Employee time tracking is a subcategory of time and attendance. It shows how companies record the hours worked by employees, which effectively ensures that the employees are compensated accurately for their time. It also benefits the company in managing its employees’ performance.
With the evolution of technology, most companies no longer employ manual time tracking. They use a time tracking software for automatic and accurate tracking of time.
Whether manual or automatic time tracking, there are organizational and employee benefits. But there are also cons to it, such as possible micromanagement and employees feeling intimidated by the demands of tracking their time.
Considering the cons, you might doubt how effective time tracking is.
That being said, this question may pop out in your mind: is a time tracking really that effective?
We will further answer that question in this article. Read on as we explore how time tracking works, its importance, benefits, and impact on productivity.
Ready? Let’s dig in!
How does time tracking work?
Generally, time tracking allows visibility and transparency by letting you keep track of the time spent on individual tasks and the projects as a whole.
There are many ways to track time, ranging from traditional to modern ways of time tracking. Here are the common time tracking methods of tracking and how it works:
1. Paper Timesheets
Paper timesheet is a manual employee time tracking system that is common for its simple and inexpensive way of tracking time.
The employees will write down their tasks and the time they spend completing them on a piece of paper. In measuring time, they use their smartphone, wristwatch, or clock.
They can do this after completing the tasks or while working on them. However, employees from most industries write down their start and end times when their shift ends because they are focused or busy on their tasks.
This time tracking method is commonly used in service-based industries where timesheets are the basis for employee compensation and client billing.
What makes paper timesheet great is that companies can use this approach anywhere, even in remote areas, because it does not rely on an internet connection. It is also easy to do and does not need any device or other technology.
However, it is prone to errors because it mainly relies on human memory. You are likely to forget to record tasks and other details when you are busy or jumping from project to project.
Other disadvantages include wasting much time tracking, being prone to damage and loss of timesheets, and having difficulty collecting and maintaining physical records if employees work in different locations.
2. Spreadsheets
Using Excel Spreadsheets is another manual tracking time method that lets you manually enter your start and end times into a spreadsheet.
It saves you time to write out an actual timesheet because it has built-in functions that calculate daily or weekly hours automatically.
👉 See how to calculate payroll!
One good thing about spreadsheets is that you create and use a template to your specifications for multiple projects. Other benefits include storing entries for all employees in a single place, back up and storing data effectively, accessibility if cloud-based sharing is used, and generating reports based on the data.
Nonetheless, it is still prone to error because employees still track their time manually, which is tedious and time-consuming.
3. Swipe Card System
The swipe card system is an employee tracking system that tracks the time of employees, regulates their access to specific work locations, and monitors attendance, breaks, and departure times. It is similar to punch cards, but this is the modern version and offers a lot more features.
You can integrate it with the payroll system to simplify the payroll process of your employees,
As the name itself implies, employees will just swipe their cards when they enter and leave the workplace. The system will then calculate an employee’s working hours by calculating the difference between the start and end of their shift.
Swipe card systems are often the time tracking system in engineering, agriculture, retail, and healthcare industries.
The main perk of this time tracking system is it is easy to use—there is no need to train employees on how to swipe their cards. There is also no code or passwords needed.
It also reduces administrative workload because there is no need to upload timesheet data to another system. This will consequently help project managers and the human resource team to focus more on their important tasks.
However, the swipe card system is not ideal for tracking the time of remote employees since the system relies on being in a location like the corporate campus.
4. Time Tracking Software
Time tracking software allows you to automatically record your employees’ time. It lets you efficiently and accurately track the time the employees spend on each assigned task, giving you an idea of employee productivity.
Employees start a clock when they start doing their work and stop it when they are done. The time tracking app runs automatically in the background to track time.
Most of the time tracking software, like TimeCamp, is rich with features that combine financial tasks into a single comprehensive workforce management platform. It makes the time tracking app a part of accounting or project management software.
The great thing about time tracking software is that it eliminates manual tracking errors because of its precise and automated record of your time and tasks. In this way, you can focus on other essential tasks.
It is also a valuable tool for team and project management. Most time tracker software with non-intrusive features make your employees feel safe when you monitor their activities and the project’s progress. It allows employees to manage themselves and help increase the employees’ productivity, as well as the team’s productivity.
Time tracking software also generates and provides you with reports on your team’s time and performance and your business. The reports include the summary of tasks, time spent working on each task, estimated time of the existing projects to finish, and the idle times. The information can help you easily identify which tasks take longer hours to complete and know the team’s problems and areas of improvement.
