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Business case: How time tracking can increase your profits. Massively.

There are many agencies that do not keep track of hours. 😁 That can be fine if the agency is on the smaller side and the number of projects is manageable. But if the agency becomes larger and the projects become plentiful, there's no way to do without precise time registration.

Business case: How time tracking can increase your profits. Massively.

There are many agencies that do not keep track of hours. 😁 That can be fine if the agency is on the smaller side and the number of projects is manageable. But if the agency becomes larger and the projects become plentiful, there’s no way to do without precise time registration.

Yes but …

No not at all! We will show you in the curious case of missing hours at Just Think. 

1. The agency

Just Think is a successful advertising agency from Amsterdam. It is their mission to devise effective strategies for their customers and to make impactful work.

There are 30 strategists, creatives, designers, producers and analysts working at Just Think. The agency regularly wins awards and they are known for their innovative concepts and high-end productions.

Although it is a medium-sized agency, no hours were tracked for years. The retainers and the large budgets were sufficient to cover the hours so no one thought twice, and indeed the agency was well profitable and renowned for their exceptional work.

2. Decreasing profits

The company continued to grow, but profits continued to decline. Management started to worry. A gut feeling told them that something was very wrong.

Everyone was busy and even freelancers had to be hired to deal with the work load.

3. A new project management tool

There was still a lot of work with Excel and a variety of handy tools that could not talk to each other.

Management decided as a first step to upgrade the internal information management. 

As a result, the budgets could be better determined and reports became available.

After a short orientation with relevant stakeholders, new project management software was implemented.

It was also decided that everyone should keep track of the project hours. That didn't go without a struggle, by the way. Nobody really liked this initiative, the creatives in particular.

4. Tracking hours: not punishing but rewarding!

In order to increase support for hour tracking within the organization, a clever program was introduced: Hours Suck. But Not Here ✌️

A session was organized for the entire company in which the importance of time registration was explained.

They even created a humorous instructional video:

An advertising agency only sells hours and it is the only way to make a profit. And that profit is good for the employees and important for the continuity of the company.

On the basis of many examples it was explained how an hour worked ultimately leads to a payment by the customer.

New employees were also informed during their on-boarding about the importance of writing hours.

Rewards were also implemented. For instance, if all hours were filled in on Monday at 11am lunch was extended with delicacies.

To take it a step further, if all hours were filled in on time throughout the month, a company outing was organized.

The project management platform also contributed: employees who were on time to fill in the weekly statement were randomly sent a gift.

Good behavior was rewarded and not punished!

It took a while, but in a few months, everyone got it.

5. The result

It quickly became clear that the productivity of the entire company was only 40% instead of 70% (the industry standard). Now that's what you call efficiency.

Furthermore, certain retainer agreements were so bad it turned out that many hours were not being sold.

Additional work should have been invoiced separately but since no hours were recorded before, they were not visible and went unnoticed. 

They also discovered some employees forgot to invoice extra work. Due to changing freelance account managers, extra work or costs were hardly billed, if at all.

It was not a little issue; turns out the company lost tens of thousands of dollars per month.

It also turned out that projects were hardly completed and sometimes the hour tracking never seemed to stop.

6. The measurements:

The learnings from the new project management system were a wake-up call for management.

✅ The number of freelancers was greatly reduced

✅ Various vacancies were not filled

✅ Project managers were instructed on the concept of extra work. The additional work could then be determined and invoiced faster

✅ Projects were invoiced faster

✅ The project management system had the ability to work with a project completed status. Book costs, but track no more hours

✅ Hourly rates were far too low for some activities. The hour cost of employees were re-determined (salary, overhead and profit margin). As a result, the real margin on projects were now visible in reporting.

 

Planner was introduced to gain more insight into the available capacity. The planning of tasks provided insight into future capacity.

This made it easier to determine when freelancers had to be hired.

Because tasks were now being worked with, keeping track of hours also became easier: tasks were linked to hours, so that a task only had to be checked off to be recorded. 

7. The result 2.0

The effects were amazing in such a short period of time. Productivity went up to 66%! The company became more profitable. 

Another important learning was that when it was quieter, projects were sold too cheaply. With this insight, awareness in the organization was increased and choices could be made more purposefully.

8. Rodeo. Manage the Madness

This company works with Rodeo. No surprise of course ☺ Do you want to know more about Rodeo?

Create a trial account or let us know if you want to schedule an online demo.

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