1 TIME IS MONEY A revealing study into the cost of today s poor time tracking habits & technology.
2 Introduction While the phrase time is money is true to many people in business, nowhere is it more true than in the professional services sector, which includes lawyers, accountants, consultants, designers, engineers and architects. All of these professionals need to keep track of the time they spend working on projects, issues and retainers for their clients. Unfortunately, though, this critical part of their jobs hasn t really evolved much over the last couple of decades. Professionals are still required to remember how much time they spent working on certain projects for a variety of clients, and enter it manually, often days after they did the work. To help understand the scale of this problem, AffinityLive commissioned a survey to ask professionals about their time tracking habits and accuracy. We found, unsurprisingly, that the main reason professionals have poor time tracking habits is that it is cumbersome to do. Most timesheet applications are dedicated software unrelated to the day to day work of a professional that they need to go out of their way to access and complete. Additionally, the process itself requires professionals to remember exactly what they ve done over the course of a week or more. Technology hasn t really automated or made the process much easier in the last 30 years, which is why many services professionals dread filling out timesheets. But what is the effect of this disappointing situation? By combining this new data with existing studies of work patterns and volumes, we ve been able to paint a picture of just how much outdated timesheet technology is costing American businesses, and the results are startling. 2 Introduction
3 Through the data, we ve been able to identify three major costs of the current manual, memory based way of doing timesheets: causes professionals to leak over $50,000 in revenue per year Meetings and calls cause professionals to leak over $32,000 in revenue per year Moving from weekly (or worse) timesheet updates to daily (or better) would recover $52,000 per professional, per year in billable time. Given the size of the professional services sector, this is costing the U.S. economy over 50 million hours or $7.4 billion a day in lost productivity. By capturing this lost time, a 15 person professional services firm could add another $1.4 million to their top-line every year. We finish our report with a series of recommendations of practical steps professionals can take today to recover some of this lost time and productivity. Findings The findings below are based on a survey of over 500 professionals conducted in July and August of The survey was anonymous, and restricted to people working in the professional services sector. Where external data has been used, it is referenced and linked in-line. leaks over $50,000 per professional, per year It s proven that reading and answering takes up a significant portion of our day, especially for a professional services firm where employees are engaging in conversations with multiple clients each day. According to Atlassian, those in a business setting receive an average of 304 s per week, and McKinsey found that we spend just over 2.6 hours a day reading and responding to those s. This means over a quarter of our day is spent on . 3 Findings
4 Average days in a work week spent reading MON TUE WED THU FRI 1.5 Days spent reading s a week But, our survey found that when it comes to timesheets, time spent on is largely ignored. Almost 40 percent of respondents reported never tracking time spent reading and answering , and 15 percent rarely do. Only 33 percent of respondents said that they track time spent on always or often. Percentage of respondents that track their s and frequency 35.8% Never track time spent writing 17.4% Always track 16.6% Often track 15.2% Sometimes track 15% Rarely track 35.8% Never track This is costing us big time -- more than half of survey respondents indicated that their employer directly uses timesheets to bill clients hourly or determine retainer amounts. If only a third of respondents are tracking the time they spend on , and the average professional spends 2.6 hours per day on , over 350 hours of work per year are going unrecorded, and therefore not billed. This means that the average professional services firm, which brings in $150 per hour, is losing $52,500 per employee annually due to untracked time spent on . 4 Findings: leaks over $50,000 per professional, per year
