10 advantages of time tracking you can’t ignore

As a small business owner, time is one of your most valuable assets—not just yours but your employees as well.

The best way to get a handle on how you’re spending your time? Time tracking.

Time tracking can feel tedious, but you might be surprised at how much it levels up your workplace for everyone. 

But don’t just take our word for it. We’ve rounded up some of the top advantages of time tracking for small businesses. Now, you never have to guess if time tracking is actually worth it ever again.

What is employee time tracking?

Employee time tracking is when a business records the number of hours that an employee works during a given period of time. 

Typically this is done by having employees clock in at the start of their shift and then clocking out at the end. For employees working longer hours, they’ll usually clock out for breaks as well. This information is then used to optimize labor costs and pay employees for the number of hours they worked.

Alternatively, employee time tracking can also refer to tracking the time spent on individual projects or tasks. It’s a strategy commonly used to improve time management and productivity. 

Who tracks time? 

Employee time tracking is super common among businesses that have shift workers. This typically includes teams that don’t work fixed hours and employees are paid for the amount of time worked. You’ll often see shift work and time tracking in businesses like retail, restaurant, and manufacturing.

Time tracking is also commonly used by employees who work in remote settings, where supervisors aren’t always aware of their comings and goings. For example, teams on construction sites or mobile service providers.

Employee time tracking is less common with salaried employees who are paid a fixed amount, regardless of how many hours they’ve worked. In these cases, you might still see employees track their time. However, it’s usually more so that they can get a better idea of how they’re spending their work day.

Is time tracking effective?

Yes. Oui. Si. Ja.  (Feel free to pretend that we answered in every language around the world.)

Time tracking helps companies keep better track of the time employees are at work and the amount of time spent on various tasks. There’s a reason almost all companies with hourly workers will use some type of time tracking, whether it’s a punch clock or even a spreadsheet. 

One study found that over 50 million hours of productivity are lost in the US per day due to unrecorded work activities. In fact, even non-hourly employees will use time tracking to make sure they’re making the most of their time.

But time tracking isn’t just about improving productivity, it can be effective at boosting employee morale and saving costs as well.

15 advantages of time tracking 

Time tracking isn’t a strategy companies should use to nickel and time their employees. It’s a tool that can support workers, clients, and the company as a whole. It can even impact company culture.

We talk a big game about the benefits of time tracking—so here are 10 advantages to prove it.

1. You’ll get better visibility into your labor costs (and save money!)

Money talks, so let’s start with the cost savings. 

Labor costs are one of the biggest expenses for your small business. And if you have hourly employees, you’re paying them for the number of hours they’ve worked. Time tracking helps guarantee that you’re only paying for the hours actually worked.

Ten to 15 minutes here and there may not seem like a big deal. But whether it’s buddy punching, time theft, or simple payroll errors, the cost of that time can add up. If you’re constantly paying for time that’s not worked, you could easily find yourself overpaying your employees by hundreds of dollars every year. 

Time tracking helps you keep your labor costs in check—right down to the second.

2. You can boost employee morale and happiness

When it comes to time tracking, it might feel a bit like micromanaging your team. And if you’re familiar with micromanaging, you know it’s not an effective team management strategy. 

But when done correctly, time tracking can actually empower your employees to be happier at work. How?

• They’ll get paid correctly: Time tracking means they’ll be paid for all the work they’re doing. Remember those 10 to 15 minutes of lost time we mentioned earlier? If employee working hours aren’t accounted for, your employees could be losing out as well.

• They’ll be more productive: Time tracking has been proven to improve productivity—more on that below! And when employees are productive, they’ll feel more accomplished and satisfied in their jobs.

• They’re less likely to be burnt out: When you know exactly how many hours an employee is working, you can avoid over-scheduling them, so they can still maintain a solid work-life balance.

If you’ve never tracked time before, you might get some pushback from your employees. But don’t worry, if you clearly communicate the benefits, your employees will be on board in no time!

3. Everyone will save time

The thought of adding the extra step of time tracking to your workflow can sound like a pain. But in reality, it can actually save everyone time in more ways than one.

• Less manual tracking: Even if you aren’t tracking time, you still need to maintain reports of hours worked. So this means you and your employees need to spend time manually calculating hours worked.
• Faster payroll: Time tracking, especially digital time tracking, can help speed up payroll prep. So when payday rolls around, you can easily check how many hours have been worked and how much everyone should get paid.

4. Your employees will be more compliant with company policies

Time tracking isn’t meant to turn anyone into the time police. But it can serve as motivation for employees to come to work and leave work on time.

It’s estimated that 20% of employees will come to work 10 minutes late at least twice a week. If you’re tracking that time, you’ll know exactly who’s late and how often. And when you’ve documented it through time tracking, you also won’t end up accidentally paying them for that 10 minutes.

While money isn’t the only motivator, it can help. If employees know their pay will be docked, they’re more likely to skip that extra coffee run that makes them late for work.

Make sure you’re taking the time to document your time-tracking policies. Not sure where to start? Homebase’s team of HR pros can help.

5. You can level up your employee productivity

We can’t expect to be productive 100% of the time. After all, we’re only human. But you should always do what you can to boost productivity, so employees can make the most of their time at work. 

Time tracking has long been a time management strategy for businesses. You get a detailed log of who’s working on what and when. It gives you and your employees a better understanding of how time is being used, so you can make improvements in the future. 

