8 Reasons Why Time Tracking is Important for Businesses and Employees

For employees, time tracking exists solely to allow managers and leaders to watch their team’s every move. For employers, there are plenty of reasons why time tracking is crucial for managing remote teams and ensuring that work is completed efficiently. 

Whether you’re a skeptical employee trying to convince your team to adopt this new way of working or an employer concerned about the impact of discussing the idea with your team, you’re in good hands. We’ve compiled a list of eight reasons why time tracking is essential for both parties. 

Time tracking, when executed properly, can positively impact the entire organization. But what specifically does it bring to the table that makes businesses worldwide adopt it?

Here are the top reasons why time tracking is important for employers and employees.
For businesses.

1. Improved productivity

For businesses

Time tracking apps give businesses access to performance metrics beyond just a basic record of your employees’ working hours. With the best productivity time tracking tools, you can see: 

• Activities that consume the most time
• Times when team members are most active
• The apps and websites that make teams most productive or become distractions
• Utilization rates and time spent in meetings vs. working independently

With an advanced workforce management tool like Hubstaff, you can access advanced insights like focus time, industry benchmarks, and productivity trends. Employees can leverage this data to identify work they excel in or areas of inefficiency so they can make the right adjustments to their workflow.

For employees 

Time tracking lets employees measure the time they spend on specific tasks. It makes sense to think that time tracking data is nothing more than records of hours and minutes, but there’s more to it than meets the eye.

Time tracking data at all times is a great way to increase productivity. Employees can use this data to identify their biggest time-wasting tasks and optimize productivity methods like the Eat the Frog or The Pickle Jar method. 

2. Enhances billing accuracy

For businesses

Billing is an inherently delicate process regardless of which industry you work in. There’s zero room for error — billing errors can even result in legal repercussions that significantly cost businesses.

Time-tracking software won’t magically fix all billing issues. However, it ensures that employees are compensated appropriately and the company does not incur any overpayments or losses.

You can use these reliable billing records as references in the future should the need arise.

For employees 

In most cases, employees aren’t meant to be payroll and time tracking experts. So why would you want them to waste billable hours struggling with manual timesheets? Tools like Hubstaff can convert time tracking data into real-time, detailed timesheets to simplify the process. 

3. Better project management

For businesses

Project management can’t exist in a vacuum. For businesses to be successful, they’ll need people with strong collaboration skills, superb time management, and a great project manager to oversee everything.

The best time tracking tools make life easier for project managers and businesses as a whole by ensuring every team member can track time to projects and tasks to gauge real-time project spend and adjust project scope on the fly as needed.  

For employees

Even for the most capable project manager, starting a project and expecting to complete everything as planned without understanding how other employees use their time is impossible. No project was ever successful without the right project management tools and a project manager who knows which tasks to prioritize and who best to delegate them to.

4. Reduced time on administrative tasks

For businesses

Beyond payroll, time tracking tools help businesses reduce time spent on other administrative tasks. The ability to track time to specific tasks and even see real-time spending on a project-by-project basis helps businesses visualize how much it costs to add an employee to a project.

That said, leadership can also apply this same logic to the time employees spend not working on core tasks. This work might include things like: 

• Filling out timesheets
• Responding to emails and Slack messages
• Staying up-to-date on security and compliance training 

Employee pay rates don’t usually change based on the work you have them doing, so classifying tasks is a great way to ensure employees are properly utilized. 

For employees

The same thought above benefits employees, too. Most of us would much rather be doing the work we’ve been hired to do than responding to a mountain of emails, searching for documents, or watching mind-numbing training videos. 

In commission-based roles like sales, reducing admin work is also in an employee’s best interest. Employees in these roles know full well that they make much more from sales than they do from internal admin work. 

5. More accurate invoicing and expense reports

For businesses

Invoices are one of the most polarizing aspects of managing a business.

Do an excellent job, and no one even notices. Make even a small error, and catastrophe ensues. A recent article by Versapay found that over 60% of C-level executives have overseen a lawsuit or a threat of one due to an invoice dispute.

The report also found that 98% of businesses believe upper management gets burdened with invoice and payment disputes.

When you track time, most time tracking apps auto-generate the financials. For instance, Hubstaff’s online invoicing calculates your clients’ total bill from the time your team spent on their projects and each team member’s hourly rate, ensuring timely and accurate invoices.

For employees

Like clients, employees benefit from accuracy in this department. Expediting the expense reporting process helps ensure that employees are reimbursed in a timely manner for travel, food, lodging, and transportation. 

6. Increased work flexibility

For businesses

More and more companies are shifting to remote work, and the 9-to-5 is becoming less prominent. Modern workforces are prioritizing flexibility, so it’s up to businesses to accommodate that need.

