The relevance of time tracking for HR companies
More and more companies are recognizing the benefits of time tracking. Hence, this business practice is rising in popularity in a great number of modern offices. Implementing it and utilizing all of its options helps HR and recruitment firms track their current and historical progress. It also gives them the data necessary to make informed business decisions for the future of the company.
Time Analytics is a time tracking solution that collects data and measures company progress based on key performance indicators. KPIs are quantitative measures that show the state of businesses. Reviewing and analyzing them can point the management towards optimal solutions both for daily struggles and underlying problems within the company. It can also help you assess the team’s performance and profit and loss account.
Time, project, and client tracking can point you to different solutions – task redistribution, including different hr project management tools into your team’s workflow, identifying top and low performers both in your team and among the clients, and more.
It is well known that HR specialists and recruiters have to deal with more and more applicants for a single position. This means they are often overwhelmed by the amount of work they need to do if they want to find the best candidates, conduct interviews or tests, and make the most favorable decisions when hiring. Hence, it is important to know whether every team member is doing their part. Time tracking brings the transparency needed for good work distribution among team members, which will also bring the team members closer.
Timesheet options
Time tracking per employee
This is the most common category time tracking software offers. There is a good reason for that too, as employee time tracking brings a great number of benefits, including
- Knowing whether your team members are using all of their work time to work
- An insight into their effectiveness
- Identifying unproductive behaviors and distracting websites and apps
- Determining who are your top performers and team members who are behind
- Tracking overtime, vacations and sick time
- Measuring time utilization
Time tracking per task
This type of tracking enables you to assess the current state of your business and discover the possibilities for improvement. You can also identify lapses in organization and task delegation oversights.
Tracking time per work task will give you an accurate insight into the time certain tasks and task types take to complete. This is a big advantage when it comes to time estimates for future projects. Finally, if some activities take up a lot of time and bring you little to no profit you may want to outsource them so your team can dedicate more time to billable tasks.
Time tracking per client
The importance of time tracking within your own company can’t be overstated. However, it takes more information to be able to propel your company above the competition. An HR or recruiting firm can’t function without its clients. All profitable activity is contained within your collaboration with other companies. In other words, you should also track the time you dedicate to each client to boost your team’s efficiency and profitability. The advantages of client time tracking include
- Tracking the profit coming from individual clients
- Allocating costs accurately
- Precise profit assessments
- Differentiating high and low performing clients
- An insight into whether your fees, contractual terms, and cooperation models are optimal
- Identifying the clients who aren’t profitable and terminating contracts with them
- Drafting future offers to be more favorable for you
Time tracking per project or service line
Project or service line time tracking gives you an exact insight into your HR firm’s efficiency and profitability on the project level. For example, it is important to differentiate the profit margin coming from your main line of work – finding candidates and conducting interviews, and the profit coming from other activities, such as employee training, payroll calculation, administrative duties, etc. It is also important to know how much time is taken up by each activity.
Time tracking – the basics
Track time easily
HR companies that look for a solution to measure and increase productivity should pay special attention to the simplicity of the time tracking process itself. There are hundreds of time tracking software solutions currently on the market, and they offer different levels of complexity. While super-sophisticated solutions offer better fine-tuning options, you should pay special attention to their user-friendliness.
Simply put, an extremely complex system will not be easy to use and can take up quite a bit of time each day to remain useful. Additionally, it can take a lot of time to set the platform up initially and customize it. In other words, the administrators would need some time to make the initial settings match your company’s needs. That is why it is important to use a user-friendly platform.
What shouldn’t you track?
The differing levels of complexity also reflect on the tracking possibilities. Some companies use timesheets and automatic trackers similar to old clock-in systems, and others use stricter tracking methods. They offer hardware and software activity monitoring and even taking screenshots of user desktops.
These solutions indicate distrust and can raise trust and privacy issues. Additionally, most professionals aren’t comfortable with this level of micromanagement. Lastly, a screenshot-taking solution may oppose the GDPR in your country, so make sure to check the local laws if you are sure you want this feature.
Recurring tasks
Having to navigate a time tracking platform in which you have to create each new task from scratch is difficult for the management. On the other hand, creating said tasks takes time out of your employees; days.
Hence, another important feature you should look for is the ability to create tasks in a couple of clicks with predefined options. This is especially convenient with tasks that occur on a daily or weekly basis.
Determining billable rates
Calculating the planned (expected) and realistic (achieved) billable rates for each employee and client is another way to determine how your business is doing. Seeing whether these two values differ, and by how much, helps you determine whether you’re achieving the expected profit or not.
Time tracking software accounts for each HR specialist default billable rate as they perform the service. Alternatively, the specialist can manually set up their rate. They can also use a billable hours chart to save time and make sure they never forget any important piece of information.
Once the project is finished and invoiced you can calculate the realistic billable rate. This is done by dividing total revenues by spent billable hours by employee.
Cost rates
Similar to billable rates, you should keep your eye on your company’s cost rates. The total cost rates include the employee rate, based on their salary and direct expenses per hour. The other component of total costs is based on general expenses per hour. Time tracking software has an important ability to automatically account for the defined cost rate and calculate the cost prices per project or client.