The good thing about time trackers is that they will not cost you a fortune. There are free trials you can try on to check whether a certain time tracking software suits your business needs. Later on, you can decide whether to get a premium on the tracker or not.
Try TimeCamp tracking app for free!
5. Geofencing System
A Geofencing system uses a person’s device’s GPS location to track the time of employees’ scheduled shifts. It also alerts project managers when employees enter and leave the workplace.
A geofence is first set up in the workplace. It serves as a virtual barrier around the workplace. Since most location-based time trackers are applications, employees install the time tracker on their devices. The app will automatically track their location and work hours.
The recorded time will be generated as a detailed timesheet that you can use as a reference for billable hours and invoicing.
This kind of time tracking system is most suited for companies with a mobile workforce, especially construction and landscaping companies that involve delivery and moving businesses.
This time tracking system makes clocking in and out easy for employees. It also prevents inaccuracy and errors in time tracking and timesheets and reduces time theft and buddy punching. Additionally, it saves project managers time and money from driving from one workplace to the next just to check on workers.
The one drawback of this time tracking system is the battery drain brought by the app.
Regardless of a company’s employee tracking system, there are three main components in time tracking: time entry, approvals, and reporting.
Time entry refers to clocking in and clocking out of the employees. The employee will keep their recorded time on a timesheet that is subject to approval. A time tracking report will then be generated for payroll processing and for, budget analysis and identification of discrepancies in compensation.
👉 Check also our list of 10+ Best GPS Tracking Apps With Timesheets
Does time tracking improve productivity?
Yes, time tracking improves productivity. It helps determine and measure your productivity in your work. Once measured, the information can tell you what you need to improve to increase your productivity.
On average, a person is actually productive for two hours and fifty-three minutes only in an eight-hour shift, as revealed by the study conducted by the Vouchercloud. There were also top ten work distractions, wherein 47% admitted checking their social media accounts as their top distraction.
Additionally, another survey done by Milieu Insight showed that most people are more productive during the first half of the workday, from 8:00 am to 12:59 pm. However, their results revealed that employees are productive for five to six hours daily. Similarly, the top distraction for workers is still browsing social media.
For someone tracking their time, they know how many hours they are usually productive in a day and what time they are usually highly productive.
This is because one can generate reports from the recorded time. If you are using a time tracking app, the application will generate automatic reports for you. The report will show you idle times, the time you spend working on and completing a certain task, unproductive routines and habits, high and low-value assignments, and more.
Examining your report from the tracked time, you will know the problems and areas for improvement. You can then plan out ways to improve time management skills, letting you plan manageable timelines and schedules.
Furthermore, the report will help you strategize how to increase productivity. You can also develop time tracking habits to further improve the quality of your work.
How does time tracking affect productivity?
Time tracking can positively and negatively impact productivity, depending on how it is used and how one perceives it.
The positive impact of tracking time on productivity
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Balances work
For a project manager, the right time tracking tool can give you an overview of your team’s progress on a project you are working on. A detailed report from the tracker will let you gain insights on who has completed their assignments before the set deadline, has been working overtime, and needs support on a certain task.
Time tracking can then help the team support each other in finishing on time, which can lead to high productivity.
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Setting priority of tasks
Time tracking tools give you a summary of your hours worked, providing relevant information on your tasks and how long you are doing them. It lets you see the tasks according to their urgency and priority level. It can also help you set your priorities and keep them straight.
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Smart allocation of time
Since time tracking lets you see where you spend your time, it helps you know how much time you usually spend on a specific task. With such information, you can strategically allocate enough time for each task to finish in its due time. On top of that, time tracking gives you ownership and more autonomy over how you manage and do your work.
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Prevent multitasking
When we are loaded with many assignments, we tend to multitask. It may seem effective at the surface, but it makes you achieve less than you think.
Switching your focus between the two tasks lowers your productivity and efficiency because your brain can only pay attention to one thing at a time. Aside from that, it disrupts your concentration, leading to more mistakes in your work.
Utilizing a time tracking software can help determine whether you or a team member is constantly switching from one task to another. You can then remind the team to focus on short and concrete tasks to accomplish more.
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Prevents burnout
Burnout is severe work stress due to overworking. It can have a psychological impact on the employees experiencing burnout. One of the most notable negative effects of burnout is low productivity.
