Do you know improving gross profit margin is really important as a service organization for a book keeping and accounting company? For this kind of company, improving GP depends on the various factors. But most importantly, what I saw was in my organization 2 things directly influenced and impacted. One is  mostly the direct cost of this kind of a company. For my company, it mainly related to the staff who are directly involved in projects,billable costs or staff  time. Mainly, that’s what happens.

How to improve the GP, and how we can work on improving GP were two challenges in the initial stages I faced. One is staff when they involve in various projects, various retained clients. Even though we set up a scope, there’s ongoing management accounting. So there can be a lot of things in different nature where tasks will occur. What happens is that the entire team spends their time on  different   tasks. Then at the end of the day, as we track client-wise profitability or how to improve staff productivity, we don’t have any clue. There, after, we searched for many platforms and how we could automate this.Then we learned that there are thousands of tools available to make it happen. But what I realized was not about the tools that  we use,how we use them or how well we use them and how we can make them a part of our culture. Because when we do something new and if that is not a part of the culture of our working pattern, working environment, working conditions, putting up something new is going to be really challenging as its a test ,  it’s a trial-and-error method.

How I made it successful is the first thing to create that test culture in a daily routine. So we implemented something called time tracking. I know that there are so many time tracking software like Clockify or so many. Even since we are Xero partners, we have some free tools for us to make it happen to have better  practice in  management, but lacking is not about using that tool. Mainly the culture. You know how they are performing their task and how this time tracking can be incorporated as part of their task. So that was the challenging part. Hence, the initial few months, I faced making it happen. Then I learnt something about how we can make it perfect through creating accountability and monitoring systems to make this particular tracking process easy or to make it perfect.  What we did was, try to create their culture and  all the staff needed to track their task, mainly task based. They can handle multiple clients in the organization. But the important thing is to track the task against the clients and the “time in time” out of that particular task and what’s the time duration to spend on this task.

In my organization, anything more than 5 minutes which they are going to spend on a particular task, even when you see it, so you have to enter it or  you have to track that particular task and there is time taken for the task. So, based on time tracking, we made it  applicable from tier one staff to tier three staff. So we educated them on the broad part of it before we started implementing it. While we started practicing, we educate them on a broader  part of why it has to be done. So it’s not to track and say OK they are working or they are not, but the purpose of tracking the time. The purpose of time tracking is that you need to know the profitability of a client and then how you can improve your own work for productivity. So those are the 2 convincing things for them: why they do what they do. So that’s really important for them to understand. Then, what we did was, once they started tracking, I created a monitoring system. We are like another person who is responsible for creating that data input.

We need the person to generate a report and send it on a daily basis about which client and what and where they  have spent time on. Whether it’s data processing, it’s review  or a meeting. Because we figure out “OK we spend a lot of time in meetings”. So when we see how many hours we are spending on meetings and on which client, even internal, trainings or whatever. So knowing what is measured, then I know that it’s going to be done. Then what we did was  this particular person started tracking and generating reports on each staff member and sent them to the supervisors of that particular team. So the reports gave detailed sheets of what their task was and how much time they spent on that and each category. Very comparable reports they generated and were sent . That was sent on a daily basis. It’s automated and  they don’t spend a lot of time on that and then, most importantly, what if a few staff are not updated ? Your information is not going to be accurate, right ? So how to make this as a culture was our next question.

We allocated another person  accountable on a daily basis. The person reports a particular dashboard to oversee every staff whether they have completed or not completed the previous days time tracking sheet. So every morning we get a report based on that. This report is circulated to the entire team. So this particular person’s work was to go to the sheet  and simply check person A, person B, person C to see whether they’ve updated or not. If updated, the tab is green or if not the tab is red. so that’s a clear indication to activate it through supervisors. Initially, a lot of red were there and then gradually it became fully green  and that helps us to implement this successfully. Now we’re generating information on GP percentage and we are working on the productivity of each person even the  senior level staff. Sometimes they might spend a lot of time on data processing. Why do they have to spend on data processing? We need to know how many hours they are spending on data processing for a particular client?  So what is going to be our delegation strategy for that? So what are the actions and tasks needs to be done? So all these decisions we are taking through these particular time tracking sheets and that helps us to continually improve our gross profit margin, which is also very important for a service-based organization. Thank you.