Time Tracking Categories & Best Practices to Make the Most Out of It

Sheena McGinley, April 15, 2024

Time tracking categories and best practices

We've all been there... the feeling of constantly being behind and not knowing what to prioritize, as yet another working day dwindles away with less-than-productive results.

Whether you're a freelancer, an employee striving for efficiency, or a business owner seeking project clarity, this blog post introduces time-tracking categories. We'll explore how to categorize for maximum ease before outlining the best practices to follow.

With us all becoming more time-poor, taking control of it – while boosting your productivity, and gaining valuable insights – has never been more important.

In this blog post, we'll dig into...

How different companies can categorize their work

How companies categorize their work

Full disclosure: there is no fixed set of rules you must adhere to in terms of categorizing your work, it varies wildly from business to business. Why is that? Well, companies simply categorize work in ways that best suit their time-tracking goals. Here's how some factors can influence work categorization:

Company size

One of the leading factors when creating your own time-tracking process is the size of your business. So, if you're running a small business, keep your categories concise. For instance, small businesses often use time-tracking categories such as:

  • Sales
  • Marketing
  • Finance
  • Operations

Simplicity is key when resources are limited.

Conversely, large enterprises have more departments, which require more specific categories. In which case, you might consider categories for:

  • IT development
  • Engineering design
  • Legal services

This brings us seamlessly to our next leading influencing factor...

Industry matters

Indeed, having a category for "engineering design" is largely unnecessary if you aren't in the field of engineering. That's why it's important to make your categories industry-specific. Below are just some examples of how different industries might categorize their work:

  • Service firms: Given how broad this field is, it’s best to categorize by service types (consulting, legal, IT teams) or client needs (project management, billing, communication).
  • Retail: The focus here could be primarily on customer journey stages (sales, support, returns) or inventory management (stocking, ordering, tracking).
  • Manufacturing: Those working in this field might track time by production stages (assembly, quality control) or project phases (design, development, launch).

Project-based vs. ongoing work

Project based vs ongoing work categorization

Another key element to consider is the type of work you and/or your company undertake.

  1. If you do project-based work, you should track time by project phase (planning, execution, closure) or deliverables (reports, prototypes, presentations).
  2. If, however, you're engaged in ongoing work, you can use categories that lean into marketing campaigns, customer service calls, or product updates for routine tasks.

Project time tracking categories

For those of you interested in project time tracking, here’s a brief overview of the phases you should consider when defining your categories.

Project lifecycle: Track time spent on the initial planning phase, be it brainstorming, research, and creating project plans. Then, during execution, categorize tasks directly involved in project work, like development, writing, and design. Finally, during the closure phase, capture the time spent on finalizing deliverables, testing, and wrapping things up.

Task types: Break down your tasks beyond development (coding, debugging, testing) to capture how you spend your time. This includes communication (meetings, emails, calls), project documents (reports, presentations, user guides), and administrative tasks (scheduling, resources, expenses).

Client focus: To ensure clear communication while managing project expectations (and the dreaded scope creep), track your time spent interacting with clients. This includes meetings, demos, presentations, emails, calls, and even the time it takes to incorporate their feedback and revisions.

Team roles: For even deeper insights, consider tracking time by team roles (designer, developer, etc.). This way, you can get an overview of workload distribution. If you bill by the hour, categorize tasks as billable or non-billable to track profitability. Don't shy away from creating custom categories specific to your project, or industry for even more tailored data.

Always remember to start with a basic set of categories and add more as needed, while ensuring everyone on the team uses the same categories. Also, review and refine as you go. By that, I mean regularly analyzing your time-tracking data and adjusting your categories for optimal results.

Best practices for time tracking

Best practices for time tracking

Now that we’ve grappled with the latent subjectivity of company categories, let’s dive into how to make them work for you. Here are some best practices for time-tracking categories, regardless of the specific system you choose.

