It's 3:30 on Friday afternoon... your mind's thinking about the drinks after work, what you need to do this weekend, what's on the TV tonight... then a collective sigh spreads round the office. Yeah that familiar email has just been circularised... "can everyone please complete your time-sheets..." You roll your eyes... "I suppose I best do this," you say to yourself, "but what's the point?"
There is a point! (really!)
Often people focus on the negative of time sheets, the "Big Brother" aspect. Whilst it is true that time sheets can be used to "monitor" what staff are doing, this should not be the purpose! Good management should result in energised, enthusiastic, committed staff, and leaders can't effectively mask over this deficiency in their management, should it exist, using time sheets.
Assuming good management, here's why time-sheets are necessary in a service business!
1. Identifying work that should be charged to clients
If you're directly involved in delivering your company's output, your time is an input cost that should theoretically be billed out to one of the company's clients / customers. Keeping a time-sheet allows management to see where a service has been provided, and who could then possibly be billed for this service, ensuring the business collects all of the money that it is due!
2. Monitoring and controlling the profitability of jobs
Staff time has a cost, and jobs are priced to return a profit. Your business will have a target profit margin for each job, and the only way to best ensure that this profit margin is achieved is to measure the amount of time/cost spent on this job as it progresses, and take corrective action if necessary.
3. Identifying team strengths and weaknesses
The theory of a team is that the collective is greater than the sum of its parts... teams are diverse with members having individual strengths and weaknesses to compensate and compliment each other. Measuring time helps the leaders to identify strengths and weaknesses across the team and to allocate team members to tasks and delegate accordingly.
4. Identifying organisational strengths and weaknesses
Not only does measuring time enable management to identify team members strengths and weaknesses, it also helps to identify strengths and weaknesses in the collective. This can help with formulating the strategic direction of the business, moving in a direction that best uses the team's strengths, avoids its weaknesses, therefore increasing the chances of business success.
5. Assessing the pricing accuracy of jobs
As mentioned above, businesses price jobs to return a profit. There are a number of reasons why the target profit might not be achieved, or may have been exceeded, and one of these is that the job may not have been priced correctly at the start! Assuming that the job was priced on a time estimate at the first stage (which should be the case!), a subsequent review of time estimate vs actual will show where the pricing fell down or where it was too generous, guiding future pricing to ensure profitability whilst remaining price-competitive.
6. Measuring organisational capacity
Just as you can't build a house with a hundred bricks, neither can you realistically bill 2000 hours per month with four members of staff! Recording staff time helps management understand what is possible with the current work force and helps to plan for up-coming jobs by supplementing the existing workforce if necessary.
- ensure business profitability - profitable businesses are good places to work!
- organise work effectively and efficiently - less stress across the team!
- shape the future direction of the business in a way that uses the teams strengths - normally this equates to what they enjoy!
- monitor team capacity - less stress!
And that's why they are necessary!
(but yeah, they are still annoying!..)