Time Tracking

What is Time Tracking?

Time tracking refers to how organizations record the working hours of hourly employees and ensure those employees are compensated accurately for their time. It is a subcategory of time and attendance, which is a broad term that typically encompasses time tracking as well as other elements like attendance, time off, billable hours, and scheduling.

Time tracking breaks down into three main components:

1. Time entry

2. Approvals

3. Reporting

Originally, these functions were all performed entirely by hand. Now they are often handled by computer software designed specifically for that purpose; however, there are still organizations who perform time tracking manually, either in part or in full. Time entry is the daily process by which an employer records employees’ starting times, finishing times, and any breaks not included in the employee’s contractual agreement. These times are called timestamps, and may be recorded on a physical document called a timecard or via an electronic method like a spreadsheet or time-tracking software. Time entry is often referred to as “clocking in and out” or “punching in and out,” the latter of which refers to “punching” the button on a physical time clock that stamps the time on a paper timecard.

Modern software-based systems use a unique identifier to clock an employee in and out; time-tracking functions built into a point-of-sale system often use an employee’s first login and end-of-day logout as a way to perform time entry as well as grant system access. In both electronic and manual systems, the times of day recorded by the system are called timestamps, and the record of an employee’s timestamps is kept in a timesheet. Approvals are essential for an organization to ensure accuracy and compliance in compensation. Generally, a manager will review employees’ timesheets for the pay period to verify that they are correct, at which point HR or the software will calculate the total hours worked along with any overtime hours.

All time tracking involves some form of reporting, first and foremost as a way to submit approved and verified hours to payroll for processing. Time tracking reports also have strategic benefits, as they can be useful in helping an organization perform budget analysis or identify discrepancies in compensation.