  • Keep it simple: If you don’t keep categories at a minimum, it will become overwhelming to track time and analyze data.
  • Be specific: Categories should be specific enough to provide meaningful insights, but not overly granular.
  • Be consistent: Use the same categories every time for consistent data comparison over time.
  • Review regularly: Evaluate your categories periodically to ensure they remain relevant and effective.

Now, let’s get into the nitty gritty by outlining some best practices by category focus.

Have functional categories

Keep it organized. Clearly define boundaries between functions – like marketing and sales. If you require more detail, then you can branch into subcategories. For instance (if applicable) consider tracking social media marketing under a broader marketing category.

Mirror your team structure

Use departmental categories that align with your departments, such as marketing or IT. This avoids confusion. If you need to track collaboration, you can add categories for cross-departmental projects, like joint marketing-sales initiatives.

Nail project tracking

Clearly define project-based phases (planning, execution, etc.) and deliverables to accurately categorize your tasks. Remember that consistent project naming makes everything easy to find and track.

Track every activity, the little ones add up!

Focus on capturing specific activities like writing emails, attending meetings, or coding features. Using activity-based categories can highlight your team's more repetitive and time-consuming tasks.

Use client-based categories

Tracking time by specific client projects ensures accurate billing. Don't forget to set clear guidelines for differentiating client-facing tasks (presentations, meetings) from internal work (team communication, administrative tasks). This keeps things transparent for both you and your clients.

Extra insights to help create time tracking best practices

Here are some additional points to ponder when crafting best practices for your specific industry niche.

Make sure to use consistent language for categories and subcategories across the organization. Come up with naming conventions. It doesn’t have to be complicated, even a single-page style guide will do.

Get your employees feedback. Yes, even if it sounds tedious, it’s necessary. How else will you continuously improve your categorization system and get that key decision-making data? Make it fun by incentivizing participation.

Turn your newly acquired time-tracking data into actionable insights. Identify areas for improvement and make more informed decisions.

Make sure to automate where possible. Utilize time tracking software with automatic activity recording, such as Memtime for improved efficiency.

This brings us seamlessly to our final offering before we wrap this blog up, that being…

Key features for time tracking software

Time tracking software features

As there are numerous options on the market, behold some key aspects you should consider when choosing the optimum time tracking software.

  • Make sure it tracks time accurately and offers easy ways to categorize tasks. Additionally, consider features relevant to what you do – be they project management tools, invoicing integrations, or reporting capabilities.
  • Your time tracking software should be user-friendly and intuitive to minimize onboarding time and encourage adoption by your team.
  • Don’t forget about integrations. Does the software integrate with your existing project management tools, accounting software, or payroll systems?
  • Will the software be able to grow with your company? Consider your future needs and choose a solution that can adapt.
  • Ensure whatever software you choose has robust security features to protect your data, especially if you track billable hours or client information.

Wrapping up

Setting up time tracking might seem like a huge undertaking, especially if your team isn't used to it. But here's the thing; by not doing it, you’re missing out on valuable, crucial insights you need for long-term growth.

Time tracking is all about understanding how you and your team work. After all, knowledge is power! By taking the time to plan your time-tracking system and how to implement it, you'll end up with a business that's more agile, efficient, and ultimately, more successful.

Unsure where to start in terms of categorizing? First, outline your ultimate end goals and then reverse-engineer from there.

Bottom line is, there's no one-size-fits-all approach. By understanding these factors, you can choose the work categorization that best tracks your time and helps you achieve your goals!

If you’re ready to learn more about how we can help you implement time tracking into your business, feel free to schedule a call with us. We can walk you through our automatic time tracking, or you can start your 14-day free trial here.

Meet the author:

Sheena McGinley - post author

Sheena McGinley

Sheena McGinley is a columnist and features writer for the Irish press since 2008. She’s also a business owner that is conscious of how time tracking can foster progress. She wrote for SaaS companies and businesses that specialize in revenue optimization by implementing processes. She has the unique ability to digest complex topics and make them easy to understand. She shares this precious skill with Memtime readers.

When she's not making words work for people, Sheena can be found taking (very) brisk dips in the Irish Sea.