Tracking time also doubles as a form of time blocking, helping employees stay focused on the task at hand. Whether it’s getting distracted by their cell phones or multitasking, it’s easy for hours to get wasted throughout the day. Realistically, multitasking can reduce productivity by up to 40%.

6. Your customer service will thrive

For service-based small businesses, your employees play a critical role in making sure your customers get the best experience. But if you don’t have enough employees working at any given time, service can quickly decline.

When you track employee work hours, you also create historical data that you can review. You can then compare this trend with sales forecasts and previous sales. This way you can anticipate busy times and calculate exactly how much labor you need to serve your customers.

No more overscheduling or underscheduling.

7. You’ll be able to stay on top of employee overtime

Anytime an hourly employee works over 40 hours a week, they’re entitled to overtime pay.

If you’re not tracking time, you’ll have to guesstimate how many hours an employee has worked so far every week. This means an employee might accidentally slip into unauthorized overtime without you realizing it. 

Even if this happens by accident, you’re still on the hook for tracking and paying that over time. And since overtime is typically paid at 1.5x an employee’s typical wage, those costs can add up quickly.

What’s worse? You might find yourself in some hot water with the Department of Labor. 

Just ask this café in California. In 2022, they were fined $40,466 and owed $185,097 in overtime back wages for failing to pay their employees overtime. They also faced several FLSA record-keeping violations. 

8. You’ll get a better handle on paid time off (PTO) accruals

While PTO isn’t required by the Fair Labor Standards Act (FLSA), we know that a PTO can help you stand out from other employers. Plus, it’s a major plus for improving your employee work-life balance. Studies have found it can make employees up to 68% happier.

So it’s worth doing PTO right—and time tracking can help.

For hourly employees, PTO is typically accrued based on hours worked. This means you need to know how many hours an employee works, so you know how much PTO they’re owed.

And on the flip side, if you’re not tracking hours, it can also be difficult for employees to know how many hours of PTO they should request when they end time off.

9. You can build a stronger company culture

In fast-paced environments, building a solid company culture can be a challenge. And believe it or not, time tracking can help make a positive impact on company culture. 

Time tracking fosters a positive company culture by:

• Improving transparency: Time tracking helps make it clear how employees are being paid, it also offers a clear overview of hours worked and tasks completed across the entire team.
• Creating alignment around objectives and priorities: Time tracking helps employees see how their time spent at work ladders up to company goals. It also creates a sense of accountability.
• Streamlining workflows: Time tracking can help identify gaps in scheduling and task assignments. By optimizing your schedules to better manage your resources, your team will be more efficient and feel more confident in their work.

10. You’re more likely to stay compliant with labor laws

The biggest advantage of employee time tracking? Not having the government all over you.

If you have hourly employees, the FLSA requires that you have to have timesheets that clearly indicate when an employee starts their shift and when their shift ends. 

So essentially, if you want to stay compliant, you’ll have to use some form of time tracking. The last thing you want is a not-so-happy call from the Department of Labor.

Of course, additional time tracking for things like tasks and projects isn’t required by law. But as you’ve learned above, there are some pretty rad benefits to it.

The benefits of time tracking software

Time tracking brings tons of value. But we won’t lie to you. If you have a busy business, sometimes it’s easier said than done.

Enter time-tracking software.

These are digital tools that are specially designed to help businesses track time efficiently and effectively. The best time-tracking software can help you and your employees save time:

• Automate the process: So you (and your employees) can spend less time calculating how many hours were spent and more time actually working.
• Reduces human error: When employees track time directly in an app, it can calculate the hours for you. Reducing the risk of clicking the wrong button on the calculator or missing hours altogether.
• Streamlines your business workflow: More often than not, you need your time tracking to seamlessly integrate with other functions of the business, including payroll or invoicing. A good time-tracking software can do that for you automatically.
• Empower employees to take control of their work: If every employee can track their time themselves, it puts the accountability back in their hands.

Homebase: your new favorite tool for employee time tracking

Homebase’s time clock app is the number one solution for small business time tracking.

From tracking employee work hours to optimizing your labor costs, Homebase’s all-in-one employee management solution will have you taking advantage of all of the benefits of time tracking in no time. 

The best parts?

• Time track accurately with a small business time clock that can be used on most iOS, Android, and POS devices.
• Compare your time tracking with your employee schedules and labor forecasts in just a few clicks, so you know your labor costs are on track.
• We’ll automate your payroll processes. Now that time you’ve tracked can easily turn into money in your employees’ pockets.
• Share the latest time-tracking updates with your team using our in-app team communication features.
• Compliance has never been easier with features that help you stay compliant with state and federal labor laws. And don’t worry, our pros are here to guide you along the way.

Employee time tracking made simple? 

Yep, you read that right. Homebase’s free time clock app makes tracking employee time easier than ever. Get started today.

Advantages of time tracking FAQ

Is time tracking effective?

Absolutely! Time tracking is very effective for businesses since it helps businesses keep better track of the time employees spend on the clock. As well as staying on top of time spent on different tasks throughout the work day.

What of the benefits of employee time tracking?

There are many benefits of employee time tracking include:

• Increasing productivity
• Saving time on processes like payroll and employee scheduling
• Helping stay compliant with labor laws
• Boosting employee morale and company culture
• Reducing labor costs
• Improving customer service

What are the benefits of time-tracking software? 

Time-tracking software offers many benefits including:

• Automating the employee time-tracking process
• Reducing the risk of human error
• Streamlining workflow
• Empowering employees to take accountability for their work