Five Instances That Require Timekeeping

Most of you hate timekeeping. You hate doing it and you hate enforcing it (see an eight-part sliding plan to do just that).

There's very little scientific connection, too, between profitable firms and firms that are religious about tracking all of their time. So these are the only times when you need to stay on top of it:

  1. When you introduce a new service offering. You'll be guessing at the pricing and so you'll need to confirm your instincts.
  2. When a new employee joins the team. Who knows what habits they might have developed at their previous job. Doing this right starts with a clear definition of billable time: "anything I'd stop doing if the client went away."
  3. When you are growing by more than 30% per year. That's the watershed for marketing firms. At growth rates above that level, their culture and systems struggle to adapt to new ways of working: new positions, new pricing, new service offerings, new process.
  4. When you need to spot check an existing program. I'd recommend doing this every three years.
  5. When your utilization is below 60%. When calculated correctly, the average marketing firm in the developed world (across a sample size of 4,000 firms) was billing for 42% of their time. Prices should be set based on value, but you can't talk about value pricing until you're at least getting paid for the time you're spending, and most agencies aren't there yet. But as soon as you get over that utilization hump, pull the plug on timekeeping. It's a necessary evil, but it's only necessary for so long.

There you have it. It's an essential practice that you should get beyond as soon as you can. But quit beating your employees up about it, okay? The purpose of timekeeping is primarily to improve the next estimate, not control the time someone is spending on this project. If you get that wrong, your employees will just keep fudging their time. They'll over-report to make sure you think they aren't sitting around, or they'll under-report to make sure you won't think they are slow.

Some of my most profitable clients don't regularly track their time.

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