Agency Time Tracking Done Right (And Why It Matters)

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Hello and welcome to today’s webinar on agency time tracking. I’m your host, Chip Griffin, the founder of SAGA, the Small Agency Growth Alliance, and I am delighted to have you here with me today while we talk about something that is maybe not the most exciting thing. Well, let’s be honest. It’s a painful thing, but it’s something that is really important for the success of your agency as a business.

So we’ll start by talking about what we’re going to cover in this webinar today. And so we’re gonna be looking at the purpose of time tracking. Why do we even bother? We certainly hear about agencies that have said, you know what? We’re done with time tracking. We’re done with time sheets. We don’t need to do it.

We’ll talk about why that’s not a good idea. We’ll talk about how employees actually benefit from time tracking because too often they see it simply as a burden, which means that they’re less likely to give you the information that you need. , we’ll talk about what you should track and what you shouldn’t track, because that’s really essential to getting, uh, high levels of compliance and accurate data.

We’ll talk about how to implement a solution. We’ll talk about how to address compliance or lack thereof and how you get the most accurate information that you can from your time track. Processes. And finally we’ll talk about how you actually use that data in the end to make effective changes to your business.

Before we dive into that content though, I do want to go over a couple of housekeeping items. The full replay of this webinar and all of the webinars that we do here at Saga are available, uh, for free for all Saga Pro members. All you have to do is log into the website, uh, and access the webinar replay library.

You can also use the q and a function if you are watching this live, and that q and a function will pop up Questions for me that I will answer at the end of the. Presentation. If you want to ask a question because you’re watching this on replay, or maybe you have a question that you don’t want to ask publicly, feel free to email me at chip small agency growth.com.

You can find out more about Saga and the other resources we have@smallagencygrowth.com. And if you’re interested in talking about this webinar on social media, I would encourage you to use the hashtag agency leadership so that folks can find the content. . All right, so let’s talk about time tracking and why we should even bother with it.

Why should we be tracking time and obviously at at, at its root as an agency, we are selling ours, we are selling labor, and we can package it up however we want, but ultimately that’s what we are doing. And so if we want to know. What everything costs. We need to know how much time we’re putting into it because those labor hours are what constitute the cost of service for any particular client.

And so it’s what drives our profitability. So profitability is absolutely important, but the things that you should be thinking about when you are talking with your team in particular are things like resource all. . When you’re tracking time and you understand how your team is spending that time, how much time you’re investing in certain kinds of activities or clients, it helps you to better understand that resource allocation and make intelligent decisions about how your team should be spending its time.

And so if you get this accurate information from your team, you can sit with them and say, Hey. Why don’t we stop doing this particular activity and instead invest that time in something else that maybe is more productive, not just for the business, but perhaps for that employee as well. Time tracking also helps you understand not just when to hire.

But also what you need to hire. If you start taking a look at the time that you’re tracking and you say, okay, I know this team member is overburdened, or you know yourself, that you are overburdened as the agency owner, you can figure out, these are the blocks of time that I can and would like to get off of my plate or off of my team member’s plate.

And so that then helps inform your decision about what you need to hire for. And too often when we’re making hiring decisions, we’re doing it off of our gut feel or we look around and say, geez, wouldn’t it be great if we had someone who did this for our agency? , but if you have time tracking, you can make a more data informed decision that will allow you to really understand how you can recoup more of your time and more of your team members’ time for more productive activities perhaps.

Of course, the most important thing that you can do with time tracking is to price more effectively. Most small agencies are undercharging their clients. The reasons for this are many, but a piece of it is, You don’t understand well enough how much time it takes to execute on the promises that you make to your prospects and clients, and by using time tracking and reflecting on what you estimated at the beginning of the project versus how much you actually spent or are spending on a monthly basis for retainer clients.

It helps you to price the next engagement for that client or for other clients more effectively so that you can hit your profit margin targets. And when you’re hitting your profit margin targets, it’s good for you as an owner, but it’s also good for your team because you’re no longer in a position where you feel compelled to balance your books on the backs of your team by asking them to overwork and stressing them out.

