Labor Tracking

The ultimate guide for business owners

Small and medium-sized business owners like you, whose service delivery is dependent upon a labor-based workforce, must have labor tracking solutions at your fingertips that help you save money and maintain a sterling reputation with your customers.

In this guide, you’ll learn:

  • Exactly why labor tracking is so critical to your business’ success

  • Essential labor tracking best practices and strategies

  • What to do before you evaluate labor tracking solutions

  • How to choose the right labor tracking solution for you

And much more …


Short on time? We’ll send you the PDF to read later!

Why labor tracking can save your business

It was 2008, and as the owner of a roofing business myself, I was facing the same challenge as many other business owners around the country – how am I going to weather this recession?

Here’s the reality I was facing at that moment.

Yes, I was looking for ways to save money. However, you can only let go of so many people and sell so many trucks before you no longer are able to operate. You still have to run a business, you still have to survive and be able to provide the services you say you offer.

So, one Friday afternoon, as I was wrestling with what I needed to do next to keep going forward, I started asking myself:

“What are the most expensive parts of my business, and what of those expenses can I control?”

The first thing that came to mind was business insurance. Insurance can feel like a money pit, and while it was one of the largest line items in my budget, I moved on from it quickly as a necessary evil of running a company. I knew I could only negotiate the premiums down so much, which meant there wasn’t much money to be saved in that category.

I realized that labor was my greatest expense

I had already decided I couldn’t let go of anymore people on my crews if I wanted to be able to stay in business and serve my customers. Still, I saw an opportunity for cost-savings that went beyond layoffs.

Layoffs aren’t the only way. In fact, I determined the only significant lever around labor expenses I could potentially pull was productivity.

With that in mind, I started looking through the time sheets of my crews. And it didn’t take long for me to notice a not-so-great trend.

There were a lot of inconsistencies. For example, time would be logged but there would be no job names or locations listed. I also noticed that virtually every time sheet from every employee every single day had the exact same punch-in and punch-out time of 7 a.m. to 3:30 p.m.

Even though I knew my guys weren’t stealing from me or trying to pull a fast one, I knew immediately I was losing money.

To show you what I mean, let’s pretend for a moment that every employee I had over reported in their time-tracking by 15 minutes each day. A mere 15 minutes may not seem like much, but across an entire year that can add up to over $3,000 for a single employee I’ve paid out for work that isn’t being done.

And given what I was looking at, I knew I was dealing with much more than 15 minutes lost, per person. If I were to apply the same bare minumum error margin across all my employees, I’m looking at $103,000 overpaid across the year.

Unreliable time tracking is also a liability

Leaving aside the money I was losing, not being able to consider my own time-keeping reliable is a significant liability when it comes to customers.

Someone can push back on an invoice after it’s greater than they expect, and if I don’t have labor tracking solutions and best practices in place that I can trust, I don’t have the ability to validate their concerns or justify the charges, whatever the circumstance may be.

I can’t say with authority, “I know my guys showed up at 8 a.m., because it’s what’s tracked in our system,” without acknowledging they may be able to come back and say, “That’s not true, I was at my house all morning and no one showed up until 10 a.m.,” and I can’t counter that.

It’s like that old saying, if you can’t measure it, you can’t manage it – and self-governed time-tracking protocols with no automation or systemic oversight is not measurement. That’s an honor system that relies on 100% accuracy every single time.

That’s simply not possible to achieve.

At the time, there were some labor tracking solutions out there

Unfortunately, for the most part, they weren’t that great.

Back then, the time tracking and attendance solutions were more hassle than they were worth. Yes, they were much more evolved than the wall-hung punch clocks of yesteryear, they were mobile … to an extent.

For example, one solution we tried gave us time clocks to hook on the fences at a job site. When an employee wanted to clock in, they’d hold a fob up to the clock and it would register they had arrived. When they were ready to clock out, they’d hold up a different fob and it would register they were done with work.

This sounds great, in theory, but we still had to physically retrieve the data from those sites using a Palm Pilot.

Our business operates in New Hampshire, Maryland and the middle of Pennsylvania. That meant in order to use this solution that was supposed to save me money through more effective labor-tracking, I had to pay someone to drive out to each site to collect the data.

I’m all about spending money to make money, but this was not the way.

It was a terrible system.

And if you’re reading this guide, I’m willing to bet some of my story resonates with you.

When you own a labor-driven business, tracking productivity is everything

I’ve learned that from my own experiences, and those experiences I’ve shared with you here are why I founded Labor Sync.

Small and medium-sized business owners like you, whose service delivery is dependent upon a labor-based workforce, must have labor tracking solutions at your fingertips that help you save money and maintain a sterling reputation with your customers.

But the goal of this guide isn’t to sell you on Labor Sync.

The goal of this guide is to empower you, the business owner with the strategic insights and expertise you need to understand how to do labor tracking well for your business, what best practices for labor tracking you need to be aware of, and what you need to know (and do) to find the right labor tracking solution for you.

