Best practices for approving time sheets
For any project-based service business, the tracking and recording of time spent on projects is crucial. Time tracking is the foundation of providing services to customers, who then pay for those services accordingly. Time tracking is the fuel on which an organisation runs. It literally puts food on the table for both the company and its employees. Understanding the completeness, accuracy and promptness of time tracking is therefore essential.
When employees submit their time sheets, these usually have to be checked. In other words, the hours have to be approved. This administrative task is an integral part of very service provider. Generally, it's not considered a pleasant job, but it has to be done. In this blog we'll take a look not only at why this is so important, but also at the various ways in which the approval process can be implemented.
First, we'll describe the process using a practical example to outline typical issues, then we'll discuss the reasons why time sheets need to be approved. We'll also discuss 3 methods of approving time sheets and give advice on which method may be most suited to your project-based business. After that, we'll conclude with a number of final considerations.
Case study of a time-based business
As an example, let's take a look at a company that develops web applications. In addition to employing teams who work on long-term projects, this company also takes on short-term assignments. These short-term projects consist of, for example, making modifications to, or resolving bugs, in existing applications.
Each project is managed by a project manager. They have a complete overview of the whole project, are in contact with the client and oversee the teams working on the project. The various short-term assignments are carried out under the supervision of a team leader. The team leader is responsible for the overall productivity of his team.
The project managers and the team leaders are always eager to get their hands on the information of the actual time worked by their teams. The project managers want to see whether the time that was budgeted for is in line with the actual time spent on completing the project. In addition, for projects based on time material, invoices cannot be completed until the actual time is known. The team leaders, on the other hand, are interested in monitoring the productivity of their teams as well as individual employees.
The process of project managers and team leaders approving time sheets is often slow. Employees are instructed to submit their weekly time sheets, but this does not always happen. Due to employees being busy with other jobs during the week, they are often unable to indicate precisely what they have spent their time on. Occasionally hours are 'written off' against a general code.
Project managers regularly have to help their teams remember to submit their hours in order to have a current picture of the project status as well as being able to complete the invoices for the projects. The team leaders also chase up employees in order to draw up their own productivity reports for management reporting purposes.
This is a typical scenario familiar to many. Most have an aversion to time tracking, simply because it always takes time. Project managers and team leaders are not keen on approving time sheets either. However, it is essential, because time sheets - and the performance, budget, and invoicing data they contain - are some of the most important tools a business has at its disposal.
3 reasons why it's essential to approve time sheets
Can we not simply rely on all employees to dutifully submit their time sheets? This may be possible when it comes to some employees, but unfortunately there are always the few 'usual suspects' who simply lack the discipline to get it done. As the saying goes: a chain is only as strong as its weakest link. Furthermore, to a service provider, time tracking is so crucial that they should always want to do the approval, and for the following reasons:
First of all, by approving time sheets, you can see whether the hours are complete. Team leaders want to ensure that each employee makes at least his contract hours. Has there been any overtime? Team leaders need to know this in order to check whether the overtime worked is in accordance with what was agreed.
When approving project time sheets, you can also simultaneously check whether the time worked has been booked against the right jobs and the correct project. This information is especially useful to project managers. This gives them a more reliable picture of actual time versus budgeted time. The correct booking of actual time also ensures that it is correctly specified on the (detailed) invoice. This in turn prevents any errors in the invoicing process.
When time sheets are approved, all subsequent tasks can be performed in a prompt manner. For example, delays in approving hours can cause reports and the prompt invoicing of projects to bottleneck due to the need for subsequent recalculations. Invoices that are sent out late are also paid later by the client. A smooth process ensures that the invoice lands in the customer's inbox as quickly as possible.
Who's responsible for approving the time sheets - 3 methods
Who should actually be responsible for approving the time sheets? The project manager or the team leader? Or both perhaps? All three options are possible, but all have their pros and cons
A. Approval by the project manager
The advantage here is that the project manager is best placed to assess the accuracy of the submitted time sheets. Where required, he can make any necessary adjustments himself when checking the hours. This will improve both accuracy and promptness.
The disadvantage is that the project managers themselves may then cause a bottleneck. During the hectic daily business of managing projects, they may assign priority to other jobs that need their attention rather than spend time approving time sheets. As a result, other important processes, such as reporting and invoicing, will then be delayed.
B. Approval by the team leader
The number of team leaders in an organisation is often limited and easy to oversee. This will improve promptness. The less people responsible for approving time sheets, the faster the entire process will be. In addition, team leaders are best placed to check the completeness of the hours tracked. After all, they're familiar with their teams and their contracts.
The disadvantage here is that team leaders are less able to assess the content of the submitted time sheets. Errors such as using incorrect project codes can occur more easily, which puts the accuracy of the time sheets at risk. This will have negative consequences in terms of reporting and possibly for invoicing as well.
C. Approval by both
With this method, the approval of time sheets is first done by the project manager and then by the team leader. The advantage of this method is that the accuracy as well as the completeness of the submitted time sheets are optimally checked.
The disadvantage is that the approval process now runs to two levels instead of one and that usually doesn't auger well as far as promptness is concerned. After all, two approvals have to be carried out. The team leader must first wait for the approval of the project manager. Any delays on the part of the project managers will automatically result in further delays in the entire process.
Choice based on the size of the business
Choosing the correct method should be directly related to the size of the organisation itself. This coincides with the breakdown in the blog post 4 stages of resource planning:
In a start-up business, each employee is responsible for their own tasks. At this level, the approval of time sheets is unnecessary because they're automatically responsible for their own projects. In this instance, they will often do the reporting and invoicing themselves.
In the standardisation phase of a business, there are no departments yet, but there are some project managers who are responsible for the implementation of all projects as well as other jobs. Here, you can obviously opt for the approval of time sheets by the project managers, because they have a clear overview of all the jobs in hand.
Teams begin to emerge in the professionalisation of an organisation. These teams are managed by team leaders who are responsible for the development and productivity of the teams. In addition to doing project-based work, employees also work under the direct supervision of the team leader. During this phase, approval by both the team leaders and project managers is the most efficient method.
In the bureaucracy phase, the organisation has now grown considerably. The organisation employs many teams and many project managers. The approval of time sheets by both the team leaders as well as project managers is no longer feasible. Management's emphasis will be more focused on the promptness and completeness of the time sheets, thereby opting for the time sheets to be approved by the team leaders.
As can be seen, the approval of time sheets is important because it's the fuel of every service-based business. For the sake of completeness, accuracy and promptness, this process should be properly organised. Discipline is the key. The appropriate method of approving time sheets will depend very much on the advanced level of handling projects as well as the size of the organisation.
For the sake of accurately reporting the time spent on projects, you may also want to consider having employees enter their times on a daily instead of weekly basis. If your company handles short assignments based on hours and half-hours, this would certainly be worth considering. If you think about it, at the end of the week it may be difficult for an employee to remember exactly how much time was spent on which assignment. In this scenario, the approval of time sheets can still be done on a weekly basis.
Another consideration is to only approve time spent for certain projects. Approving time sheets is perhaps less important when it comes to internal or fixed-price projects. By side-stepping the approval method altogether, you would bring more focus to the entire process. This will also reduce the administrative burden.
Finally, the use of a professional system for time sheets and their approval is essential. Just think of how much time employees, project managers and team leaders spend manually entering and checking hours in Excel time sheets, for example. Not to mention compromising the completeness, accuracy and promptness of time tracking.
Questions or comments regarding this blog? Contact Timewax.
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