A time tracking tool can help you streamline your workload and evenly distribute it across the week. Allocate a specific time and deadline for each work. In this way, it can help employees work effectively without the risk of burnout.
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Reminds you of taking breaks
Time tracking apps remind you to take a rest or a short break to prevent exhaustion. If setting your priority and allocation of time for each task is paired with breaks in-between, it will make you complete more tasks than you expected.
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Beats procrastination
Time tracking helps you see the unproductive tasks you engage with, the time spent on them, and how often you procrastinate. This way, you can work on improving yourself by lessening the unproductive tasks and procrastination, which is the killer of productivity.
The negative impact of tracking time on productivity
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May lower employee morale
One concern of employees regarding time trackers is that they feel like they are being constantly watched. It makes them feel like the company and managers don’t trust them, which can affect their morale and may lower their productivity.
To prevent this, the managers should clearly explain to the team why the company wants to implement time tracking.
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Uncomfortable with micromanagement
Since time tracking records every minute of the employees’ work, employees may feel like they are being micromanaged. They may fear hearing criticisms on every little thing they do from their employers. These may contribute to lower efficiency and productivity of employees.
To avoid this, employers or project managers can give feedback to the employees based on their efficiency, shortcomings, and areas of improvement.
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Waste of time and money
Generally, a time tracking solution helps you save time from manual time entry. However, this depends on the time tracking tool you employ. If you do not use the right tool or incorrectly implement time tracking, it lowers employee productivity and wastes your money and time.
Make use of free trials of different time tracking apps to determine whether it is the right fit for your company. You can try TimeCamp’s free version, which is packed with features that can help you shift from manual to time tracker software.
Despite the negative effects of time tracking on productivity, it did not outweigh the time tracking benefits and positive impact on employee productivity.
What insights can you gain?
Generally, time trackers can give you insights on the team’s and individual performance, a summary of tasks, idle times, time one spent working on each task, and the estimated time of when a project finishes.
To make it more specific, we will look at Timecamp’s offerings as an example of knowing what insights we can gain in time tracking.
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Employees working time
TimeCamp gives you insight into employees’ working time because it lets employees automatically or manually log time at work to ensure that employees are billed fairly.
You can enjoy the transparency since the recorded time is saved on the handy timesheet. You can view the detailed information on the timesheet or through a graphical, calendar-like view.
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Estimated project time
TimeCamp gives you insights into the time your project is estimated to finish and your project performance. You can set the time tracking and integrate it directly with tools you already use for more accurate input and data.
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Estimated project profitability
They will provide you with data and reports that you can use to refer to and analyze to get reasonable estimates for your projects and monitor your resource usage.
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Check attendance and timesheets.
They allow employers and employees to see and monitor their absence, vacation, and sick leaves. It gives you an idea regarding employee tardiness while keeping track of each employee’s remaining sick and vacation leaves.
With TimeCamp’s time tracking tool, timesheets are now fully automated and can be easily submitted for approval. You can quickly approve or reject the timesheets if they meet other requirements.
Since TimeCamp’s time tracker can be integrated with other apps and tools, you can connect the attendance data with payroll tools to easily create payroll lists. It ensures that the employees are paid fairly.
👉 Find out more about Employee Attendance Tracking Apps
Why is time tracking important for you and your organization?
Time is money, so tracking it is crucial for you and your organization.
According to the survey by Accelo on 500 professionals, they found that 40% of them do not track their time. The untracked work time from businesses that use timesheets for clients’ billing resulted in a loss of $52,500 per professional every year.
See how much money is lost for the failure to track time?
The importance of time trackers is not only on a monetary level. Other reasons include:
1. Accurate tracking of billable hours
A good time tracking for employees can help them accurately bill clients. Automatic time trackers also track meetings, emails and call hours relevant to work efficiently and accurately.
Since a time tracking app precisely records time and tasks, it helps employees eliminate manual tracking errors. It prevents overpayment of clients and underpayment of employees.
Additionally, the time tracking records can be used to analyse project profitability and estimate project costs for future projects.
👉See how to keep track of time and work hours.
2. Decrease administrative costs
The non-billable hours are the time spent on marketing, administrative, and other tasks that keep the business running.
A good time tracking software does not only include billable hours but also tracks time for the non-billable hours. It gives you insights into the overall business cost to help reduce administrative expenses and increase profitability.