5 Meetings are better tracked, but still expensive The survey revealed that professional services employees are much more diligent when it comes to tracking time in meetings. In fact, they re almost twice as likely to record time spent in meetings than on . While frequent time trackers are more likely to record time in meetings, the results did not vary significantly across the board. This is probably because professionals are able to refer back to their calendar to determine how many hours they spent in pre-arranged meetings when completing a weekly timesheet. Percentage of respondents that track their meetings and frequency 20.6% Never track time in meetings 44% Always track meetings 19% Often track meetings 9.9% Sometimes track meetings 6.5% Rarely track meetings 20.6% Never track meetings While survey respondents were more diligent with meetings, the numbers could still be improved. Roughly a quarter of survey respondents said they never record meetings. According to a study from Verizon, the average employee spends about 62 hours a month in meetings, which is about 15.5 hours a week. If we re not tracking time spent in meetings, almost 40 percent of our work week is going unrecorded. 5 Findings: Meetings are better tracked, but still expensive
6 Average days in a work week spent in meetings MON TUE WED THU FRI 2 Days spent in meetings a week Given the large amount of time spent in meetings, even though people are twice as good at tracking time in meetings than , there is still a significant amount of leaked time and value. We ve calculated that over 213 hours a year is leaked to time spent in meetings, costing businesses almost $32,000 a year in foregone revenue. Higher Frequency = Better Accuracy, with a twist One of the trends that stood out in the data - and which frankly isn t that surprising - is that people who were more frequent at completing their timesheets were more accurate at keeping track of their work. People who fill out a timesheet at least once a day are more accurate than people who fill once a week Accurate Once a week Less than once a week Multiple times a day Once a day Multiple times a week Inaccurate The graph is based on weighted numbers: Very Accurate: 3 Somewhat Accurate: 1 Somewhat Inaccurate: -1 Very Inaccurate: -3 Do Not Track: -5 6 Findings: Higher Frequency = Better Accuracy, with a twist
7 Science proves that frequency matters, too. According to the Ebbinghaus Forgetting Curve, humans only retain 23 percent of what they learn after six days. This means that it s impossible to be completely accurate with your timesheet if you re only completing it once a week. Ebbinghaus Forgetting Curve Can you remember what you did last Tuesday? Memory Time (in days) One other interesting observation from our data seems to follow the Dunning-Kruger effect. While the self-reported accuracy of people who completed their timesheets decreased in a fairly predictable manner with reduced frequency ( very accurate being high for daily or better, and dropping by half for less than once a week ), the people who self-reported very inaccurate was self-reported to be the same (3%) for people who complete their timesheet multiple times a day as well as people who complete their timesheet less than once a week. Given what we know about the Ebbinghaus Forgetting Curve, the large percentage of people doing their timesheets weekly or even less frequently are probably over-estimating their own accuracy. 7 Findings: Higher Frequency = Better Accuracy, with a twist
8 Memory Leak: Moving to daily time entry cuts leakage over 80% Knowing that more frequent timesheet entry leads to greater accuracy is good, but what is the cost to the business of tardy timekeeping? People who log their time at least once a day are 66 percent accurate, whereas people who log their time weekly are only 47 percent accurate, and people who complete their timesheet less than once a week are only 35 percent accurate. In short, getting people to fill in their timesheets daily can double their accuracy, and reduce the lost time from 23 percent to less than 5 percent, a recovery of 80 percent. Percent Accuracy versus Timesheet Frequency 64% 67% 55% 48% 36% % Accuracy 0 Multiple times a day Once a day Multiple times a week Once a week Less than once a week To put this into numbers, assuming the professional was billing out at $150 per hour, and they were working a normal 40 hour week, recovering this 18 percent of their week is the equivalent of $1,080 a week, or almost $52,000 per year. 8 Findings: Memory Leak: Moving to daily time entry cuts leakage over 80%
9 Costs and Consequences By establishing the amount productive, paid professional time that is being lost to these various leaks, we re able to examine in the context of both the wider economy and an example professional service business. So, how much is this costing the economy? To put it simply, it s costing the economy a lot. According the Bureau of Labor Statistics, the United States has over 19.3 million people in the professional service sector today, making it the largest private sector employers in the U.S. Additionally, the sector is the fastest-growing -- responsible for almost one in four new jobs created through the recovery from the Great Recession. In the USA 19.3 million people in professional services are leaking 59 million hours at $150/per hour results in 8.8 billion lost each day 59 million hours leaked daily costing costing n $8.8 Billion every day Looking across all professionals, the leaked time lost to , meetings, calls and memory loss not being captured in timesheets is 59 million hours every single work day - which if billed out at $150 per hour would come to $8.8 billion. Every. Single. Day. 9 Costs and Consequences: So, how much is this costing the economy?