And it’s one of the reasons why the agency community has such a bad reputation for burnout of employees. Because we’re not doing a good enough job of understanding how they’re spending their time and making sure that we’re pricing effectively so that we. , um, put together a, a, a package of services that gets the results the client wants while doing it within the resources that we have available.

And of course, pricing is not just about the actual fixed dollars, it’s also about how you scope out work and the deadlines that you’re providing to clients. And if you’re doing those kinds of things with time tracking, it will help you to do that in a better. And finally, I should note that some agencies do bill by the hour.

And of course, if you’re billing by the hour time sheets, time tracking of some sort are absolutely essential because otherwise you cannot fairly charge your clients. Now, this webinar is not about whether that’s a good idea or bad idea. Most of you may know that I believe that there are situations where hourly billing makes sense.

Whether or not you’re doing it, it still is important to be tracking time. So tracking time is not just for agencies that are billing by the hour. It’s also for all of you who are doing fixed pricing or retainers or value pricing, are any of the other models that exist out there? Now, one of the reasons why agencies don’t like to implement time tracking is cuz nobody likes to do time sheets.

And part of the reason why employees don’t like to do time sheets is not just because of the burden of it, but it’s because they feel like this is big brother watching over them. This is someone spying on them trying to figure out how are you spending your day? And I would encourage you to think of, of time tracking and communicate to your team.

The benefits of time tracking to them. This is not some spyware type thing where we’re trying to keep an eye on, are you working from seven 15 to seven 20 or not. This is about understanding how you are spending your time in order to be able to more effectively manage the resources that are available.

Perhaps even, uh, identifying some low priority tasks that you’re doing that we don’t need to do. Maybe you’re spending two hours a week on some sort of a report that we don’t need as an agency, or at least is not worth two hours worth of time, and so maybe we can reduce the scope of it in order to free up some of your time.

These time sheets also help employees by helping to identify when they really need help and what kind of help they need. So if you’ve got an employee who feels like they’re burning out, who feels like they’re being asked to do too much time sheets can be a great way for you to see a. , whether or not that’s the case, and also how to address that, whether that’s through trying to provide some additional training to make their work more efficient and effective, or it’s taking things off of their plate, or it’s shifting work from one employee to another, or it’s deciding that you do need to hire and get additional resources.

You can also use the time sheets to have meaningful conversations with clients about scope creep. And most agencies have challenges with clients asking for more and more. We agree to do more and more because we, we wanna be people pleasers. We want to say yes to clients, we want to keep them, and so we end up, uh, experiencing scope creep, but we can use this data that we’re collecting through time tracking to communicate.

With those clients about just how much time it’s taking to go beyond the original scope of work. And so oftentimes that’s an opportunity to talk with the client about reducing the scope going forward, or increasing the size of the budget that they have to invest with us as an agency. . We can also use this time tracking to more effectively delegate tasks, whether that’s looking at our own time tracking, so we can say, we shouldn’t be spending three hours a week on these administrative tasks.

We can farm that out. We shouldn’t be spending five hours a week on managing Asana or Trello. We can have someone else on the team do that for us. All of these things get surfaced by doing time tracking as a team, and it benefits the entire team. It’s not just about. Spying on them and driving profitability and all those kinds of things.

In order to make it palatable for employees and palatable for you as the owner, because you as an owner, need to be doing time tracking yourself. This is not simply something that you delegate to your team. You need to know exactly how you’re spending your time as well, because it’s the only way that you can make meaningful change for yourself and get greater satisfaction out of the business and drive greater profitability.

But to make it palatable, you need to make sure that you’re understanding what you should and shouldn’t. and my general advice is track the bare minimum amount of information that you need. Do not. All of these time tracking systems that are out there have lots of capabilities to track specifically what kind of task, what sub-project it is.

You can track down to the second, in some cases, run little timers on your screen so you get it really precise. That’s not the way that you want to think about time tracking. You want to think about time tracking and say, do I absolutely, positively need this piece of information in order for this project to be a success?

And so the things that you should. Are basically a short description of the task. This is not so much because you’re gonna use this data so much as it helps remind you as you’re filling out your time sheets, what you’ve recorded the time for. If you just put in the client in no other detail, you may not, uh, remember.

