Strategy for time sheet compliance

 

Time Sheet Compliance Strategy

Lack of Time Sheet compliance is a common issue among creative agencies. No matter what the firm’s billing scheme is–fixed fee, retainer, or time and materials–capturing the effort spent at the task level of projects is critical in these three areas: Estimating, Productivity Analysis, and Financial Accounting. To counter this problem I propose a tiered system of bonuses as an incentive program for increased Time Sheet compliance for creative agencies. 

Benefits of compliance

Assuming you, the reader, agree Time Sheets are a vital component of the creative agency and you are interested in fixing these problems yourself, I’ll not spend too much time addressing obvious benefits afforded through compliance. I can summarize the benefits by pointing out the fact that accurate historical data is crucial to the health of the agency. The fudging of numbers from a staff member writing Historical Fiction Time Sheet (HFTS) at the end of the week/month, deprives the firm of business intelligence and forces it to play the role of a forensic detective to arrive at meaningful data.

Aligning Incentives

So how do you make time sheets compliance important from the user perspective? The answer on this topic is the same as many business problems; through the aligning of incentives. In that regard the agency has two options: the Carrot or the Stick. I.E. “Give me your time sheets or your fired”…  Or the firm can realize reward systems are far more likely to garner compliance than punitive ones. As I stated at the beginning of this post, I propose a system of tiered bonuses as an incentive program for creative agencies. In my proposed scheme, supervisors get a larger share than their reports, but everyone gets a piece of the pie.

How it works

The Tiered Structure

Take the agency ORG Chart and find your department supervisors (anyone who is responsible for conducting performance evaluations). These folks should approve the time sheets of their subordinates, or at least getting reports for their performance daily. Establish a rate structure that makes for your firm and giving 60% to the supervisors and 40% share to the staff. Shares reduce each month for non compliance, by 8.34% per month with any incident occurring in that month. An incident being any month when even a single sheet is not submitted.

Throughout the year supervisors will push their direct reports to comply to keep their additional bonuses in tact. Those staff members will want to keep their own bonuses in tact as well as appease their supervisor to ensure their performance review will go smoothly.

Quantifying the Value of Compliance

How do you figure the dollar amount to build the company pot? Start by analyzing the cost of non compliance as it relates to lost revenue. How many write-offs does your agency make due to late Time Sheet entries after a project has already been billed? How many administrative hours go into fact-finding missions, chasing the offenders around the office with pad and pen?  Take these factors and put a dollar value on that is lower than the cost but high enough to win the benefits from the investment.

Thoughts? Am I being to lenient on these derelicts? Do you prefer the Stick method? As always I’d love to hear your what you have to say.

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2 thoughts on “Strategy for time sheet compliance

  1. If the real value of accurate time sheets is the business intelligence, how would you quantify that? At our shop, we usually audit timesheets prior to closing a project, so that cost goes unrealized.

    • Andrew,
      Sorry for the delay in answering. I appear to have let my guard down on comment SPAM security measures for WordPress and paid the ultimate price, hundreds of trackback pings for designers shoes. All is squared away until they learn a new way in!

      How would I quantify accurate time sheets as adding value to business intelligence reporting in the creative agency?

      I hate to be someone who points to their own blog when making an argument but here goes:

      http://creativeagencyprocess.com/creative-performance/

      Evaluating project health within an Earned Value Management schema is impossible without up to date project costs. In order to have the Business Intelligence reports: Cost Performance Index (CPI) and Schedule Performance Index (SPI) we need to know a few Key Performance Indicators (KPI) at all times:

      Planned Value = Budget

      Percent Complete = Number of tasks marked complete by Project or Traffic Managers on a project schedule

      Earned Value = Planned Value multiplied by the Percent Complete (i.e., how much of the budget did we “work off” so far)

      And of course the thesis statement of my reply and the lynch pin of the Business Intelligence reporting I am referring to:

      Actual Cost = Time and Materials to date (i.e., time sheets, purchase orders, vendor invoices and expense reports updated throughout the project life-cycle, not just at the end).

      Reconciliation is important and necessary, but it will not help you identify troubled projects and inform decision making that can course correct a project. That level of visibility is value-added Business Intelligence.

      I hope this reply was on target to the question you posed. And thank you very much for the comment!

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