Time tracking not only makes that flexibility possible; it makes it work. A time tracking tool lets employees keep track of their work and create timesheets anywhere and anytime.

For employees

Additionally, time tracking helps promote a culture of autonomy in your workplace. Let your employees know you trust them to use their time best. It’s also important to communicate that they also share some responsibility in prioritizing their well-being with a healthy work-life balance.

7. Adherence to compliance requirements

For businesses

Certain industries, such as health care, manufacturing, or government contracting companies, must adhere to compliance requirements that mandate accurate timekeeping. Time theft and fraudulent timesheets (even accidental instances) are punishable by law.

For employees

Compliance is not just for businesses; these regulations trickle down to employees as well. Time tracking and employee productivity tools ensure that employees stay abreast of their compliance requirements and are compensated properly for overtime, PTO, and more. 

8. Smoother payments

For businesses

As fun as it is to get paid, processing payments can be a tedious task. Can you imagine having a fully remote, global team of 100 people and sending payments to them twice a month? We’re quite sure you’d agree when we say computing for a large team’s payroll isn’t something most are looking forward to.

In case you didn’t know, time tracking tools can automate payroll, too. You can set hourly rates for your employees to automatically compute payments. Not only does this save you potentially hundreds of hours, but it also ensures payment amounts are correct.

Time tracking apps also integrate with payment platforms like PayPal and Wise, allowing you to send direct payments to international employees.

For employees

Getting paid is literally the point of going to work for employees. That’s probably why 24% of employees will choose to leave after one payroll mistake. After just two mistakes, another 25% will follow suit. 

Your business may be something you’re passionate about, but at the end of the day, everyone you employ is there for a paycheck. By improving payroll processes, you can ensure more accurate and timely payments that keep employees feeling engaged and more likely to stay with the company. 

Comparison of Time Tracking Tools

Now that you understand the importance of time tracking from both an employee and employer perspective, you’re probably wondering what time trackers are available. While we’re a bit biased, we’d like to share three of our favorites. 

Hubstaff

Maybe we’re a bit biased, but we really do feel confident in our product’s place as one of the most versatile time tracking and workforce management tools on the market. While Hubstaff is one of the most intuitive time trackers available, it also boasts an array of features like: 

• Timesheets. Seamlessly convert employee time into detailed, automated timesheets. Add manual time entries and approve timesheets in just a few clicks.
  
• Employee productivity. See real-time data on hours worked, spending, website and app usage, and more right from the Dashboard.
  
• Reporting. Choose from 20+ detailed reports for hours worked, time and activity, expense reporting, and more.
  
• Invoicing. Create your own invoices complete with automated line items, custom branding, and automated sends right from the Hubstaff.
  
• Integrations. Power up your workday with 30+ integrations with your favorite tools like Asana, Salesforce, PayPal, QuickBooks, and more. 

Customer reviews 

• G2: 4.4/5  
• GetApp: 4.6/5 
• Capterra: 4.6/5

Pricing

Hubstaff offers a free, 14-day trial and four paid plans — all of which support unlimited users:

• Starter: $7 per user/month
• Grow: $9 per user/month
• Team: $12 per user/month
• Enterprise: Custom pricing is available upon request
  

You can also level up Hubstaff with these additional add-ons:

• Insights: $2 per user/month
• Tasks: $3 per user/month
• Data retention: $2 per user/month
• More screenshots: $3 per user/month
  

Toggl

Toggl Track is a favorite for those looking to break into the time tracking space. Its easy, intuitive interface makes it a huge hit with freelancers, in-house employees, and outsourced teams. There are also some polished, detailed reports to choose from, but you will miss out on the workforce analytics features other time trackers have to offer. 

Key features

• Time tracking. Toggl’s beautiful, intuitive timer makes it easy to record billable hours and train teams on time tracking.
  
• Beautiful reports. See where your hours are going with reports. Toggl’s reports are sleek, stylish, and great for analyzing time spent on projects.
  
• Integrations. Powerful integrations with project management tools like Trello and Asana help you track time to specific tasks to gain a better understanding of project spending so you can make adjustments on the fly. 

Customer reviews

• G2: 4.6/5
• GetApp: 4.7/5 
• Capterra: 4.7/5  

Pricing

• Free
• Starter: $10 per user/month
• Premium: $20 per user/month
• Enterprise: Custom pricing  

Everhour

Everhour is an intuitive time tracker that helps businesses track time across various projects and tasks. It integrates with over 40 apps like Asana, ClickUp, Jira, and Monday.com.

Key features

• Time tracking. Everhour provides precise time tracking capabilities, including the ability to log time against specific tasks. This makes it easier to monitor the duration of individual activities.
  
