible, and provides accurate monitoring will definitely help users get the maximum benefit from it.

3. Training employees on the correct way to use the time tracking solution

   It’s better to train everyone on the team on the particular employee time tracking software, what it is and how it operates, so that there will be no problem during its usage.

4. Refraining from micromanagement

   As the proverbial saying goes, “Everything is good in moderation.” And it stands true with employee monitoring – your team members must not feel that they are being overwatched, otherwise their productivity will decrease due to the constant stress and pressure.

5. Using the software with automatic clock-in and clock-out features

   Automated time tracking solution will help employees get the exact time count of their working hours. However, users may forget to clock in at the beginning of the workday and clock out during their lunch break or before leaving the office. In such cases, it may lead to miscalculations and significant financial losses for the company. That’s why the software that automatically switches on when employees start their workday and switches off when they get off work is a must.

6. Utilizing activity reports

   The activity report, which highlights how a user is utilizing their time, is a blessing for managers and employees alike. Employer or employee can examine the activity report to see which applications and websites were used and for how long. Time tracking in combination with activity reporting is also a great combination to reduce distractions while working from home.

7. Discussing reasons for employee’s unproductive time with them

   An unforeseen situation could easily happen, in which an employee does neglect work-related tasks in order to resolve some sort of personal issues. For example, a medical emergency or a family emergency could occur, in which the employee has no choice but to stop everything they had been doing and focus on said problem. If the employee can provide the explanation for their unproductive time, openly discussing it with the management, it entails improved transparency as well as a healthier working atmosphere within the team.

8. Turning to project-based time tracking

   Tracking working hours by synchronizing with the projects will help both employees and employers to get an overview of the working time required to finish a project. This way, by examining previous time records, managers can allocate more precise time periods to future projects. Project-based time tracking is also helpful for paying wages by calculating the total time required and the budget.

9. Setting clear policies on what will be tracked

   There must be clear guidelines for time tracking in place so that employees feel comfortable and safe. Like we’ve mentioned above, before implementing any time tracking tool, the employer should inform their employees about the tracking that’s about to follow. Clear instructions bring positivity and transparency to the work environment.

10. Ensuring every employee gets the same treatment with time tracking

    It goes without saying that managers should try and stay as unbiased as possible when it comes to monitoring employees’ working hours. What we’re talking about here is a bit different, though. Let’s say that a company has many departments, such as Marketing, Product Development, Finance, HR, Accounting, etc. In such case, it would be wise to implement a particular time tracking tool for all the departments.

What Features Are Most Useful in Time Tracking Software?

Let’s take a look at some of the advanced time tracking features that can help organizations make time management more effective, streamline their workflows and deliver high-quality results:

• Offline mode. This is a must-have feature for situations where you might not always have a stable internet connection. Automatic time tracking allows to keep track of the working hours even when the internet is unstable.
• Online screen recording. Time tracking with screen video recording provides visual records of what employees were actually working on at different times. This can be really useful for tasks where it’s important to keep a clear record of what has been done during each step of the way.
• Automatic clock-in. Some tools can start tracking employee’s time automatically as soon as they turn on their computer. This feature makes sure no one forgets to start tracking their work.
• App & website usage tracking. This type of tracking shows managers exactly how employees spend their time on different applications or websites. This can be really helpful for analyzing which apps are used the most and how these apps affect team productivity.
• Mouse clicks & keyboard strokes tracking. This feature records what each employee does with their mouse and keyboard, giving managers detailed information on how their computer is used, helping identify more precise productivity and usage patterns and better understanding employees’ work habits.
• Self-monitoring features. Such set of tools helps improve employee self-management, providing them with an unprecedented level of autonomy when it comes to the practice of work monitoring.
• Analytics on productivity. Combining reports on worktime distribution with the productivity analysis data, managers can get the most precise information regarding the average efficiency of their team members and determine time periods when they’re most and least engaged with work tasks.
• Alerts and notifications. These are the essential features in time tracking that help stay on top of all the tasks and projects. By setting up custom notifications, both managers and employees can receive reminders about upcoming deadlines, task assignments, and project milestones.
• Integrations and API. These advanced features in time tracking allow the time tracking tool to be connected with other project management tools and solutions. By integrating your time tracking tool with other tools, you can automate tasks, streamline your workflow, and improve your project management efficiency.