3. Enhance project management
The right tracking app can improve not only your time management skills but also your project management skills. The time reporting system in the app generates reports that can give you an overview of your tasks, letting you see a clearer picture of the assignments you have and the time left to finish your project.
You can identify and categorize tasks according to their urgency and priority level with a clearer picture of your responsibilities. It also helps you identify which tasks take longer hours and how much time you need to allocate for each task. In this way, you can manage your tasks or projects well.
For project managers, time tracking apps can give an overview and detailed reports necessary for monitoring team members’ performance, employee capacity, and project progress. This ensures that your team spends the right amount of time on each task, project, or client.
4. Optimize productivity
A time tracking software can generate reports to give you insights into your productivity, including the time spent working on a certain task, the idle times, and other tasks.
You will know the problems and areas of improvement by analyzing your productivity report from the tracked time. You can pinpoint your top distractions that inhibit your productivity and other unproductive habits.
You can then think of ways to enhance your productivity and time management skills, minimize distractions, and develop time tracking habits to improve the quality of your work.
5. Ensure transparency
Since time tracking software gives data on the hours worked by the employees, it serves as the basis for billing. The tool generates reports on the client’s current project, its progress, and whether the employee or assigned team followed the timeline and budget of the project.
Thus, the time tracking app reports transparency to the clients and assure clients and employers of the projects’ progress. This, in turn, builds trust with the clients and builds company credibility.
6. Improve profitability
Analyzing reports from all the time and tasks tracked by a time tracker can help estimate project profitability and increase your business’s profitability.
As a worker offering services to clients, having a time tracking data can assist you in estimating project costs and guide you in deciding how much you will bill clients next time.
With time tracking, you can monitor whether you are following the expected timeline of a project and whether you are under or over the budget while the project is ongoing.
Time tracker tools can let you easily see discrepancies in time and budget. If there are discrepancies, you can meet with your team to discuss possible solutions to the problems before the project fails.
Furthermore, you can attract potential clients by establishing trust through transparency and showing previous successful projects collated from the time tracking software. You can also explain the project costs and negotiate the rate of your services.
Who does time tracking benefit?
These are the people who can benefit from time tracking:
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Employers
With employee time tracking, employers can maintain good relationships with their employees because time trackers ensure that their employees are paid well according to their work time.
The generated reports from time tracking can help employers analyze their employees’ performance and work on improving the employees’ productivity.
It also helps them in business and project planning, reducing administrative costs, business pricing, and improving business profitability.
Additionally, time trackers give data that can be solid evidence for their credibility and proof of achievements in their projects with previous clients. This, in turn, attracts potential clients and retains good relationships with previous clients.
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Project managers
Project managers can effectively manage their teams and assigned projects with the help of time tracking software.
Time tracking can give rich information about their team members’ performance, project progress, project forecasting, and potential issues and problems.
Project managers can use such information to plan how to utilize their team member’s strengths and weaknesses and how to help employees improve their work performance.
They can also prevent project failure if they act immediately on the perceived potential issues and problems as presented on the data generated by the time tracking tool.
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Employees
Time trackers do benefit not only employers but also employees. With the automatic and accurate time tracking, employees are assured that they are paid well for the services and the hours they have worked.
Aside from the financial aspect, time trackers also give insights into each employee’s productivity and performance. It provides information to employees about their strengths and weaknesses that they can work on.
It also helps employees become aware of their unproductive habits and the tasks that consume much of their time. This way, they can improve and enhance their skills, work, and time management.
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Clients
Yes, clients, too, benefit from time tracking. The transparency of work that the time tracker brings can assure them they are getting the service they have availed of and the worth of the money they invested.
They are also fairly billed according to how much the company worked to deliver the desired results.
Aside from the billing, clients are also informed of the project’s progress, updates on budget allocation, and other necessary information.
Conclusion
Time tracking, regardless if it is manually or automatically done, is essential to businesses and anyone who is offering a service. However, its effectiveness has been improved with the presence of time tracking software.
We have thoroughly explained the effectiveness of employee tracking, its benefits, its impact on productivity, and its importance. All of which point to how important time tracking is, especially now that remote work is more common than ever.
If you are hesitant to transition from manual time tracker to time tracker software, TimeCamp is the best choice.
TimeCamp is the best time tracking software that offers a free plan you can try for your time tracking implementation. It is very cost-effective and packed with useful features. It allows many users unlimited client projects, which is ideal for employees from various industries.
Sign up now to start tracking your time with TimeCamp’s free version!