Timesheets. Friend or foe?
Timesheets kill creativity and are bad for agency culture. I disagree.
Timesheets kill creativity and are bad for agency culture.
Numerous articles have been written on the subject. The philosophy is that you sell creativity, not hours spent, like a plumber or a lawyer. The price of a new identity is determined by a lot more than just how many hours the team collectively spent creating it and for good reasons. Clients don’t chose to work with your agency because you are the quickest to turnaround that logo, but for your unrivalled creativity and your extensive experience in the matter.
Furthermore too large a focus on the contribution or input, in hours and minutes, of each team member is bad for culture, seeing what counts is the end result.
If tracking time is the reason you are selling hours instead of creativity or if tracking time is the reason for creating rivalry in the team, I can see why one is against it. However I don’t believe tracking time itself is the issue here. What happens with the data is.
The reality is that in an industry where budgets are being squeezed fewer clients use your creativity as the sole reason to work with you. The market is incredibly competitive and others will often service more work for the same fees.
I’m not saying dropping prices or over-servicing is the right thing to do, just pointing out what you’re up against. As a defender of creativity you don’t want to join in the downward spiral of delivering more for less. But at the same time the pressure is on to make the right decision when that loyal client of 15 years is forced to shop around now that their budget is cut.
So unless you’re running an agency that is immune to these market trends, with high profit margins, it is crucial to keep an eye on all metrics from a business perspective. Including time spent.
While timesheets aren’t meant to determine the sell rate of a project, they are instrumental for tracking profit. A healthy agency strives towards a 15 – 20% operational profit margin. When an agency finds itself with margins too tight or even losing money, difficult decisions need to be made. These decisions won’t just be based on unrivalled creativity and extensive experience either.
Along with how good it felt working on a certain project and how proud you are of the end result, you want to use financial metrics to decide which clients to keep and which once to ditch. What types of work to try and find more of and what type just isn’t worth the effort. Who in the team is best qualified to handle specific tasks. When it’s appropriated to do another correction round free of charge and when the client is taking the mikey.
You want to work with clients that bring out the best in your team. Clients that push you for your most creative work, but who are also grateful and respectful of your efforts. Clients who value your contribution. At the end of the day, you run a business that needs to survive, not just one that gets a lot of likes and followers.
There is also a big difference between production studios and creative studios. One does the execution, which is easier to measure in time spent or cost. The other is more a strategic partner with value that can only be measured in results. If your focus is 100% creative and strategic, I can see why you may not want to track time. But in many agencies, there isn’t a clear division between the two types of work. It sometimes varies from customer to customer and project to project.
The biggest issue with timesheets internally is how they are used by management and perceived by staff. I have dealt with agencies that try and use timesheets to calculate staff contribution and to figure out staff profitability. Having your team work under a constant latent threat of castigation for not doing well enough, is probably not just the best way of killing creativity, but also to install unproductive rivalry in the team, not in the least between the creative and the accounts team.
Profit per individual can’t be expressed by working out the total revenue against the hours spent per person. It’s a shortsighted way of measuring quantity without taking into account quality. It does not value creativity, or a person delivering work faster than expected, or a top notch sales person who just managed to get a premium price for the work done, or a project that was just fun to do and made the team happy, or a client that is a great reference, or time spent learning new techniques,… Or the opposite of each of those.
If quantity is all that matters, people will just be compelled to try and get the job done as quick as possible, to not accurately record all the time it took to complete. They will record hours they didn’t spend just to get their weekly totals right.
Even though you’re not necessarily selling hours but results to your customer, time is often the currency used internally for organising work. You estimate how long something might take and schedule in the work accordingly and the schedule is adjusted as you go. Creatives will try to get as much time as possible to perform their best work, account managers will be pushed to get the job done for the least amount of (time and) money.
The solution is to introduce transparency in the business. Creatives need to appreciate the finances of a project as much as account managers need to appreciate creativity. They need to be allies rather than adversaries.
So be transparent about budgets and how they came about – transparent on how much a project was billed for and how much profit was made in the end. Or not made. Make sure creatives are involved when estimating how much time something is going to take, rather than to assume it will be similar to that other project. Give creatives space to plan their own work, rather that deciding for them what they will do today and exactly how long it can take.
Set the goals for the agency as a team and then work together as a team to achieve those goals. The only way you can do that is to make sure everyone is on the same page and it’s a shared responsibility.
If you are afraid to give creatives insights into your company’s finances, out of fear that they might leave, when they see how much you are charging their work for, perhaps just not paying them enough. Because if you’re paying them a fair salary and your rates are in line with the market, the grass is just going to be exact same green on the other side. If you are afraid they will leave and set up their own studio, transparency will make them understand it isn’t as easy as they might think.
At the end of the day your company needs to make money in order to pay salaries and rent. It needs to make profit in order purchase new computers or grow the business. There is a responsibility to provide a stable work environment for employees and be a reliable partner for your customers.
If you don’t care about the money, then you shouldn’t be taking orders from clients and you can call yourself an artist. But a creative agency, as important as it is to defend creativity, still needs to be a sustainable business. Metrics need to be tracked, just like any other business. Since you can’t measure bricks laid, units rolling of the conveyor belt or miles driven, you’ll just have to track time spent.
If done correctly, tracking time is not a necessary evil, but a way to make your business healthy.
How to work out revenue and profit per head
“Can we get a report that shows how much profit each team member has made a on a certain project?“.
NEW Reports: Work in progress
It's a daily battle for project managers to keep all the plates turning – having to manage budgets, planning, deadlines, assignments, purchases and amendments for a bunch of jobs in progress at any given time. So it's all the more disappointing when a job goes off the rails and you didn't catch it on time.