Tracking employee hours sounds simple: You just need workers to open a timer, hit start and stop and send over the invoice. It was easy enough on my own when I was a freelancer tracking time for clients.
But things change once you start adding more employees to your team. Suddenly, it’s not just yourself or a couple of people to keep track of—it’s dozens. After a certain point, your napkin math and hand-coded spreadsheets won’t cut it, and without a solid system, you’ll quickly get overwhelmed. To make it easier, I’ll share a few tips to help you manage timesheets without the frustration.
Advantages of Tracking Employee Hours
First things first, let’s cover why you should care about accurately tracking employee hours. Yes, I already hinted that doing so can stop you from ripping out your hair—a great personal benefit—but there are advantages for your business as well.
Accurate Payroll Calculations and Labor Compliance
“Accurate time tracking is crucial for calculating payroll, legal compliance, project planning and staff optimization,” says Alex Chertoff, principal of research in the HR Research and Advisory practice at Gartner, a global research and advisory firm.
In other words, just by tracking employee hours, you can make sure you’re paying your workers the right amount, as well as making sure you’re following all local and federal labor laws when it comes to overtime or full-time benefits.
“Proper systems capture every regular and overtime hour, create a clear audit trail, alert managers before they schedule beyond legal limits and ensure employees are paid correctly for both regular and overtime hours,” says Matt Taylor, president and CEO of Guardian Payroll Services. “They also confirm that breaks are taken as required.”
Accurate Project Time Estimation
Tracking employee hours is also helpful in knowing how many hours to dedicate to certain projects and what the true cost of an activity actually is.
“Some managers have a habit of casually throwing out ‘ideas’ for their team to look into without realizing how many hours of work are required to do so, nor clarifying where the new request falls in the order of priority vis-a-vis existing tasks or projects,” says Anita Williams Woolley, professor of organizational behavior at Carnegie Mellon University’s Tepper School of Business. “Tracking time can enable managers to see what such requests really cost and calibrate their expectations for how quickly requests can be completed.”
More Informed Technology Decisions
Beyond project planning and optimizing how to use your staff, you can even use time tracking to plan out your technology investments.
“If having a piece of software could save X amount of time, what would the payback period be for this particular investment?” says Woolley.
Improved Employee Trust
Tracking employee hours goes beyond just helping your company. It can also build trust among your employees and improve their company loyalty.
“It’s all about transparency,” says Taylor. “They can see the hours they’ve worked, the overtime they’ve done and match it up against their paycheck, which gives them the trust and reassurance to know that their paycheck is correct.”
Best Ways To Track Employee Hours
After speaking with a few experts, they all seem to agree that the easiest way to track employee hours is whatever works best for the company in particular. That can vary depending on work type and work model.
“For on-site front-line workers, integrated workforce management systems effectively track employee hours,” says Chertoff. “But for remote knowledge workers, time tracking software can capture patterns in employee behavior.”
Here are a few of the most popular ways to track employee hours, as well as what type of company they might be best suited for.
1. Physical Time Clocks
Best for: Warehouse or desk workers
If you have a workplace where employees spend all of their working hours, having a physical time clock or time clock software can make a lot of sense. Employees would simply clock in upon their arrival and clock out for breaks and when they leave for the day.
If you’re rolling your eyes at how archaic this sounds, there are more advanced options you can try, like using ID badge data that automatically captures when employees enter or leave the office. There’s even HR cloud software that lets you see real-time views of who is clocked in and who isn’t.
That said, the main drawback of this method is forgetting to clock in and out, which can lead to errors you need to fix on payroll.
2. Time Tracking Software
Best for: Remote or office workers
Time tracking software is like the older brother of time clock software. Rather than just functioning as a digital time clock, it allows workers to allocate time to specific projects, helping to keep better track of project resource management.
“These tools can automate calculations like overtime and meal breaks, reduce payroll errors and provide real-time insight into labor tracking,” says Taylor. “They also centralize data for clean and easy reporting.”
If your goal is also to boost productivity, you can even go a step further and opt for employee monitoring software that automatically tracks time while making sure remote employees stay focused on the task at hand.
3. GPS Tracking
Best for: Field workers
If you have workers out in the field all day, like contractors or repair workers, then GPS time tracking is almost a must. Time tracking capabilities are often built into fleet management software and allow you to track exactly when and where your workers are putting in their hours.
It can let you know how long it takes them to get to appointments and how long their breaks are. You can even use it to optimize routing and scheduling.
4. Self-Reported Timesheets
Best for: Smaller companies
For smaller companies of just a few tight-knit employees, you might not want to fix what’s not broken. If you’ve been using self-reported timesheets on a spreadsheet, in some cases, that might continue to work for a while.
But the truth is, you’ll be missing out on a lot of efficiency, especially if you’re still working on paper.
“Paper-based timesheets are completely inefficient in today’s world,” says Taylor. “Relying on the ‘trust system’ for example, saying, ‘My team is small, we’re like family,’ is also risky. Nothing seems wrong until it is. Is it worth risking your business?”
Not only do paper timesheets leave more room for human error, but they also increase work on your end, as you’ll need to manually enter all that data into your payroll system.
Employee Time Tracking Mistakes To Avoid
Whatever system you use to track employee hours, you’ll want to make sure your workers are comfortable with it. If you’re switching to a form of time tracking that seems invasive, like employee monitoring or URL tracking, it may have a negative effect on employee morale.
Gartner research shows that while using tools and technology to record employee activities does improve productivity, deployments that create a heightened sense of anxiety among the workforce can reduce productivity in the long run. Employers should carefully consider the cultural implications of activity monitoring practices and be transparent about what data is being captured and how it is used.
— Alex Chertoff, principal, research in Gartner’s HR Research and Advisory practice
Relying on your time tracking solution as the single source of truth may also be a bad idea.
“Many companies buy a time tracking solution believing it will solve all their problems, only to have the project fail because the implementation team couldn’t deliver,” says Taylor.
Often, the problem lies in trusting only one metric—hours worked—as the key factor in productivity. Woolley believes that workplaces should have a more holistic approach to measuring employee performance.
“We know that overfocusing on a particular number often leads to unintended consequences, and thus having a more balanced view of performance that includes other kinds of contributions and metrics (innovation, problem solving, organizational citizenship, leadership) in addition to productivity is important,” says Woolley.
Bottom Line on Tracking Employee Hours
Tracking employee hours has a lot of benefits for both the employee and the employer, so it’s not something you should simply shrug off. If you do it correctly, you’ll find payroll becomes a breeze. Plus, employees will love that their paychecks are correct every week without having to bug HR. Finding the time tracking method that works best for your business may take a little research and experimenting, but it will be well worth it in the end.
Source – https://www.forbes.com/advisor/business/software/how-track-employee-hours/