And so as you’re updating it at the end of the day or the week and reviewing it to make sure it’s accurate, you, you need that as a. For you. So that’s the main reason for putting in some kind of brief description. Really just two or three words is plenty. You need to track the time spent, and I would encourage you to do that in probably quarter hour increments.

We’re not lawyers, we don’t need to do six minute increments. We don’t need the, the secondhand stopwatch on the automated timers that these things have. You want to just have a, a clear idea of how much time is being spent on things, but it doesn’t need to be accurate down to the minute. Obviously you want to track the date that the work took place since you can track, you know, are you busier at certain times than others?

And as you understand the, the volume of work over time, it helps you make resourcing decisions so that you can hire staff effectively. Obviously, you wanna know the client or project that that time is being spent on. But these, you’ll see here, these are the bare minimum types of things. It’s not tracking.

Was this a meeting, a phone call, an email. It’s not tracking. Was it with someone? Was it without someone? Was it, was it internal time or external time? It doesn’t track the names of the people in meetings and all that kind of stuff. You don’t need that level of detail. in most cases, or if you do, it may be on a limited time basis where you say, for the next week we’re gonna track much more accurately.

Cause we really wanna understand how much time is being spent on email versus phone calls versus Zoom versus in person, internal, external, all. You may want to do that for short bursts of time to get a more granular picture. But most of the time when I see folks set up all of these options that are available in time tracking systems, the data gets collected and is never, ever used.

The more you ask for, the tougher it is for your team to swallow and to do this work effectively and accurately. And if you’re not using this data, if you find that you’re collecting data and never looking at it, stop collecting. . It just doesn’t make any sense. You don’t want to be in a situation where you are burdening your team unnecessarily because now you’re just making a bad problem worse.

And so we’ve already talked about some of the things that I would encourage you not to track, but it doesn’t matter. For example, the time of day, right? I, you should track the date, but who cares whether it happens at 8:00 AM or 9:00 AM. Unless someone needs that in order to prompt themselves and remember to accurately track their time, it, it doesn’t really add much value.

So really, really limit what it is that you’re collecting so that you can be much more friendly to your team and frankly yourself. Cuz again, you are gonna be doing this and if you find it painful, if you find it difficult, imagine how your team feels. . So how do we go about implementing a solution? And I get a asked all the time, what’s the best software for time tracking, project management, et cetera.

And my answer is always the same. My answer is always the best solution is whatever you’re actually going to use if you use the back of a bar napkin, or an Excel spreadsheet or whatever. That’s the best system for you. So don’t worry too much about which platform you’re choosing, and particularly because I’m encouraging you to keep it simple.

You don’t need all of the bells and whistles. So if you’ve got something that that integrates well with your existing project management tool, or integrates with your existing billing system, if you’re billing by the hour, by all means lean into those solutions. Don’t go and find new stuff just for the sake.

I would also encourage you to be clear with yourself about what your requirements are for your time tracking system before you go shopping. It’s really tempting to go and watch videos and demos and talk to salespeople and understand what each platform does, but you end up being in a position where you start.

Deciding that, oh, that’s a great feature. I should use that. I need that. And it’s, it takes you away from keeping it simple. So focus on those things that are affordable for your organization, that are integrated with whatever you needed to integrate with that has the, the necessary features, the ones you identified both.

Before you went shopping, it’s like if you go to the grocery store hungry, you end up with food that you don’t really need. Put your shopping list together before you start talking to vendors, before you start doing demos, before you start doing free trials, and then ultimately pick something that is easy to use.

And as an owner, I would encourage you to try it yourself. By all means, have your team tested as well. Give their feedback. But figure out if it’s something that you can use consistently and reliably, because my experience is that owners are even more cantankerous about time tracking than employees are.

So if you can find something that you are satisfied with, chances are it’s gonna be easy enough for the team to use as well. So now let’s talk about compliance and accuracy of the tracking that we you’re doing. And the first thing to understand is that all time tracking isn’t accurate. You’re never gonna have time tracking that is a hundred percent accurate.

That it, that really gets to exactly what the employee did, and the reality is. That unless you had a camera over someone’s shoulder and it was tracking all of the different things that we do. Cause if I’m looking at my email, I’m gonna bounce from one client to the next. So I’ve gotta do some kind of estimation when I’m putting together my time sheets in any case.