• In-depth analytics. Create reports and customize them with columns, filters, and more. Then, you can email them right from Everhour.
  
  
• Budgeting. Use Everhour’s budget management features to create product budgets, manage expense tracking, and prevent budget overruns. 

Customer reviews

• G2: 4.7/5
• GetApp: 4.7/5 
• Capterra: 4.7/5  

Pricing

• Free plan 
• Team: $10 per seat/month

Tips to implement time tracking

Like any new technology, you can’t bring it into your tech stack without any preparation. To implement time tracking, there are a few important things you’ll need to consider: 

• Find the right tool. You can’t implement time tracking with confidence without finding the best tool for your team. Consider your team size, where you work, the industry you’re in, and other factors. From there, decide if you need basic time tracking or more robust features like productivity insights, expense reporting, or GPS and geofencing.
  
• Getting buy-in from employees. In order to ensure employees track time and submit timesheets properly, you’ll need to get buy-in from them. Make sure they’re aware of the time tracking software you choose and outline best practices for using it as needed.
  
• Establish best practices. Even with the right technology, you’ll still need to establish best practices for time tracking. What hours can employees work? When are timesheets due? These are just a couple of the questions your process documentation should answer.

Case Study Examples

By now, you’re probably well aware of the benefits of time tracking software. But for your skeptics, here are some real-world examples from real Hubstaff customers. 

• Alpha Efficiency. Hubstaff’s time tracking software has helped Alpha Efficiency complete projects 30% faster, leading to improved performance and increased cost savings.
  
• Tallyfy. The versatility of a time tracking app like Hubstaff has helped Tallyfy’s global, remote team streamline time tracking by offering a versatile array of options across desktop, mobile, and web. 

Addressing Potential Drawbacks

Like with any technology or method, time tracking certainly has its shortcomings — especially if you’re tracking time manually. Here are a few potential drawbacks to be prepared for if you choose to implement a time tracking tool for your business: 

• Inaccuracies. Manual time tracking is prone to inaccuracies, time theft, and even buddy punching issues in certain industries. If you’re planning to track time manually, we’d strongly suggest you consider software instead. 

• Micromanagement. Giving businesses the power to track their employees’ time is one thing, but a lot of tools offer employee monitoring features. While these tools can be helpful, they can easily fall into the wrong hands. If you’re interested in employee monitoring, check out our guide to help ensure you’re managing ethically.
  
• Misunderstanding metrics. Time tracking tools are great, but not if managers aren’t properly trained on how to use them. Seeing tracked time on a task-by-task basis is pretty black and white, but employee productivity tools are where it gets interesting. You can’t equate success in every profession to keyboard and mouse movements. 

• Legal and ethical concerns. Time tracking and even employee monitoring are legal in the United States, but it’s crucial to stay informed on the changing legislature. If you’re located in Europe, make sure you read up on GDPR and compliance.
  
• Damaged morale. Anytime you suggest time tracking to your team, you’re inviting the possibility of morale taking a hit. To some employees, turning to a time tracking tool can imply that you don’t trust them to track time accurately or work efficiently. Fortunately, we have some tips for you here.
  

FAQs

What is the main purpose for using time tracking?

The primary purpose of time tracking is to establish more accurate hourkeeping for payroll purposes. With more accurate payments, businesses can establish more accurate budgets, cost estimates, and deadlines for future projects. 

What are the benefits of tracking?

Tracking time is primarily beneficial for more accurate payroll, but it also has a slew of other benefits: 

• Better budgeting 
• Improved project planning 
• More accurate client invoicing 
• Preventing employee burnout
• More accurate overtime payments

Is time tracking effective? 

Yes. With the right time tracking software, time tracking can be a very effective way to track employee hours, overtime, project estimates, and more. Manual time tracking, on the other hand, is a lot less effective due to the increased likelihood of inaccuracies. 

Conclusion

We might be biased, but we think time tracking plays an important role in increasing productivity.

There is a caveat, though — and one that we stand firmly with. 

If you want to implement time tracking so you can use fear-mongering tactics to micromanage your team, we don’t condone that behavior. 

Time tracking can make everyone’s work much easier, but not if you keep employees in the dark. If you micromanage, studies show that the short-term gains don’t outweigh the long-term impact:

• 75% of employees cite micromanagement as their biggest red flag
• Of that 75%, 46% would leave a job if micromanagement persisted
• 51% of employees view remote work as their ultimate green flag

If you want to reap the benefits of time tracking, creating a culture of trust and transparency is crucial. You’re asking a lot from your employees, so they deserve to know what you aim to achieve with time tracking.

Get on the same page with your team, treat them respectfully, and then start tracking time. That’s when you’ll see how powerful this practice can be.