OK, enough preamble. Let’s dig into the insights that brought you here in the first place.

Part I. What it takes to get labor tracking right

As a business owner, if you don’t know what your real costs are, you’re essentially flying a plane while blindfolded.

Whether you’re running a two man crew or have hundreds of employees under your watch, if you don’t have an accurate grasp of your labor costs right now, I can guarantee that you are losing money.

It doesn’t matter how honest you think your people are, without the right systems, best practices and technology in place to track labor productivity, you are without a doubt letting money walk out the door.

That’s why the labor tracking conversation is so important

It does take time and energy and (yes) money to institutionalize labor tracking correctly in your business, but in order to feel that time and investment is valid, you need to understand why it’s so important for you to do so.

When you have proper labor tracking protocols and solutions, you not only have a more accurate picture into what work is or isn’t being done, you also don’t overpay your people for work that isn’t being done.

On top of that, you’ll learn when you’re bidding too high or too low on projects, so you can make smarter decisions that have a direct impact on your bottom line.

“But is a labor tracking solution worth the cost?”

If my Palm Pilot story in the introduction showed you anything, it’s that the answer to that very question is very much dependent on the solution you go with.

In some cases, the answer is going to be no, but this guide is here to help you avoid that fate. Because, with the right best practices and solution (you need both, technology can’t solve every process problem you have), the answer is 100% yes.

Using our solution as an example for context, most of our customers spend a couple hundred dollars a month on our solution, at $10 per employee. (Our platform is a monthly subscription service, rather than a flat, up-front fee.)

That means, the average customer spends about $2,400 to $3,600 per year for their Labor Sync subscription.

Now, let’s say that average customer has an employee who costs them $35 an hour. At that rate for a full 40-hour week, that is $1,400 gross. But without proper time-tracking in place, that hypothetical employee’s reporting is off (for innocent reasons) by 30 minutes per day.

Thirty minutes per day at a rate of $35 an hour is $87.50 per week. That’s $393.75 roughly over the course of a month. But over the course of that month with Labor Sync, you’re only spending $10 on them to track their time more efficiently and accurately, eliminating those types of costly discrepancies.

And that example makes the assumption that only one of your employees is off in their time-tracking in any way, and that discrepancy is only 30 minutes.

If you want to play around more with your numbers, this calculator can help you recognize the cost savings potential you have. Even though it’s a Labor Sync-specific calculator, it can at least help you answer at a high level whether or not this kind of labor tracking investment is right for your business.

Part II. Before you choose a labor tracking solution

OK, you’ve decided you’re going to explore labor tracking solutions for your company, because you’re a business owner who likes being smart with their money. I like you, you’re my kind of people.

Of course, what the right solution ends up being will be dependent on the unique needs of your business.

So, let’s talk about how you might make that right choice.

Looking inside your organization first

Whenever you’re making this kind of investment, there are certain things you need to define and understand about your own business first, before you start researching what your options are.

These include basics like your budget and what you are (and aren’t) willing to spend. This is particularly important to note because, as I alluded to in a previous section, some solutions offer a monthly subscription fee that is based on your headcount.

On the other hand, there are some that won’t and instead will charge you an upfront, one-time charge that is not customized to your headcount.

Having a rollout strategy is also essential

My experience as a business owner and as the cofounder of a labor tracking solution has taught me that the most common reason why great labor tracking solutions fail inside a business has nothing to do with the technology itself.

Instead, it’s because the business owners and leaders failed to consider what their rollout strategy would be before they started researching and having conversations with potential labor tracking solutions partners.

When I say a rollout strategy, I mean choosing a designated point person to own the transition to your new solution and the oversight and governance of everyone following those new best practices.

I also mean having conversations early with your people about the change that is coming. In fact, depending on where they sit in your company, you may want to seek their advice or insight into what challenges around labor tracking they’d love to see solved.

The last thing you want to do is make the decision to implement a labor tracking solution and the first time your people hear about it is on day one of the rollout, after you’ve already bought it.

Think about a potential pilot program

If you’re concerned in any way about the adoption of a labor tracking program, and you have a large enough workforce, one idea you may want to consider as part of your own strategy is a pilot program of a select group of employees.

This is something I recommend all the time to companies who are unsure of how to roll out Labor Sync effectively with their employees.

I tell them to let me work with one employee or one crew of workers. We’ll focus on them, get them trained, up, and running.

The benefits are two-fold in that you immediately start to see the data and what you’re getting out of the solution, and then they can turn around and be the role model of your new best practices to the rest of your workforce. (Oh, and you can troubleshoot problems in a more isolated manner, too.)

Additionally, if you have a large workforce, potentially scattered across an entire region, the rollout strategy to everyone all at once can be too complex and overwhelming to really get your head around. This scaled pilot program approach can help you overcome that.

Keep this in mind as you start thinking about how you’ll manage the change within your organization with new software. Change, even when it’s positive, is difficult to manage. The more proactive planning and thinking you do, the better.

Your relationship with your employees

This is a tricky subject to talk about, but it’s one I need to mention.