And so you wanna make sure that you understand that you’re not going. For a hundred percent accuracy. If you’re looking for that, you’ll be very disappointed and you’ll make your team miserable. You have to understand that close enough is better than not at all, and so if you’re in a position where you’re getting the information as accurate as it can be within reason.

You’re great. You have the information that you need in order to make smart decisions, and there are many reasons why you might get bad data, and we’ve talked about some of them already, but there are a few others here that I want to highlight as well. Obviously, we’ve talked about the more difficult it is, the less likely people are to enter the information accurately, but one of the biggest things that we make a mistake on is that we tell team members that we expect that they spend at least a certain number of hours on a project.

We’re not more than a certain number of hours on a project or we tell them we want them to be at least 85% billable and it has to be client work and only 15% of their time can be something else. The more rigid we make those things and the more afraid we make our team of missing these targets, the more likely they are to tell us that they hit these targets, even if they didn’t, and it’s not because they want to be dishonest.

It, it’s not a natural. It’s a natural instinct to keep people happy, and it’s something that’s pervasive, not just in the agency community, but for employees everywhere. You want to keep the boss happy. And I can tell you, when I was a junior account executive in an agency 30 plus years ago, one of the things that I did and other team members did was we were told that we couldn’t spend more than a certain number of hours a week on a large client.

And so what did we do? We always. That number or lower on our time sheets. The reality was that that client was very difficult to work with and would often put in requests. That took us more than that amount of time to do that, put us as junior employees in a situation where we either had to anger a client, which meant they were gonna call our bosses and complain that we weren’t getting the job done.

or we had to anger our bosses by telling them we were spending more time than, than they wanted us to on a particular project. So it put us as junior employees in a no win situation. If you put your, your junior employees in a no win situation, they’re going to do whatever it takes to survive. So don’t set these rigid numbers.

Make sure that your team understands that you want them to communicate honestly. on your time sheets, you would rather know what the real amount of time being spent is, whether it’s high or low, compared to expectations. Doesn’t matter. What’s important is that you get the right information to make smarter decisions going forward.

And so you don’t want to create this atmosphere where you are a micromanager and you look and you say, Hey, this person spent three hours on this task. They should’ve only spent an hour and a half. And so then I sit down with them and say, you said you spent three hours writing this press release. Why?

Why did it? Three hours versus 90 minutes, 90. It should only take you an hour to do that or two hours to. Don’t do that. If you get into that situation, you will just breed resentment amongst your team and again, start collecting inaccurate data. You also start to get bad data if people think that the information they’re providing you is being ignored.

So if you tell people that you’re using this time tracking to price better and to avoid scope creep and to, uh, allocate resources more effectively and determine when to hire. If you’re not actually doing those things, your team will notice. And if your team notices that you don’t pay attention to this data, they will stop paying attention to that data and they’ll just do what the bare minimum is in order to get them across your desk on time.

And finally, if you start to focus too much on accountability and too little on accuracy, uh, that’s where you start to run into problems with getting bad data as well. In other words, if I’m saying I need this in by five o’clock every day, or, Bad things are going to happen. That’s not a good way to get your team to improve their compliance.

So how do you get the best data then, if those are things that cause you to get bad data? How do you get good data? You first of all have to make sure that you are communicating why you’re doing it and educating them about it and making sure that you are demonstrating how you are using this data. Have honest and open conversations.

With them about how time is being allocated across the team and how you might work together to either become more efficient or change the resource allocation or move tasks from one person to another. All these different things that you can do if you’re taking advantage of this information. You also get good data if you lead by example.

You need to be doing these time sheets, as I say, but you need to make sure that your team knows that you are also doing the time tracking yourself, and that you are not simply putting a burden on them that you are not willing to accept. Yourself, and I’m telling you, this is not just to set a good example, it’s because it actually will help you.

If you know how you’re spending your time, you will be in a much better position to shape your time in a way that gives you true satisfaction from your business, allows you to spend your time for the highest value activities, which then leads to better compensation, both in the short term and the long.

And finally if, if you are in a position where you’ve got some people who are complying and some people who are not, some people are just always late turning in their time sheets, you may need to resort to naming and shaming. It’s a last resort, but it can be helpful and, and I’ve seen organizations that have effectively used things like if everybody has their time sheets in by 10 o’clock on Friday morning or whatever.

