Mention the word “timesheets” to someone who has worked at an agency and it’ll probably send shivers down their spine and have them running for the hills. It’ll conjure up memories of frantically going through emails and to-do lists on a Friday, and somehow making things add up to 40 hours for the week. We’ve all been there!
For an industry so dependent on good time management for success, it can be difficult to explain why most agencies struggle to do it effectively. Is it down to bad tools, poor processes, your dodgy home internet connection, or something else entirely?
To understand what’s really happening out there, we surveyed over 3,600 agency leaders to get their views on what agencies are doing right with time, and where there’s room for improvement. The results have been packed into a handy free guide, which we’ve aptly named the Teamwork Agency Time Management Report.
If you don’t have time to read all 15 pages right now, here are 4 key learnings for you to think about at your agency. Then go and read the full report – you’ll thank us for it later!
Most agencies are hitting the magic 70:30 ratio of billable to non-billable time
We hear from our agency customers time and time again that they’re always aiming for a 70:30 ratio of billable to non-billable time. It’s the agency equivalent of the “Goldilocks zone”, with just the right amount of each type of time to maintain profitability.
The good news is that 70% of agencies are hitting this ideal standard – which is a healthy majority. Unfortunately, a third of agencies are struggling to make the cut, and looking at the data, it’s creative agencies that are lagging furthest behind.
Why? Andrew McCaul, Managing Director at creative agency The Bigger Boat, simply says: “The beauty and pain of creative work is that it’s subjective. That typically leads to more amendments, and more versions, than on a digital project.”
We’re sure anyone who has ever received “subjective” client feedback will be right behind you on that one, Andrew!
So, what can agencies do to mitigate against the unknown quantities that lead to scope creep and an increase in non-billable time? There’s a ton of ways you could approach it, but here are some of the things we’d recommend:
Always set a clear brief from the beginning, and make sure your deliverables (including rounds of feedback and amends) are chiseled into stone and signed off by the client before work starts.
Consider allocating 10-20% of non-billable time in your budget to account for inevitable scope creep or a change in direction. Up this figure for clients you know are guilty of increasing your non-billable time.
Constantly review your billable and non-billable time across tasks, projects and clients, to establish benchmarks and stay on target.
With 15% of agency staff logging more than 40 hours per week, the risk of burnout is real!
Having recently spoken to agency leaders about burnout on our podcast and in a special expert roundup on the topic, we know a thing or two about how #Agencylife can impact health and wellbeing. The evidence is clear: working long hours consistently can lead to multiple problems, including poor work / life balance, reduced job satisfaction, and increased physical and mental health problems.
So, it was alarming to learn that 15% of agency staff log more than the allocated 40 hours per week. That’s a lot of people working overtime who are potentially at risk of burnout. And with 9 out of 10 agency owners agreeing things could get worse as a result of the current economic climate, it’s an issue that clearly needs to be addressed – and fast!
But what can you do about it? Here’s some solid advice straight from the horse’s (or agency leader’s) mouth:
Nathan Harding, Yo Media: “It’s not about how hard you work, it’s about knowing what your highest leverage tasks are, and only working on those while delegating everything else.”
John Lincoln, Ignite Visibility: “It’s important to realize you are always going to have busy weeks and slow weeks. It’s all about organizing your time, energy, and projects in a way that works best for you and your clients.”
It’s also worth noting that without proper tools and processes in place for tracking time, you can never truly understand how over (or under) utilized your staff are. Making time management a priority will help flag any issues before they arise, so you can ensure staff aren’t burning the candle at both ends for too long.
Overestimating tasks is hampering agency profitability
If you thought scope creep was a problem, then here’s an even bigger one for you. A whopping 61% of all tasks are overestimated by agencies – rising to almost 75% among web development agencies.
Why is this an issue? Well, if agencies are blocking off time that won’t actually be used, they are impeding future planning and ultimately leaving money on the table. It’s time down the drain that you won’t ever get back.
According to Jarek Nalewajk, Head of Projects at NIU, the reason why web development agencies are overestimating tasks more than others comes down to a lack of technical knowledge from the client side:
“When estimating time, we take into account that some parts of the job may be more complicated than expected. But we can’t predict all of the issues that might emerge. If we took the worse-case scenario, then we’d inevitably end up overestimating… but we try to estimate realistically. Of course, it doesn’t always work due to factors like vague expectations and lack of technical knowledge and requirements.”
So, what’s the solution? We’d recommend constantly reviewing estimated vs. actual times, so you can make refinements based on real data. If you can commit to the process, you’ll quickly see your estimates become more accurate. This will put you in the driving seat to improve your project and capacity planning, and generate more revenue.
Set clear time tracking policies (and use a tool that’s actually built for agency work)
Your employees need to be on the same page when it comes to logging their time. But to achieve this, it’s vital to establish clear policies and guidelines.
Agencies come in many shapes and sizes. Some like to log time down to the minute, while others log in 5 or 15 minute increments. Some only focus on logging billable hours, while others take account of both billable and non-billables.
Regardless of how everyone logs their time, they all need to be singing from the same hymn sheet – otherwise you’ll end up with patchy and inaccurate data that doesn’t tell the whole story.
We’d recommend including the following items in your time tracking policy:
What activities should be tracked (client vs. internal work)
How often time should be logged (hourly, daily, or weekly)
What level of detail is required (task-level or project-level)
What metadata needs to be captured (tags, description etc.)
If everyone tracks their time in the correct manner, it will save your agency a ton of hassle, lower the blood pressure of your project managers, and ensure you are consistent in your billing and collecting of revenue.
Incidentally, our research highlights Friday as the most popular day to log time, and 5-6pm the most common time of today to fill in timesheets throughout the week. If there's one thing agency folks can all agree on, it's that leaving timesheets to the last minute is the way to go!
Get more insights into the latest time tracking trends for your agency
Want to learn more about how agencies are logging and evaluating their time to maximize profitability? Download the Teamwork Agency Time Management Report today!
Infographic: Agency Time Management Report Key Findings