You might disagree, but we believe time tracking is a really important tool in running any creative agency. We know it is a pain in the a** and getting people to do their timesheets accurately takes a huge amount of effort and, yes, time, but we have found the payoff to be significant. After decades of doing our own timesheets, managing businesses with timesheets and working with businesses with - and without - time tracking, our conclusion is clear: timesheets are a necessity if you want to run your agency efficiently, effectively and profitably.
There are three key benefits to tracking time:
First, it validates your project budgets. The primary way that most agencies make their money is in their fee. And the primary way that most agencies calculate their fee is by multiplying projected hours by rates. Timesheets enable everyone to be more accurate in their time projections. Not only can you track how you’re doing with the current project against what was projected (to make sure you’re not over-servicing), but you can also use the results of one project to help inform another project, thereby making ensuing projections more accurate.
Second, it helps your employees understand the value of their time. Almost all budgets allocate an amount of time to a specific role to complete all of their tasks for a project. As a best practice, this time allocation should be communicated to the person playing the role, who then gets a chance to review the allocation against what they know their tasks to be, and (hopefully) agree to its accuracy – in this way it provides a benchmark to track against. As the project progresses, the completed timesheets will show the employee if the allocation was accurate. Not only will they learn from this, they may actually strive to be more focused and efficient with the rest of the work on the project in order to meet their budgeted time.
Third, timesheets provide insights that will strengthen the business. From a management perspective, poor utilization is an excellent personnel management tool that can help to identify an employee who is not valuable. Low utilization can be a sign that the person is not well respected, and/or is not a team player–someone that people don’t want on their team. They may need performance feedback and adjustment, or a different role, or possibly a different job.
Additionally, it can help inform management if they have the right number of employees in the right jobs. If one department or group is heavily utilized and another is not, then perhaps the staffing balance needs to change between the two groups. You can also calculate how much each department should be contributing to revenue, and then validate that against the actual timesheets coming out of the department. However, remember, just because an employee puts time on the timesheet doesn’t mean the client paid for that time.
Finally, if your client budgets outline the number of hours required for a project, timesheets provide the necessary backup if your client requests an audit. This alone makes timesheets a necessity.
Timesheet compliance is a PITA, but the struggle is worth it. And timesheets and utilization reports are just parts of your company performance story - they don’t absolve you from paying attention to other financial indicators. But importantly, they should lead you to having conversations with your team to understand what the data is telling you about your operation and what adjustments may be needed.
Tonic Consulting Group works with live event agencies and related companies providing the insights, expertise and direction necessary to create enduring competitive advantage. We work with leaders to build new pathways to growth, create high-performing operations and develop companies people love working for.
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