That, you know, everybody gets a pizza lunch or something like that. And, and so you, you sort of have a carrot and stick approach and then if someone is the, the laggard on that and they’re the one reason why you’re not getting it, you can name and shame. I don’t encourage this unless you have. , you know, some true compliance issues, and most of you in small agencies are unlikely to have major issues.

This tends to creep up more when you start getting up to 20, 30, 40 or more employees and you start to have people who are more disconnected from the business. If you’re in a 5, 10, 15 employee agency, chances are you are still closely knit enough that people will want to try to be helpful and you’re not going to be in a position where naming and shammy is gonna be necessary or even.

But it is something to consider if you are starting to grow, and that does become a problem. So how do you use the data effectively? Since we talked about only collecting data that you’re going to use? Okay, how do you actually use it? And so you need to use it first and foremost, as I mentioned at the start of this conversation, to build better estimates, to set better prices.

And in the saga resource library, there is a project budgeting template and package that has information on how to do project budgeting, including how to factor in time tracking so that you can price more effectively and take into account scope creep and overhead expenses and profitability and all. . So by all means, first and foremost, use it to, to get those estimates to set your prices, but then also use it to track your profitability over time.

In other words, if I estimated this work was gonna take a hundred hours, did it really take a hundred hours? Or did it take 110 or 120? Maybe it only took 80. , all the chances are, I mean, I will tell you based on my experience working with agencies, most underestimate the amount of time it takes. And one of the things that time tracking will help you do is understand how the amount of time it takes you to do something compares to one of your team members.

More often than not, you as an owner will be able to do things more quickly than an employee can execute the same task. And so when you’re putting together estimates to set pricing, you need to factor in that it’s going to take them longer. It takes them longer for a number of reasons. One is they typically have less experience than you do.

And as we all know, as you gain experience, you usually can perform a task more quickly. But you also are in a position where if you’re a more junior person, you need to to ask for feedback and there may be more revisions or having to incorporate feedback in other ways, whereas you as an owner, typically can bypass that because you are the approver.

and so you don’t need to run it by somebody else. And so all of those things contribute to the amount of time it takes your team to do something versus you. And time tracking will help you to learn that better. And it’s an important lesson to learn as you grow because you start to become more and more disconnected from the day-to-day work and what it actually takes to get the results that your clients are.

You also wanna make sure that you truly are using this to get rid of, get rid of low value, low priority tasks from your team’s plate. And we all accumulate them. Sometimes we accumulate them because business was slow and so we started doing some reporting or some project and, and it all of a sudden is eating up time that’s unnecessary.

But then as we get busier, we still feel obligated to do them. We need to help triage the work that our employees are doing and using time tracking can really help us to identify those things that simply are not worth the time investment. . We can also use this time tracking to provide constructive feedback when we’re having our one-on-one conversations with team members.

When we’re doing reviews, when we’re doing after action reviews of projects, uh, or activities that we’ve done for clients, we can use the amount of time spent and say, Hey, was this really worth it? And I would encourage you to do these things by asking questions. Don’t tell them. It was not worth spending five or 10 hours on this.

Ask them, do you think it was worth spending five or 10 hours on that particular task or project? More often than not, they will agree with you, but if you’re encouraging them to be the one that voices that, Uh, viewpoint, they will be in a stronger position than if you’re dictating to them that viewpoint.

So encourage them to look at this data and to use it themselves in order to provide their input that can help the business grow and thrive. , you want to use these time sheets also as an opportunity to try to figure out where you can get some efficiencies. And so if you’re finding that all of your team is spending 10% of their time on administrative tasks, maybe it’s time to try to find a centralized administrative resource that can help them.

Uh, if you’re finding that you’re spending a, a lot of time on other kinds of routine tasks that you can move off of the plate of a higher cost employee to a lower cost employee, that helps quite a bit. Maybe you can say, okay, it’s taking us 10 hours to, uh, build this kind of website or three hours to write this kind of press release release.

