Did you know that the professional service sector is America's largest employer (after government)? This sector, which includes architects, consultants, engineers and lawyers, is driving the growth of the U.S. economy.
The professional services field might comprise 1 in 8 jobs, but it has created almost 1 in 3 jobs this year. While some of these professionals bill for time and materials and others earn revenue through fixed-price contracts, their biggest cost (47 percent on average, according to Census data) is their employees.
Tracking these costs is critical to running and growing a successful business. Yet these companies are leaking or losing almost two days a week -- more than $100,000 an employee a year -- because of poor time-tracking habits and technology.
In a survey of more than 500 IT, digital and creative, engineering, legal, accounting and public relations professionals, my company, AffinityLive, found that 35.8 percent of employees never track the time they spend on email and 20.6 percent said the same about meetings. Because of this type of oversight, the U.S. economy loses a staggering $8.8 billion every day.
A 2012 McKinsey study found that people spend just slightly more than 2.6 hours each day reading and responding to emails. It's such a large chunk of time it seems like it would be easy to track. But despite employees’ best efforts, tasks that take place throughout the workday do not cluster in clear chunks, one project followed that's followed by the next. Every day can be busy and jumbled, and filling in time sheets becomes a task that's saved for a later date.
That later date might happen anytime, from the next day to two weeks later. According to the Ebbinghaus Forgetting Curve, humans retain only 23 percent of what they learn after six days. This means it’s impossible for someone to accurately track his time if he is completing a time sheet only once a week.
Much the same is true when employees attempt to record time spent in meetings. Even though meetings are easier to track since they are usually posted in an employee’s calendar, 28 percent of professional services employees never or rarely track meetings, not to mention all the time in spontaneous chats with team members discussing projects, AffinityLive found. On average, professional services employees spend 15.5 hours in meetings a week. But based on my company's research, employees' inaccuracy in logging their hours means that on average they each leak $32,000 in revenue a year.
The data show the average professional services business leaks or forgoes $110,000 in revenue every year, factoring in minutes lost to emails and meetings combined with the effects of employees' forgetting what they did on Tuesday. Even companies that don’t bill directly by the hour should be concerned. When employees do not bill their time correctly, managers lose the ability to accurately define retainers and risk severely undercharging for a company's efforts.
Obviously the first step toward more accurate timekeeping should be to encourage employees making time-sheet entries more frequently. Simply getting people to fill in their time sheets daily can double their accuracy and reduce the “lost” time from 23 percent to less than 5 percent, AffinityLive found. The following are more ways to ensure minimal amounts of time are lost for billing purposes:
Make it easy.
The modern workday consists of many unplanned transitions between tasks so it's difficult to keep track of time. A time-sheet solution with options for multiple, flexible and automated timers can accommodate this reality. Furthermore, time sheets that aren’t rigid can alleviate the pressure on those who enter their hours. Human memory is funny and tends to work best when people aren’t under duress. Make sure people can log their time as they go without locking it in. Set things up so that timekeeping is more of an ongoing habit and process and not a formal sit-down chore.
Completing time sheets should not be reliant solely on memory. This is too important to leave to chance. Thankfully, office software is becoming more intuitive. The most common way to automate timekeeping today is by automatically pulling in email and calendar information. As employees write and read emails, modern systems can record how much time is being used and even distinguish between clients. The same can be done with calendars. Meetings scheduled on employees' calendars can be pulled into their records as well, eliminating intimidating the blank time sheets that employees would much rather avoid.
Link to existing systems.
Another reason that filling in a time sheet is so painful is that the commonly used document is not part of any other systems used at work. Filling in a time sheet is an "end of the road" task that's rarely integrated with critical business functions done in real time.
The best approach is to have time tracking be part of an encompassing customer relationship management, project management and billing platform. That way no matter what client work someone is doing the logging of time is part of the process. Managers can then gain insight about budgets and easily foresee any issues with current projects and their expected scope of work. If this isn’t possible, be sure that time sheets link to other programs on the back end, letting employees see a list of current projects and tasks to which they can attribute their time.
More than 38 percent of potential billable revenue is lost to untracked time spent in meetings and on email, my company found. By implementing solutions that make tracking hours effortless and intuitive, professional services businesses stand to gain a handsome revenue boost and better understanding of their employees' workload and clients' expectations.