10 What about my business? Those are some big numbers, but let s put it in the context of an average professional service business. Let s say you ve got a team of 15 professionals billing out at an average of $150 per hour. By capturing the leaked revenue from s, meetings and memory loss, you d add another $1.75 million to the top line every single year - money that would flow straight to the bottom line (since the labor costs are already being incurred). A 15 employee company is prone to losing $1.6 million in yearly revenue to lack of time tracking for , meeting, and forgetfulness Total Hours Leaked Yearly Breakdown of Hours Leaked Yearly s not being tracked Meetings not being tracked Forgetfulness hours leaked yearly 150 dollar per hourly rate 15 employee company $1,654,875 yearly revenue leaked 10 Costs and Consequences: What about my business?
11 Even if your business works on a fixed price basis, the hours you re leaking are costing you one way or another. If you re not keeping track of the time your people spend on projects (your No. 1 input cost) then you don t really know which projects, clients or types of work are profitable. This means the lack of effective time tracking means lost opportunities to charge clients higher retainer rates or project totals to reflect the actual work you re doing. Recommendations It is clear that businesses stand to grow their revenue per professional by over $100,000 per year by effectively tracking the time they re leaking right now - so what do we need to do to fix it? Many professionals bemoan that timesheets have joined the ranks of death and taxes as horrible and unavoidable chores. In our experience working with thousands of professionals around the world, the following lessons can help make timesheets less of a painful and inaccurate afterthought and more of a useful part of every professional s daily workflow. 1. Automate, Automate, Automate! Entering a timesheet should not be completely reliant on someone s memory in the first place - it is way too important to leave to chance. Thankfully, technology like the cloud and smartphones has made it easier to automatically fill in a professional s timesheet - they can simply review automatically created time entries rather than starting with that horrible blank slate. But how can you automatically fill in someone s timesheet? 11 Recommendations: 1. Automate, Automate, Automate!
12 One of the most popular new ways to automatically complete a timesheet is to use their traffic as a cue. By simply noting which client a professional is ing, modern systems can automatically create a timesheet for a user; all they need to review is the amount of time (often adding extra time when they think oh, that took me a good half hour to write! ) and you ve pretty much solved the leakage problem. Another popular way to automate timesheet entry is to pull in data from a professional s calendar. If the meeting includes a client, then you can be pretty confident it involved some client work, and even if it didn t, pulling the subject and body of the meeting into the timesheet and prompting the user to give it a home against a client or project can be a great way to solve the leaked time in meetings and scheduled calls. Timesheets in AffinityLive suggests time entries for every you send and meeting that you attend Timesheets that automatically suggest time when you schedule a meeting in your calendar Timesheets that automatically suggest time when you a client. Speaking of calls, the continued dominance of smartphones in our lives is providing two other great ways to automatically populate a professional s timesheet. Firstly, by automatically checking a smartphone s call log, apps can fill in a user s timesheet when the call involves a conversation with a client. Secondly, geo-location means that technicians and other on-site professionals can automatically have their time logged if they re seen to be at a client address. 12 Recommendations: 1. Automate, Automate, Automate!