What Are the Best Time Tracking Tools? 

There is a wide range of time tracking tools currently available in the market. Our best advice to you is to take your time researching and comparing different options so that you definitely find the one that aligns with your specific requirements and preferences. 

Some popular options include Hubstaff, Apploye, and Toggl. Each of these tools has its own unique strengths and capabilities, and we’ve looked more closely at each of them and many more in our list of best time tracking solutions. We even have an honorable bonus mention there, so definitely go and check it out! 

How to Choose Time Tracking Software for Your Business? 

When it comes to selecting a time tracking tool, there are several factors to consider. Time tracking software is essential for businesses and freelancers who aim to improve productivity and efficiency. It provides valuable insights into time management and resource allocation.

One important factor to consider when choosing the appropriate software is its compatibility with your existing digital solutions and workflows. Seamless integration of a time tracker with project management tools, calendar applications, and communication platforms can streamline your time tracking process and enhance overall productivity.

Think about the features and functionality that are important to you. Look for tools that are user-friendly, offer reporting and analytical capabilities, and integrate well with other tools you use. 

Moreover, consider the cost and scalability of the tool. Scalability is crucial for organizations that anticipate growth, as the time tracking tool should be able to accommodate increased usage and data volume with no compromise on performance.

Another factor to consider is the level of customization offered by the time tracking tool. Customizable features and flexible settings can cater to specific business requirements and workflows, allowing for a more tailored user experience.

By considering these factors, you can choose a time tracker that meets your needs and helps businesses streamline workflows and increase productivity.

Key Points for Effective Time Tracking

To maximize the efficiency of using time tracking software, it’s better to keep the following key points in mind:

• Track time accurately. Track time correctly to ensure accurate project management with the help of designated time tracking software. This helps avoid potential errors or omissions that are associated with manual tracking.
• Set realistic goals. Set deadlines based on historical data and project requirements. This helps avoid overcommitting or overstaffing and ensures timely project delivery.
• Identify bottlenecks. Analyze time tracking data to identify any workflow inefficiencies. This enables optimization, waste reduction, and improved productivity.
• Communicate effectively. Communicate project progress, timelines, and expectations with your team. This builds trust, ensuring everyone is on the same page, and reduces any misunderstandings among the team members.
• Maintain transparency. Use time tracking data to demonstrate project progress, identify areas for improvement, and make informed decisions. This helps maintains transparency and trust.
• Review and adjust regularly. Regularly review time tracking data and adjust your workflows and goals as needed. This ensures everyone stays on track and helps continuously improve business processes.

Analyzing and Utilizing Time Tracking Data

Tracking time is only the first step. Delving deeper into the time tracking data can help uncover valuable insights that will help optimize productivity and time management strategies. The real value of the time tracking practices lies in analyzing the data and using it to make informed decisions.

When it comes to analyzing time tracking data, consistency is key. Data review should be made a habit, whether it’s performed on a daily, weekly, or monthly basis. Such consistent review will allow for spotting trends over time and making more accurate assessments of time usage patterns.

Insights gained from analyzing the time tracking data can help identify areas where adjustments are necessary, such as work processes that can be carried out more efficiently or employees who might require more attention. By making certain necessary changes to employee schedules, prioritizing tasks, and optimizing workflows, time management practices can be refined to achieve maximum efficiency and productivity.

All in all, time tracking is a powerful tool that can transform the way organizations manage working hours. By understanding the importance of time tracking, exploring different methods, choosing the right tools, implementing it in your daily routine, and analyzing the data, businesses can feel empowered to unlock their full potential. 

Start tracking your time today with Kickidler and experience the profound impact it can have on team productivity and efficiency!