Are there ways to build in some processes that can streamline that, streamline that Maybe it’s streamlining meetings, maybe it’s streamlining. The approval process internally before it even goes to. It could be that you use the time sheets to find more effective ways to work with clients. If your time sheets are showing that there’s a lot of time being spent working with a client to get approvals on things, maybe it’s because you didn’t get enough buy-in in advance.

Maybe it’s because you’ve got the wrong decision makers. In the loop, maybe you’re not sharing the information in the most effective way with those decision makers. There are some decision makers at clients or even internally at agencies that do better making decisions on calls where they’re forced to focus on something.

Others prefer to review emails or documents or other things like that. So you need to make sure that you’re using this time data to try to find those efficiencies and figure out how best to work with everybody internally and externally to get the job. . You can also use these time sheets, as I mentioned earlier, to hire more effectively.

Because one of the things that that can happen is if you say, Hey, I think I need someone to help me with project coordination, that’s great. But if your team is only spending 10 hours a week on project coordination, can you really fill a 40 hour week with a full-time project coordinator? Will it really free?

Much time from your team and, and really provide the benefits that you’re hoping that it will. You can use this data to figure out, do you need to hire a hybrid, a project coordinator slash I don’t know, writer or project coordinator slash. Virtual assistant I, there’s a lot of different things that you can do once you have this data and figure out what blocks of hours are going to move where, when you bring a new team member on, and it helps you to avoid investing incorrectly in the wrong kind of talent at the wrong time.

If you get the right talent at the right time, you can grow much more. . And then finally, it will allow you to spend your personal time budget better. And I mean this for you as the owner, but it also helps your individual employees do it as well because your employees should be looking at their own time sheets and taking lessons from them.

But if you are looking at your own time sheets as an owner and you say, okay, these are the things that I’m spending time on, you can more effectively put them into the buckets of the things that only you can. , the things that could be delegated if you chose, and frankly, the things that maybe don’t even need to be done at all.

And by figuring out those different bucket buckets, you can figure out how you can make the biggest difference the most quickly. And so if you identify five hours a week on a common type of task, that doesn’t need to be done by you, that could be delegated. Well, now you can. Those five hours much more quickly because you’ve identified what it is.

You can package it up and you can figure out, do I need a contractor to help me? Can I give it to an existing team member? All of those things are much easier once you actually see it on paper, and one of the reasons why time tracking is so important for us individually. Is because we tend to remember the things that are the most painful as if they took longer to perform than they actually did.

And the things that we enjoy, we assume we took care of much more quickly. So for things like this where I love doing webinars and podcasts and, and speaking. . I always, in my mind, think that takes no time at all. It’s just the time in front of the camera, and I forget about the time it takes to prepare and to shift off afterwards, and all of the different things that go into doing presentations, recordings, videos, et cetera.

And at the same time, if it’s something bookkeeping related, I’m gonna think it took forever because I hate doing it. It’s not fun. It’s not what I signed up to do. It’s just a necessary evil when you’re running a business, and so you need to be using these time tracking devices in order to give you accurate information that isn’t distorted by your perception of how enjoyable or not.

That bit of work is, and as you know those things, it makes it much easier for you to allocate your time in a way that gives you that higher level of satisfaction for the business that you own. And if you’re not building something that you want to own and you’re not getting the results that you want, there’s no reason to take on all of the stress and pressure and all, and the risk of running your own business.

So with that, we’ll tie it up in a bow here. If you’re looking for a way to, to drive profitability, efficiency, improve team morale, there are very few things that will help you as much as time tracking it is something that has a bad wrap. It’s something that that too many agencies are happy to try to.

Toss out the window in the name of making their teams happier. But the reality is you’ll make your teams much happier, your business much more profitable. You’ll improve your own satisfaction. If you put together a sensible time tracking system that gathers just the information that you need, that you use that information effectively, and you start to get the results that.

Deserve. It’s good for you, it’s good for your employees, and it’s ultimately good for your clients as well. So with that, that will pull to an end the formal presentation portion of the webinar. For those of you watching on replay, this is where the replay will. End. If you have questions, feel free to email me at chip@smallagencygrowth.com.

I’d be happy to answer them. And for those of you watching live, we will transition momentarily into taking some questions and answering them. So thank you all for, uh, joining. And uh, let me just grab a sip of water here and we’ll move on to the q and a session.