Why ALL Salaried Employees Should Track Time (Including Execs)

“But we don’t charge by the hour.”

“But we have people who don’t do any billable work for the clients.”

“But I’m the CMO, I have better things to do than track my time.”

As a time tracking software provider, we’ve heard these excuses (and more) too many times. Time tracking is a universally despised work chore and even those who have to do it don’t do it properly. Nevermind those who don’t sell their time by the hour and couldn’t be bothered with another useless thing to do.

However, we’re here to make the unpopular argument that ALL salaried employees should track their time. Including office managers. Including top-level executives. Because employee time is the limiting factor when it comes to generating revenue.

This article explains in detail why time tracking matters for salaried employees of service businesses. We’ll explore the rationale behind tracking time and address the common questions related to salaried employees time tracking. Then, we’ll review the tools required to build a time tracking process that yields reliable project data and doesn’t interfere with the actual work.

Let’s get to it.

Why track salaried employees’ time?

We all know what time tracking is but rarely what it does. On this blog, we don’t endorse tracking time as a form of employee monitoring or micromanagement. We do, however, advocate for ethical time tracking because of its impact on resource planning and profitability management.

Employee time is the key cost factor when it comes to pricing services. You buy it in bulk every month and it always expires by the end of it. You can’t hoard salaried employees’ time and use it later. The clock is always ticking and it’s up to you as the business owner to get the highest profit margin on every hour of employee time you bought.

It also happens to be the common denominator in calculating the most important metrics that determine the profitability of any service provider.

1. Average cost per hour (all salaries divided by total time).
2. Average gross income per hour (gross income divided by delivery time).
3. Utilization rate (billable time divided by total time).

If you want to learn more about the service business profit model and KPIs above, make sure to watch our course on generating 30% net profit for any service business. It’s free for a limited time so don’t miss out on mastering the proven math behind profitability. Inside, you’ll find a ready-to-use profitability reporting template that allows you to compare your current project margins right away.

Should managers and Execs track time?

All too often, time tracking as a policy is instituted by the people who never have to do it themselves. We’re talking about project managers, C-level executives, and owners. In most workplaces that track time, it’s been done for years and nobody dares to question the way time tracking is organized.

Let’s say your salaried employees are involved in 5 projects at a time that you sell on a value-based model, i.e., not for the hours worked. You keep running into scope creep or are generally unimpressed with your profit margin and decide to investigate how your employees’ time is allocated across projects.

But because your PMs and other senior colleagues aren’t involved in project time tracking, you miss out on some crucial data. Their time, scattered across a million things at once, is so valuable that it eats at your margins without you realizing it. What is more, because they never track their own hours they make time tracking appear insignificant to other employees who are required to track time.

We’ve said it before and we’ll say it again, if you don’t prioritize time tracking as the business owner, your salaried employees won’t either. It comes with zero rewards and it often requires too much effort. Neither junior colleagues nor PMs care to track their time and would rather guesstimate hours or manipulate data to appear busy or hit their performance targets.

When managers and executives track time, it does several things.

Now that we’ve established the reasons why all salaried employees should track time, let’s move on to using time sheets to collect work hours from salaried employees.

Using timesheets for salaried employees

The methods of tracking employee hours are many and you’re free to experiment, making sure you really step into your employees’ shoes when assessing the usability of the process.

However, when it comes to tracking salaried employees’ hours, there’s many questions as to what needs to be tracked and what tools should be used. Let’s tackle them one by one.

1. Should salaried employees clock in and out?

In professional services, we don’t see the point in making salaried employees clock in and out. Attendance monitoring is not what time tracking is for in professional services. We operate out of the assumption that employees are trusted to show up to work. It’s their project time usage that we’re interested in for the sake of optimizing profits.

2. Is it legal to track salaried employees' hours?

The regulations around time tracking have to do with compensation of overtime and compliance with minimum working hours policies. In that regard, tracking employee time is about payroll and not efficiency or profitability.

Tracking salaried employees’ time in professional services, provided it’s done ethically, is legal. The question is, whether the time tracking policy is developed together with employees, making sure they understand its importance and comply with the rules. If employees don’t see the point in tracking their time they won’t do it or round up/inflate/manipulate their hours to the point at which the data becomes unusable anyway.