Whenever any kind of change is rolled out, pushback is inevitable. Like I said, even when change is a good thing, even if it’s a change that makes it so everyone wins, people don’t like to change or deviate from established habits.

There are extreme versions of this, however, that I’ve seen come up where a business owner is in a position where their employees hold the power. Where, instead of being in charge of their guys, their employees are managing up and managing them.

If that in any way speaks to you or your situation, that is something you need to get a handle on before you even attempt to adopt a labor tracking solution. It is your business and it is your word that determines how your company runs, not theirs.

Also, this kind of scenario likely indicates that a labor tracking solution is absolutely something you need under your roof. But you can’t solve your people problems with technology alone. You have to get ahead of those issues first.

One of our customers had this exact problem with his people

One of our customers is a guy from Chicago. He called me furious one day, because he was getting so much pushback. No matter what he did, his guys would not fall in line with using Labor Sync, a technology he knew was critical to the success and overall financial health of his business.

Interestingly enough, this situation (infuriating as it was) ended up showing him exactly why he needed that solution in the first place.

Everyone was taking advantage of him. And now he knew it.

Later on, he shared that he ended up firing everyone and hiring an entirely new staff made up of people he can trust, using a labor tracking system that puts him fully in control of how his company is run. Now, when other new hires come on board, Labor Sync is baked into every process, particularly how everyone gets paid.

Part III. Evaluating labor tracking solution vendors

With a good handle on your budget parameters, as well as at least some thought given to your rollout strategy, you’re now ready to start talking to labor tracking solution vendors.

Again, what you end up choosing will depend on the unique needs of your company. That said, here are a few questions and considerations to keep in mind and proactively address when speaking with potential labor tracking partners.

Automatic time zone adjustments

For instance, let’s say your business is regional. Will the labor tracking solution be able to account for someone crossing a time zone line – losing an hour and then regaining an hour during travel – in its time tracking automatically? Not all of them do.

Foreign language support

If you have a multinational workforce, this is an essential feature that, again, not everyone supports. One of the keys to adoption is making it easy for your people to use whatever technology you bring in-house.

If your workforce is made up of a meaningful percentage of people whose first language isn’t English, an English-only solution will make it harder for you to see adoption across all of your employees.

That reason alone is why I made sure foreign language support was a key feature in the development of Labor Sync. When an employee keys their individual code into the system, the entire interface will change to whatever language they have chosen. If they speak Portuguese, every part of the Labor Sync app will display in that language.

This is the kind of thing you’re looking for. You want a solution that not only works for you and meets your needs, but also meets the needs of your employees. Everything about using whatever solution you choose should be easy for them.

Software-as-a-Service (SaaS) vs. software

OK, I promised we’d come back to this topic, because it’s a big one. Labor tracking software solutions almost always require a one-time up front cost. And this cost can be upwards of $100,000.

The cost alone isn’t the only issue. You’re also in a scenario where you’re paying an upfront cost for a product that may not end up working out for your business.

A SaaS solution (like Labor Sync) operates on a monthly fee rather than a one-time fee. So, if you end up in a situation where implementation and rollout has shown a particular labor tracking solution isn’t for you, you can simply cancel your subscription.

Yes, you may be out a little bit of money, but you’re not out $100,000 or more. The latter can be a catastrophically costly mistake to undo.

Dig into how pricing models work

Related to the previous point, ask about how a labor tracking solution structures their pricing. For example, is headcount taken into consideration? And what if your headcount changes?

Using Labor Sync for context once more to show you what I mean, I run a roofing business. In the winter time, I may only have five guys out in the field working for me, because that’s in-line with the seasonal nature of what we do. Come summertime, however, I’ll have 50 guys on payroll.

With many out-of-the-box software solutions, I’m paying the same amount whether I have five employees using the system or 50. With Labor Sync, I’m only being charged $10 a head for the employees who are actively working for me at any given moment. I’ll pay significantly less for the platform in January than I would in the summer months.

Depending on what services you offer, this may not be a consideration for you. Your headcount may remain relatively flat throughout the year.

If you do have seasonal ebbs and flows in your headcount, though, this is a talking point you absolutely must review with potential vendors. You may end up saving yourself a lot of money if you do.

Part IV. Without a labor tracking solution, you’re losing money

Really, it is that simple.

I don’t care how tight of a ship you think you’re running right now, if you don’t have a scaled solution that guarantees beyond the shadow of a doubt your labor time tracking is accurate down to the minute, money is walking out your door right now.

Yes, it will cost you money in some form. Yes, you will have to make changes to your business and develop a rollout strategy. Yes, in extreme cases, you may have to make some difficult decisions about your company.

You will also have more control over your labor.

And you will have more control over your cost.

Oh, and the people in your payroll department, they will thank you for making their lives easier and more efficient.

With the right labor tracking solution in place, there is no real downside for you.

Truly, the only real mistake you can make is not following my advice here and making the labor tracking investment that makes sense for you. The only way you screw this up is if you do nothing.