For a business, understanding how and when work is being completed is essential.
Timesheets are a tried and tested way of understanding employee input and measuring profitability.
As with most things, there are pros and cons to using timesheets. Here are some things to consider.
What are timesheets?
Let’s start with the basics. Timesheets are for employees to log the hours they work. They will complete a detailed note of what work was completed for their entire day.
Each employee will have a charge out rate which combined with the hours worked will calculate a value to their time and it will be charged accordingly to the client they have worked on.
While there are benefits to using timesheets, there are also some significant drawbacks.
Pros of using timesheets
Timesheets can give you an insight into your team’s capacity and output of work. If you calculate your staff’s available time against charge-out rates, you can get an indication of their available output in £’s, which could help you plan their workload.
Where is the lost capacity? A business can feel like it has the right amount of staff yet you are always overworked and at full capacity. By ensuring you have a good understanding of where employee hours are being spent, client or non client work, you can gain an understanding of why there is lack of capacity in the team.
In theory if correct chargeable time targets are hit it will be clear to see in profitability reports where lost time is.
You can measure work in progress. By having a well run time management system a work in progress report will be useful at the end of each month. Allowing you to view what hasn’t been invoiced to customers and understanding invoicing opportunities as well as time that can no longer be invoiced. It can highlight where missing revenue is or alternatively where overspend is hidden!
You can use the data from your timesheets to work out client profitability, using time charged against budgets to understand how much time is charged to a client and how much is lost.
By understanding client profitability this could help you adjust how work is completed or priced. Could it be a case of you quoting the wrong price? Or perhaps you may have the wrong people on the project? Either way, you will be able to find ways to reduce the losses by using your timesheet data.
Cons of using timesheets
Sometimes timesheets can seem a bit Orwellian. Your employees may feel you’re keeping a close watch on their daily work patterns, which can sometimes feel a bit overbearing.
Balancing this with your employees’ understanding of the importance of timesheets can be a task in itself, but it’s important to explain why timesheets are useful and how valuable they can be for your business. To often timesheets are seen as stick to beat people with.
Sometimes after a hectic week, it can be easy to leave the office and completely forget about logging your hours. We’ve all done it at some point, so it’s not unheard of. This is where problems may occur with having accurate data entered onto timesheets.
Often there is lots of data and it is not easy to know what to look for or report on each month. If not done correctly this can limit the value you get from having timesheets in the first place.
Let’s face It, it is another system to manage and report on, one more task to add to the to do list each month!
Just don’t use timesheets and complete the work.
A business can still run and be profitable without timesheets. However, unless there is another system or form of measurement it can be hard to understand where any problems are without having information to back it up.
You may consider splitting your team into sub-teams and assigning a revenue target to each. This will allow you to measure said team’s profitability against their work output.
Use KPI’s and track staff costs as percentage of sales, this will allow you to see when staff costs are rising and potentially are too high in your business. The challenge is you won’t have details of why without more information.
You don’t have to be bogged down with timesheets and staff monitoring. There are always alternatives depending on whether they work for your business.
Having said that, the phrase “what gets measured gets done” does always spring to mind.
If you’re unsure of the best methods of keeping track of your employees’ productivity, the team at Spark is happy to point you in the right direction.
Get in touch with our team today.