3. How many hours should a salaried employee work?

This is a typical question that relates to policies and regulations around payroll. A better question to ask when optimizing service business profits is how many hours should a salaried employee be productive? Out of the 40 hours you purchase from them weekly, how many hours should be allocated to generating profit for the business?

The answer to this varies from business to business. Most service businesses measure a billable utilization rate, used by some as a performance metric. We at Memtime are sceptical about setting a utilization target because you will certainly reach it (employees will either work overtime or inflate their hours). In our view, it’s better to report fairly and log minimum utilization if that’s the case. Then you at least have actionable insights into project load and can adjust your resources.

4. Should salaried employees use timesheets?

Yes, using timesheets is the best way to organize and aggregate data on project time usage. Salaried employees who track time on tasks should use timesheets to submit their project hours to PMs. Then it’s easy to calculate project margins and analyze profitability.

On this blog, we’ve explored timesheet automation tactics for smoother processes and less manual work. Make sure you give it a read if you want to make the most of your time tracking.

Best time tracking app for salaried employees

If there’s one thing you learn about employee time tracking from this article, let it be this: if your employees don’t want to track time, they won’t do it. It only makes sense to institute a time tracking policy if you explain to your staff why you do it and show them the way to do it that doesn’t interfere with their actual work.

Therefore, regardless of the app you choose for salaried employees time tracking, step zero is having a conversation about time tracking and bringing them on board. Here are some pointers.

Once you’ve handled the objections and concerns, it’s time to give your employees the best tools for tracking their salaried time without interrupting their work. You guessed it, we’re going to talk about Memtime, but only because it’s the best app for tracking salaried employees’ time.

No manual work

The worst part of time tracking is clicking the start and stop button for every task, getting distracted, and losing track of the actual work at hand. Memtime fixes this by tracking your time quietly in the background while you work. Being a desktop app, it can capture every little thing you’re doing on your computer and never disrupt your flow.

When you introduce your salaried employees to Memtime, you can confidently say that it will do their time tracking for them. No effort is required on their part.

Complete privacy

Employees’ #1 fear around time tracking is privacy violations. Nobody benefits from creepy surveillance and the feeling of being watched or micromanaged. Memtime handles this by ensuring privacy for every employee through storing all recorded data offline on the user’s computer only.

As a manager, you can’t see any of your employees’ screens or time usage. If your time tracking process is not based on trust and transparency, it’s useless. Give your employees the tools to record their time with zero effort but also own their data.

Easy timesheets

The way timesheets work in Memtime is the following.

• Employees review their activity log, i.e. what was recorded by Memtime.
• They create time entries and assign them to tasks and projects.
• These logged hours automatically populate timesheets (local or connected).
• If you use project software, logged hours appear there instantly.

Memtime connects with 100+ project software like Asana, ClickUp, Jira, QuickBooks, etc. by default, pulling projects from there and exporting time entries back. This simplifies the hour logging process tremendously, making sure you have correct data across all projects.

Unlimited historical data

From day 1 of installing Memtime, it will keep track of every minute of your time and store this data securely on your device. You can go back to any day in the past and reconstruct your time in the smallest detail, making sure you remember correctly what you worked on and when.

Unless you decide to format your PC or delete your time tracking data for some reason, you’ll always have all of your past time usage available to you. You can log hours retrospectively, analyze project performance and literally travel in time having full confidence in the accuracy of your insights.

Wrapping up

Whether you’re a business that’s always tracked time or never done it before, you need no convincing in admitting that salaried employees’ hours is a valuable resource. You have a limited amount of it every month and every month it expires whether you’ve invested it in profitable tasks or not.

As a business owner, you want to make sure your investment pays off. Every hour of time pre-purchased from salaried employees can yield profits if allocated wisely. For this, you need to know how time is currently managed at your business and how much of it can be better spent or sold more efficiently.

Contrary to popular belief, salaried employees have a stake in tracking their time. When they fairly report on the hours worked on projects, they can be adequately rewarded and given an appropriate amount of work. When the business is doing well, employees benefit both in terms of compensation and a sense of fulfillment in their work.

We hope this article has given you a new perspective on tracking salaried employees’ time. Don’t miss out on the opportunity to manage your highest recurring cost better and get a higher return on your investment into employee time. And don’t hesitate to reach out to us at Memtime if you need help building an efficient time tracking system that your employees will embrace.