13 2. Link timesheets to key business systems Another reason that filling in your timesheet is so painful is that the timesheet software commonly used is a disconnected afterthought and not part of any other systems people use to get their work done. The best way to make timesheets really work in your business is to make sure the place that people enter their time is the same place they re doing their client work. If they re managing tasks, projects, issues or other client work, you really need to make it easy for people to enter their time as they go about their work. Timesheets that integrate with your tasks, issues, and projects Projects, issues, and tasks that track budget and time Projects that automatically track budget when time is entered Aside from the benefit of dramatically cutting time leakage, the other handy thing about bringing time entry into your key business systems is that you ll have much better insight into budget usage. By seeing the hours spent on projects in particular in close to real time, your project managers will be able to see budget usage and handle problems before they become disasters. 13 Recommendations: 2. Link timesheets to key business systems
14 If you can t make this happen - because your project management system doesn t handle people entering their time for some reason - you ll want to make sure that your timesheet software links to the main business systems in the back-end so people can go to the timesheet software and see the list of projects, issues, tasks and other client work they have scheduled and easily enter their hours against it - simply showing a user a blank screen and expecting their memory to fill in the blanks is a sure way to keep losing almost $100K a year. 3. Make time entry effortless The third big reason why timesheets are so painful to use is that keeping track of time is scrappy and manual. Since most timesheet applications don t allow users to enter time easily as they go, people end up having to use their own manual way of keeping track of what they re doing - like a notepad on their desk, or a text document open in the background on their computer - and they have to remember to be disciplined about tracking when they start and finish working on tasks, only to then have to transcribe it all later. Only the most disciplined of people are able to be relied upon to get this right! Making it effortless to track work is a big part of the solution. By allowing users to quickly create a timer and then let technology do the counting in the background, your people lose a big part of the friction associated with keeping track of their time. Timers made intuitive with easy pop outs and running in the background Easy to create and modify multiple timers Timers minimized to run in the background 14 Recommendations: 3. Make time entry effortless
15 Another reality of modern professional work is that people are often forced to switch between tasks, especially in situations where a client calls them out of the blue with an urgent question or a colleague needs help. Making it easy to switch not just tasks but also timers can help make it easy to keep track of what s going on. Finally, timesheets tend to be a bit of a speak now and forever hold your peace interface. People have to enter their hours, and once it is saved, that s it. Unfortunately, our brains don t really work this way (have you ever forgotten a toothbrush when going on vacation?) as they piece together their work and fill in their time reports, so making it easy for people to track time in draft form, and finalize it later, can really help take the hassle out of time entry. Conclusion The leakage of time in a very big problem in professional businesses - with over 38% of potential billable revenue lost to untracked time spent in s, meetings and by delays in filling in timesheets, businesses that can address this issue and solve it stand to gain handsomely with a revenue boost of up to 61%. While managers may first thing that the solution is to have more discipline to capture the leaked time, and while everyone will admit they could do better, the fundamental problems with outdated timesheet technology mean that your professionals may improve their performance marginally for a time, but this kind of pressure isn t good for your managers or your professionals, and is reminiscent of that poster the floggings will continue until morale improves. Professional services firms are living in the 1980s when it comes to timesheet technology and are paying for it majorly. For an industry that employs over 19 million workers nationwide, it s time to embrace modern technology or risk losing millions of dollars through lost time each year. As the professional-led recovery continues competition between professional firms is going to heat up - and the ones who succeed will be the ones who make the most out of the most precious resource of all - our time. 15 Conclusion
16 References & Assumptions In compiling this white paper we referenced other research, undertook calculations and made a number of assumptions for the purposes of calculation. The details that underpin the outcomes of the research above is outlined below. 2.6 hours per day spent on McKinsey Global Institute, The Social Economy, July 2012, via the Huffington Post Workers Spend One-Fourth Of Workday Reading, Responding To Survey, August hours per week spent in meetings: Meetings in America: A study of trends, costs and attitudes toward business travel, teleconferencing, and their impact on productivity (Greenwich, CT: INFOCOMM, 1998), business s a day: Wasting Time and Work, Atlassian million employees in professional & business service sector: BLS Data: Workforce Statistics, July 2014 (Bureau of Labor Statistics, Department of Labor) 240 work days per year: 52 weeks a year, less 2 weeks for vacations, 1 week for public holidays, and one week for other leave, leaving 48 weeks x 5 days hours per year: 240 weeks per year multiplied by 40 hours a week. $150/hour billout rate: reference rate for professional services; each business, role and industry will have its own specific rate. 16 References & Assumptions
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