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The advantages of total time accounting seem self-evident to me, but I routinely get resistance from senior leadership when attempting to institutionalize this in the organizations I have been.

What makes CEO's, CFO's or accountants resistant to this as an idea? Are there some hidden negative aspects to total time accounting I'm not aware of?

EDIT:

Lots of answers regarding the cost of instituting a time tracking system. Just to clarify, this companies in question are US defense contractors and they all must adhere to DCAA rules. Since the cost of implementing such a system is a "sunk cost", required to win a contract in the first place, then what are the sources of push back if the cost to implement and maintain the system is already incurred?

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Here are a few reasons I've encountered.

  • Resistance to imposing changes on how people work. Leadership may be afraid it will make people think that big brother is watching them and that's not the kind of culture they want to create.

  • Senior management often wants (and sometimes needs) flexibility in how it pays people. Total time accounting adds in a seemingly objective metric to use when deciding compensation. This makes it harder for managers to pick favorites, incentivize specific types of behaviors or, in general, be subjective in how people are paid.

  • People will argue that not everyone accomplishes the same work in the same period of time and therefore total time accounting is "not a good fit".

AFTER READING THE EDIT With the clarification in mind that this is for DCAA Compliance here are a few more reasons that I've seen.

  • The next audit is far away in management's minds and they'd rather scramble ahead of a fixed audit date rather than invest in compliance on an ongoing basis not knowing if and when an audit is coming.

  • They use a different allocation of costs for the company's books when managing the company on a daily basis as compared to the accounting statements they prepare for the DCAA audit. Reasons for this include that they may track different metrics for making business decisions and their banks may want information presented in a way that's different from the DCAA.

  • 1
    +1 for mentioning that flexibility in pay is necessary. These aren't hourly fields. – jmort253 Mar 2 '11 at 4:30
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Total Time Accounting is something typically seen in projects contracted by Government entities, based on a few quick Google searches, and this article:

Government Contracting Leader - UNCOMPENSATED OVERTIME AND TOTAL TIME ACCOUNTING

In government, as well as many rigid corporations, process is king, and there are huge departments of people whose job it is to audit these reports.

In smaller businesses that aren't so regulated, this type of time tracking just isn't necessary, and it may have more costs associated with maintaining it than without. These costs could be monetary, but these costs could also be mental. Any time spent documenting time for each and every task takes energy away from actual work and thought on those tasks.

Accordingly, all government contractors should ensure that their time charging system is capturing all hours worked and allocating the cost to all hours worked using one of the aforementioned methods. Doing so not only requires investment in compliant accounting and timekeeping systems, it is also requires the implementation of effective policies, procedures and employee training programs.

While the author uses the term "investing" when talking about accounting and timekeeping systems, senior management will easily see this marketing-speak for what it really is, additional costs. Policies, procedures, and training programs also imply additional, unnecessary expenses in the eyes of senior managers.

Additionally, many smaller businesses just don't require this level of accounting. Also, senior managers would prefer to look at the strategic big picture rather than the details. As long as a profit is generated, that's all that matters to them.

Finally, engineering isn't the same field as one that involves preparing your burger and fries. Engineering is fundamentally not an hourly position. It involves creativity, ingenuity, intelligence, autonomy, and decision making abilities. Some of the best ideas even come when engineers are stuck in traffic, in the shower, sleeping, or awake at 3am. The question is how to objectively measure such subjective gains in a project.

Senior managers may view this level of accounting as not making sense, but also they may see it as not having measurable value and being riddled with more productivity-robbing costs.

  • @jmort253: Perhaps I'm mis-reading your answer, but I don't don't agree that the article contends that "revenue earned from Total Time Accounting, when used with salaried employees, can be easily manipulated". Rather, I think it clearly states that NOT using TTA makes it easy to manipulate the actuals charged to a cost reimbursable contract. – Adam Wuerl Mar 2 '11 at 3:18
  • @Adam - You are not mis-reading. You are absolutely right! My answer was grossly inaccurate. I rolled it back to a previous version that was correct and made some updates to it. I actually read it right the first time but then got confused and changed my answer to a wrong one :( Since the answer was edited, anyone who wishes to do so should be able to remove upvotes, if they disagree with the updated answer. Thanks again for pointing this out. – jmort253 Mar 2 '11 at 4:24
  • @jmort253 - this is related to gov contracting. I've updated the question a bit to clarify. Would you change your answer based on the addition, or leave it as is? – DaveParillo Mar 2 '11 at 4:53
  • @Dave - When you say you're trying to institutionalize this in organizations where you've been, are you trying to do so in a company bound by these DCAA rules? If the company is bound by those rules, then shouldn't they already have TTA in place? I'm wondering if you could clarify even more as I think I'm confused. Thank you. One possible reason for pushing back might just be that they like being able to game the system perhaps? Just look at some of our politicians ;) – jmort253 Mar 2 '11 at 7:29
  • @Dave - I think @Andy's answer and @Mark's answer reinforce my point about paying people for results. Do we clock in and out during times when we think about the project and when we don't think about the project. Knowledge work is hard to objectify. – jmort253 Mar 2 '11 at 7:32
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One rational reason: overhead of keeping track of all hours worked. Everyone has to register their hours, think of filling in time sheets or - worse - their time spent working is somehow measured automatically. It may work for people digging trenches, it is a complete idiocy for any kind of knowledge work like product development, marketing, software development etc. etc.

As a manager I always paid a monthly wage + a bonus to my employees. And I told them I'm not interested in when they do work but in results. Worked great for me - and for them.

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There are always many negative aspects of truth. Your upper management may afraid to know exactly what is happening in the organization. I'm sure that it's a big company you're talking about, and your managers are not its owners. As soon as they know that 50% of your team time is wasted (for example) they may loose their jobs. Why taking a chance?

  • Actually, it's a defense contractor with less than 100 employees & the managers are the owners. – DaveParillo Mar 2 '11 at 4:56

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