What is time tracking?
Time tracking is a process wherein employee hours are recorded over a fixed period of time or for the length of a project. While this is typically only for work hours, breaks may also be tracked to ensure employees take their entitled time off.
Employees usually record their own hours within dedicated time tracking software, similar to traditional punch cards, but now using digitized versions. This could include clocking in and out at the beginning and end of their shift or workday or logging any lunch hours or breaks taken, along with any scheduled time off.
Managers or human resources (HR) review employee time tracking records throughout the year to ensure that hours are accurate and that employees are being compensated for the hours they’ve worked, including any additional compensation for overtime hours. They also check for any discrepancies in the records.
Types of time tracking
Tracking time is usually very simple – employees clock in when they begin their shift, then clock out once they’re finished. Every company requires their employees to track their time for different purposes, but most scenarios can be categorized as either personal time tracking or project time tracking.
Personal time tracking is more common with hourly employees. Workers start their time clock at the beginning of their workday, then log any breaks before clocking out at the end of their day. This way, managers can see how many hours each employee has worked, along with any additional hours they may need to be paid for. Many time tracking tools use automated features to calculate employee pay based on the hours logged in their timesheet.
Some organizations use project time tracking even if they have employees who are salaried because they may still need to track their time when working on particular client projects. This is especially the case if those working hours are billable to the client.
Marketing agencies, legal teams, or accounting firms are all examples of businesses that might need to bill a client for additional hours spent working on their projects outside of the scope of their contracted hours.
Basic elements of time tracking
The simplest place to start with time tracking is to note a start and end time on paper. But with no context, this information can quickly make no sense. That’s why effective time tracking should always include:
- The amount of time spent on tasks or the total workday. This is the minimum information that should be recorded when tracking time. Any system can work for this, like a manual notebook entry, spreadsheet, or time-tracking tool. For shift workers, more detail than start and end times may not be needed, but this is determined on a business-by-business basis.
- Completed work. Especially when time tracking for project management or when working with billable clients, it’s vital to record details of the work done during each block of time. For billable clients, this information is usually noted on invoices so that clients have insight into where their money’s going.
- Breaks. It’s a good practice to document when breaks were taken and for how long, even if they’re included in paid work time. Managers often look at this information over a month or year to ensure no employees take more time than they’re entitled to.
- The total time spent working. Totals are useful for both employees and managers, particularly when payroll is automated based on the number of hours worked. Errors should be corrected as soon as possible, so it’s always a good idea to review the total hours at the end of each period before submitting them for review or approval.
Benefits of time tracking
For many employees, tracking their time can feel like an unnecessary extra step to their workday. But there are several notable benefits to keeping tabs on working hours, such as:
- Making team members more accountable. Every team member should know where they fit into the bigger picture of the company. Accountability with time tracking is not only about making sure employees show up to work on time and are working for their required number of hours. It also lets them see where they’ve contributed to bigger goals and projects. This information plays a large role in performance appraisals and encourages employees toward promotions.
- Improving workplace transparency. Time tracking easily identifies where team members may be working too much or falling short. This allows managers to step in and rebalance the workload across the team.
- Understanding where budget is being wasted. It’s easy for time to slip away without making much progress. This quickly eats up project budgets and resources if left unchecked. Time tracking means that project managers see where the budget is being spent and how this contributes to the overall outcome.
- Improving operational efficiency. For service-based businesses, spending too much time on one client’s project without receiving additional compensation leads to unhappy and overworked employees, not to mention clients with unrealistic expectations. Time tracking makes it clear where these inefficiencies are so the team can address them before they spiral out of control.
Best practices for time tracking
Every employee wants to track their time in a different way. While some elements can be flexible, like the level of detail included in records, keeping time-tracking systems simple makes the process much easier to manage.
- Ask employees to log their time once a day. If employees are moving between different projects, it can quickly become a hassle for them to record each time they complete a task. Instead, encourage team members to record their time at the end of the workday based on client, project, or task.
- Provide templates for team members to follow. If employees have never tracked their time before, it can be confusing to know which information should be recorded. When onboarding new team members or rolling out a new time-tracking system, give them a template for what should be included in each recorded entry that they can follow until the practice becomes second nature.
- Frequently review timesheets. Managers should be reviewing timesheets at least every other week or before payroll is processed. This gives them time to catch and correct any mistakes before bigger problems occur, like employees not being paid for overtime.
Keep employee working hours on track and ensure every team member is paid what they’re owed with dedicated compensation management software.
Holly Landis
Holly Landis is a freelance writer for G2. She also specializes in being a digital marketing consultant, focusing in on-page SEO, copy, and content writing. She works with SMEs and creative businesses that want to be more intentional with their digital strategies and grow organically on channels they own. As a Brit now living in the USA, you'll usually find her drinking copious amounts of tea in her cherished Anne Boleyn mug while watching endless reruns of Parks and Rec.