Timesheet review
Hr project management tools should always offer the option to create a comprehensible timesheet. This document lists all logged activity and details about it. some countries made timesheets a mandatory addition to payroll slips. The importance of timesheets lies in their ability to confirm work hours and keep track of breaks, leaves, and overtime.
You can find many useful models and timesheet templates online, but it is crucial for each full-time equivalent timesheet to contain the following:
- List of performed activities allocated per client
- Details of the work the employee has performed
- Total hours invested into projects
- The ratio of billable and non-billable hours
- Hourly billable rate
What can you learn through time reporting?
Tracking time is just the first step, aka data collection. Once you implement this practice, you should aim to use the data you collect the best you can. In other words, utilizing the full potential of time tracking software lies in receiving detailed reports and using them to improve your current and prospects.
Time Analytics gives the users an opportunity to observe analytics per client, employee, task, and project through a comprehensible dashboard. You can see real-time data as well as historical changes through accumulative reports.
Time billing
Detailed timesheets are a staple of our time tracking solution. Besides giving you information about the daily ins and outs of your business, they can also help you create detailed and accurate itemized invoices for your clients. These invoices are based on the entered data.
The importance of cost tracking
You cannot overstate the importance of cost tracking in every industry. Tracking your company’s expenses enables you to determine the profitability and efficiency of each client and project. You need to track costs per work hour to succeed.
How to track hourly costs per project and client
A time and expense tracking platform should account for the work hour price and automatically account for direct and indirect expenses and allocate them per project or client. It counts in the cost rates for each employee and the overhead costs, which, combined, make up the total cost rate.
Here is how you can calculate these expenses.
If the gross salary at your company is $1500, and the average number of work hours per month is 150, the hourly pay rate is $10.
On the other hand, we have the overhead expenses regard all expenses that occur in the office, not including employees’ salaries. In other words, those are office lease and utilities, supplies, and any other expenses you pay for the employees – phone and internet bills, travel expenses, etc.
If the overhead costs are $7500, and the company has 10 employees, we come to the sum of $750 per employee per month. Now we have to divide this number by the monthly number of work hours (150), and you’ll end up with the overhead hourly rate of $5. You need to add this value to the previously calculated hourly pay rate and end up with the total hourly cost rate of $15 per employee. Only now can you calculate accurate expense estimates.
A time tracking solution will automatically allocate the expenses to the clients each employee is engaging with and add them to the invoices.
Essential KPIs for HR and recruitment companies
Average billable rate on the company level
This KPI indicates the average amount of money your firm gets for the services you provide to your clients. It is important to compare the company average billable rate to the planned (expected) billable rate to make sure you are remaining as profitable as you expect.
Employee billable rate
A billable rate on the employee level is necessary for finding out who are your top performers. Additionally, comparing this metric to the expected billable rate and total cost rate is necessary for employee assessment. This is true because this billable rate shows how much your clients pay per hour for a specific employee.
Cost per client and project
This indicator represents total expenses your company has and allocates to a specific client or project. Time tracking gives you data about the time your employees spend working on different projects, which enables you to determine your expenses. Expense data shows how much profit is coming from any specific client or project.
Understanding and allocating expenses will make your budgeting assessments for the next budgeting cycle more accurate and simpler as well.
Time utilization
Time utilization shows what percentage of total work hours is taken up by billable hours and which by non-billable activities. The management can find out how much time each of these takes up and find out whether some activities should be outsourced.
Billable rate per project or service line
Having a firm grasp on the project billable rate allows you to see whether your projects are making you a profit or not. This can help you determine contractual changes you should make in your future projects to improve profitability.
You can calculate this metric by dividing total project revenue by the total number of hours your team spent working on that project.
Billable rate per client
This metric is similar to the previous one. It shows how profitable your clients are, and you can calculate it by dividing the total profit coming from a client by the number of hours invested in that client.
Billing rate utilization
Billing rate utilization represents the difference between the profit you were expecting and the one you ended up gaining. It is calculated as the ratio of expected (predicted) and realized billable rates.
Work task structure
Understanding the way your team works means understanding the position of different tasks within your company’s workflow and the average duration of each of them.
Overtime
Overtime is becoming more and more commonplace in many workplaces, and some managers take it as the new requirement for company success. Yet, even though it may be inevitable, it is important to understand the reasons for overtime.
If the need for staying in the offices longer is coming from the objective increase in work, you may want to transfer some new team members to the teams that are struggling or hire additional help.
On the other hand, if the need for overtime is coming from unproductive practices, you will need to have conversations with managers and team members and create a custom solution to eliminate distractions and increase productivity.
To conclude
HR and recruitment companies looking to measure and increase productivity can reap much time tracking benefits. Yet, there are some precautions.
Firstly, you should implement positive time tracking practices. That means not using the platform to punish and micromanage. Even though they may seem like the easiest and quickest option, you should be focusing on long-term goals. The key to that hides within reporting features and consistent time tracking by your team.
Time Analytics offers a user-friendly time tracking interface that takes only a couple of minutes to fill in and enables the management to receive high-quality reports. Another opportunity it offers is to level the playing field among your HR specialists so no member is either overworked or left idle.
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