What’s your most precious commodity? Time.

Every business, successful or not, has one thing in common: 8 hours of a typical workday. What is done within those 8 hours can be the difference between efficiency and chaos. It can be the difference between moving effectively toward your business goals or spinning your wheels while the competition profits. Time tracking is one way to ensure that your most precious commodity isn’t being wasted.

Some people balk at using time tracking for fear it’s too invasive. If employees feel they’re being spied on, they lose motivation and job satisfaction, the job becomes “just a paycheck,” and they do only what’s necessary to look good on the tracking system instead of actually being productive.

Time tracking is not intended as a way to micromanage people. Time tracking is intended to make employees’ lives easier while increasing productivity and profits!

The Benefits of Time Tracking

Peter Drucker, one of the fathers of management theory, said, “Until we can manage time, we can manage nothing else.” If you’re skeptical, here are seven reasons why your business will profit by time tracking your employees.

1. Accurate Project Planning

Thoughtfully planning a project (project specifics, people, budget, and resources) increases its ROI. Good time tracking tools often include project planning templates that help you compare your planning with the reality of a project. The data acquired from time tracking one project can then be used to plan future projects accurately.

2. Efficient Project Management

Once a project is in motion, online time-tracking provides an on-demand overview, allowing for flexibility in allocating people and resources, and adapting to challenges to avoid costly surprises of going over on time and budget. Time tracking:

  • Streamlines workflows by setting priorities and identifying productivity blockers like overload or inefficiency.
  • Provides daily updates on the status of individual tasks.

3. Increased Productivity

Time tracking accurately identifies how long tasks actually take and whether people are spending time on the right things. It also:

  • Sets expectations for employees. Knowing what is a priority helps people organize their time, and stay focused and on-task.
  • Helps individuals recognize where their time seems to slip away and where they feel pressured, giving them real data and empowering them to communicate these challenges, giving you an opportunity to support them, reallocate personnel, hire, or outsource.

3. Cost Management

Every business wants to reduce costs to increase profits. But time wasted or spent inefficiently cuts into profits. Time tracking:

  • Identifies productivity bottlenecks that are due to poor task prioritization, so you aren’t paying employees to work on minor tasks that interfere with the important ones.
  • Highlights productivity killers that come in the form of using outdated systems and processes (e.g., keeping multiple paper copies in cumbersome filing systems) rather than newer and more efficient technologies, or having employees doing repetitive tasks that should be automated.

4. Constructive Feedback

Time tracking is a valuable tool for employee development. This increases employee engagement and job satisfaction; and engaged employees are happier, more dedicated, and more productive. Time tracking:

  • Provides quantifiable data that shows whether certain employees are working overtime because their workload is too big, or because they are inefficient. This helps you better allocate personnel time, update systems and processes, and hire/outsource where necessary.
  • Pinpoints individuals’ strengths and weaknesses so you can optimize their performance by supporting them in their challenge areas or assigning them a more suitable role.

5. Accurate Proposals Creation

Freelancers and service providers are often asked to bid on a per-project basis. This can be a major nightmare when they realize they are spending twice the time on a project… and thus working for half the money.

Time tracking is essential for accurate bidding and proposals creation for:

  • Freelancers or service providers just starting out, who underestimate the time a project will take.
  • Established freelancers/service providers with higher rates: time tracking helps create compelling proposals that justify their value to the client.

6. Simplified Client Billing

Time tracking simplifies auto-billing, which is one of the main reasons companies track employee time.

Service providers, freelancers, consultants, or anyone who bills for time and materials will benefit from professional branded invoices that advance the business rather than relying on amateurish invoicing that diminishes a client’s perception of the provider’s value.

7. Lifestyle

Although this article lays out seven great reasons to track employee time, it’s equally applicable to the solopreneur, small business owner, or freelancer. You became your own boss not to work crazy long hours. You did it for a good quality of life while doing something meaningful.

Time tracking helps you optimize your own time, not just employee time. Use time tracking to have more time freedom to do what you’re really good at:

  • Identify tasks you are better off hiring or outsourcing. Prevent the trap of “If it’s going to be done right, I have to do it myself” and doing $20/hour tasks when you should be focusing on $200/hour tasks.
  • Break complex tasks down into manageable chunks.
  • Create a prioritization system that balances short-term goals with long-term activities, to ease decision-making when faced with several important-and-urgent priorities.
  • Stay focused and self-motivated when you’re tempted to procrastinate.
  • Work “on” the business instead of spending all of your time “in” the business.
  • Adapt, improvise, and optimize.

Making the Most of Your Most Precious Resource

Ultimately, time tracking is about enhancing people’s quality of life, both regarding work/life balance and enjoying the day-to-day aspects of running a business. Time tracking is a tool that makes life easier for you and your employees… and increases your bottom line!

J.T. Ripton is a freelance writer out of Tampa, who focuses on topics relating to business and technology. Follow him at @JTRipton.