In this week’s solo cast, I’m going to walk you through the merits of agency time tracking. Having worked with dozens of agencies on this very subject, I can help you incorporate agency tracking in your business – in a way that works for you.
This includes ensuring how to best implement the right agency tracking structure, so you can pull reports, answer questions quickly, and how to bring almost effortless order into your time tracking process.
I’ll even show you how you can do time tracking without using timesheets at all!
About Agency Time Tracking Leader, Marcel Petitpas:
I am co-founder and CEO of Parakeeto and fractional COO at Gold Front.
In addition to being an agency profitability consultant – specializing in helping agencies get a handle on their gains – I’m also a respected keynote/virtual speaker and podcaster.
Points of Interest
- What Is The Purpose of Agency Time Tracking? 2:30
- How Do You Structure Your Data? 3:58
- Selecting The Correct Methodology 9:01
- Encouraging Team Compliance 11:51
- Busting Time Tracking Myths 14:32
Agency Time Tracking Framework…
What I’m going to share with you is the framework necessary to get the optimum structure for your data, resulting in easily pulled reports containing the required information.
In basic terms, that framework includes the following…
Let’s delve into each of those four points a bit more.
The Purpose of Agency Time Tracking
If the motivation behind the time tracking is purely to keep tabs on your team’s work rate – to see if they’re working hard enough, or so you can hold them to some arbitrary utilization rate – that is not a good reason to track time.
Other folks believe the only reason to time track is to build a client. Also not a good reason to track time.
“If 2020 has taught us one thing, it’s that the best purpose of tracking time is to make your business more efficient.”
Time tracking is your most valuable set of data. This added efficiency brings more profitability while helping to protect your team’s time, ensuring you can give them a better work-life balance. This should be one of the leading reasons behind how and why you track time.
Additionally, define the questions you want to be able to answer with your data. This clarity is going to really help you define the next three steps in this framework.
How Best to Structure Your Data for Agency Tracking
Challenges occur when we have a time tracking tool that’s integrated into a project management suite – so our time agency tracking data takes on a project management structure. When you get into the nitty-gritty, like tracking time against tasks, these tasks probably won’t cleanly map back to a role…
Evaluate Your Tagging System
This may require re-evaluating the tagging system or the way things are mapped out in the project management software.
The easiest solution is to use a separate time tracking tool, outside of the project management suite, so that you can define that structure independently, thus resulting in the project management and operations team not having to compromise to meet each other’s needs.
Investigate and Assess Granularity
Secondly, something to consider is the level of granularity appropriate for your business. The question to tackle here is – when things don’t go as planned, how do you go about investigating events?
How can you best reverse-engineer your process around this?
Are you asking questions about the process, or are you asking questions about the people?
This is where graphs come in! You want to think about this complexity in terms of a graph that has two axes. The first is Process Insight. The second is People Insight. I dig more into this in the video (around the 6:33 mark).
So, once you’ve defined the level of granularity, then you’re probably in a good place to start considering the appropriate methodology for time tracking.
Selecting The Correct Agency Time Tracking Methodology
A common misconception is that timesheets are the only time tracking tool. Untrue! There are companies, like Media Monks, that have scaled immensely and they don’t use timesheets. They actually use a resource plan-based approach to time-tracking, and their operational model suits it.
For example, if you need to know how much time is being spent on every single task within a project, it’ll be very tricky to do that in a centralized way. So, you’re probably best doing that in a distributed way.
However, if you have the resources in your operational team (some good project management and/or operations people) and they can dedicate the time to it – plus your level of granularity is lower – then it might make sense for you to evaluate a centralized model where you’re using a Resource Plan as the centralized area for time tracking.
The PM or operations team is going to ask…
- What is everyone working on?
- What clients/projects are being worked on?
- Query any changes?
- Has anyone moved positions?
- Has anyone spent significantly more time on something than previously expected?
Then, they’ll use the Resource Plan to create a record of truth in terms of where/how time was spent.
Either one of these models can work really well. Which one you’ll use will come down to a bunch of factors:
- The type of work you do
- What level of complexity you have in your business
- Ultimately, what’s going to work best for your team
Encouraging Team Compliance
Compliance is critical. Firstly, however, you need to make sure that your team understands a few things, such as…
- Why agency time tracking is important
- How the data is being used
- How they are contributing to the success of the business and themselves
Time Tracking Software and Systems
If you’re asking them to fill out timesheets, perhaps provide them with an easy time tracking app or software – including a nice UI, and something that isn’t a pain in the ass to use! Time tracking apps and software have come a long way and integrations make things even easier.
Simple Project Management and Process
If you’re using a centralized model, again, give them a simple process to communicate with whoever their project manager or point of contact is.
Don’t Weaponize Employee Time Data
The last thing that I’ll say around compliance is this: the best way to kill it is to weaponize agency time tracking data.
If you start grilling people about not working enough or trying to hold them accountable to arbitrary utilization targets, this may motivate them to give misleading information. This leads to the falsification of your data and that defeats the entire purpose of this exercise.
Busting Agency Time Tracking Myths
There’s a myth I want to bust around time-tracking… I hear this one all the time:
“We don’t bill for time, so we don’t need to track time.”
As an agency, not tracking time is the same as not tracking your food cost at a restaurant. Now, you might run a high-end agency, just like a high-end restaurant. Perhaps you’re positioned to charge substantial sums for your services, much higher than your cost basis – and that’s great.
However, your direct labor cost is going to be 40 to 65% of your PNL.
So, if there isn’t some form of time tracking going on in your agency, that’s being irresponsible. Again, your time tracking data is going to be the most valuable set of data – helping you to be more efficient, more scalable, more predictable, and prevent circumstances whereby you’re asking your team to work overtime in order to hit deadlines.
Your data in this scenario is going to be the bedrock of improving your processes and getting to a place where you can avoid such situations. Once your time tracking improves profitability, you can reinvest in your people and also compensate yourself for the risk you’re taking.
Key Takeaway for Agency Tracking:
To recap, the four steps to making time tracking work…
- One: clearly define your purpose, why you’re doing it, what questions do you need to answer?
- Two: find the appropriate structure that maps back to your estimates, and that has the appropriate level of complexity to help you answer those questions.
- Three: define the correct methodology for your team.
- Four: get your team bought into this process so they can provide you with what you need and contribute to the integrity of your data set. Do all those things correctly, you’ll find that agency tracking will work well for you.
Fancy checking out some additional resources to make your agency more profitable? Head on over to parakeeto.com/toolkit to find out more!
Time Tracking FAQs
Agencies track time in order to understand if their project estimates are accurate, and to help them understand the profitability of specific time periods or groups of work like clients, projects, service types, etc.
There are hundreds of great time tracking solutions available. The best one is the one your team actually uses and provides an efficient workflow for your operational model. It should able to structure data in a way that helps you answer your most important operations questions.
Time tracking may improve productivity, but more importantly it helps to improve efficiency by giving your business insight into where time (your biggest expense) is being deployed
Agency Profitability Tool Kit
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If you’re looking for more resources to help you improve your agency’s profitability, then check out the Agency Profitability Tool Kit – it’s full of the same templates and checklists we’ve used with consulting clients to help them improve their profitability by over 100% in under 60 days.
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Marcel is an agency profitability optimization consultant, keynote speaker and the CEO of Parakeeto. He’s on a mission to help the average agency get the information they need to be more profitable. From sharing educational content and resources to creating tools at Parakeeto to make measuring the most important metrics easier – everything he does is aimed at making agency profitability more accessible.
Great piece of work, Thank you for sharing!
“Amazing write-up! Really useful thank you so much.