John Pell, Senior Account Executive at Journyx authored the following post. He has been providing creative solutions using Journyx products since 2000.  He has helped thousands of clients worldwide solve problems unique to their businesses.

When discussing functional requirements with prospective clients, I always ask them to envision the perfect product for managing all of the items their employees need to track and that management needs to report on.  Predictably, this leads to some interesting and unique responses, and most of the time our product can be configured to solve issues they never thought a timesheet solution could possibly address.  One example is equipment or material management for costing and billing purposes.

Journyx has saved one major automobile manufacturer vast amounts of money by automating the chargeback process for defective parts sent to them by their suppliers.  Previously, defective parts were literally stacked in empty spots on the factory floor and were rarely charged back to the vendor.  Now, when employees complete their timesheets they also log the part number and quantity of defective parts as well as the storage area where they are located, where they stay until picked up by the supplier.  The supplier is then billed back for both the value of the parts as well as a storage fee for the time the defective parts remained on the property.

We can use the same functionality of our product to capture production metrics.  For example, one client uses Journyx to track quantities of units produced and tasks accomplished for payroll bonuses (as well as reporting purposes) in order to gain a better understanding of which workgroups, shifts, and employee types are best suited to certain types of work. This allows them to assign the correct people to future work of a similar nature.

Several other clients use Journyx for equipment tracking for billing purposes.  For example, they might bill a truck at $2.50/mile, a bulldozer at $200/hour, a crane at $1500/day, and an explosive charge at $300/use.  When an employee or their manager completes a timesheet, they also log the equipment used as well as the quantity and measurement associated with the equipment.  Behind the scenes in the Journyx system, there is a conversion table that applies the appropriate monetary value to the equipment so the finance department can bill the client accurately. Feedback from these clients indicates that they are capturing a much larger volume of billable fees than they were using their previous methodologies.

Congratulations to Chris Laws, the winner of the 2011-2012 Journyx Scholarship! 

Laws submitted the winning essay to the 2011-2012 Journyx Scholarship, where he discusses how better resource management processes can improve a company's bottom line. Laws is currently pursuing his M.B.A. degree at the University of Chicago Booth School of Business. As the winner of the Journyx scholarship, Laws receives $500 toward tuition and fees.

Below is Laws' full essay. Additionally, if you'd like to enter the fall 2012 Journyx Scholarship, see complete information and rules here.

Before returning to school, I never appreciated resource management processes. I formerly worked in consulting where the main resource to manage was human talent. The way in which this was tracked was with timesheets. These timesheets used to be the bane of my and my colleagues’ existences. After taking a managerial accounting class, however, I now see the tremendous impact that proper accounting can have. This essay describes my journey from ignorance to enlightenment, describing one case in particular that illustrates proper timesheet accounting.

I used to hate timesheets. My old position at a major consulting firm required filling them out dutifully every two weeks. The timesheets required that we keep track of every hour spent in those ten workdays. Every client, every project proposal, every pro-bono effort had to be tracked and timed. Everyone with whom I worked viewed timesheets as an annoyance. We knew they were aggregated and our office’s performance compared to other similar units on the basis of the timesheets. Despite eventually serving as a leader of another office, I never appreciated the value of project accounting until business school.

One case we studied in my managerial accounting class opened my eyes to the power of timesheets and how they could directly impact a company’s bottom line. The case described a lawsuit against the retailer Nordstrom. Some of Nordstrom’s employees argued that Nordstrom’s accounting principles forced them to work uncompensated hours or face termination. Nordstrom argued it was simply rewarding high performers and that it did in fact compensate employees for all time working. In Nordstrom’s legendary culture of service, however, defining time spent working was difficult.

The root of the issue in the case is the way in which Nordstrom floor employees account for their working time. Nordstrom employees are measured on their sales per hour (SPH). The compensation system provides higher commission rates to those employees who have a higher SPH rate. This system incentivizes employees to not record time spent on non-sales generating activities. Doing so leads to a smaller denominator and therefore a higher SPH.

Legal and ethical issues aside, Nordstrom’s accounting missed a major opportunity for better (human) resource management. Nordstrom should tweak its compensation and accounting systems to improve their employee satisfaction and bottom line performance. My recommendations are to 1) make employees salaried and 2) track non-sales time. Making employees salaried would eliminate overtime and the feeling of not being compensated for non-sales work. This move fits better with the company culture of having sales staff feel like owners. Nordstrom could still maintain an incentive-based system by paying a fairly low starting salary that ratchets up based on performance.

More important from a resource management perspective, tracking non-sales time will provide better insights into employee activity. Having employee timesheets incorporate both selling and non-selling hours tracked will give a more complete picture of activity. Nordstrom will be able to use these data to arrive at some optimal mix. They can then establish a uniform standard rate around the company. After that, Nordstrom will be able to track where employees or stores are out of line with some ideal. This will allow management to tweak their policies and processes to minimize the burden or change directions entirely. Having a recognized expectation (e.g., 75% selling 25% non-selling split) will help to shift the culture so that employees feel comfortable reporting their non-selling time. Employees with higher morale and improved management practices should undoubtedly lead to higher profits – a win for everyone, not just the accountants!

Determining a fair price for a product or service can be tricky at times. Indeed, we see just as many companies get it wrong as get it right. Netflix is one such example, for even though the service remains popular today, their price change fiasco last year tarnished a once unblemished reputation. But why were people so upset? Netflix is hardly the first company to raise prices on a product.

Actually, the issue was not so much the price change, but the fact that the price was increasing without the end user seeing any additional value. Customers didn't need a tracking tool to see this. You spend more money, you get less for it, and the value of your resources goes down. Add in the fact that Netflix altered pricing and even tried to introduce a new service in a relatively convoluted way, and it is clear why customers felt at best confused, and at worst betrayed.

To avoid a situation like this, it is always important to realize that competing on price is not so much of an issue if you compete on value first and foremost. Of course no business should operate at a loss. There is no argument for that, and rarely do businesses wish to anger customers by arbitrarily raising prices. So, before that decision is made, it is important to determine what the customer will get out of a price increase.

By tracking and managing resources, it is possible to determine the precise value of any additions to software, physical products, and mobile applications. Insight into how much time, manpower, and money goes into it will allow businesses to make a fair decision that makes sense for them financially while still presenting the customer with a valid reason for spending more money on a product, without simply resorting to some vague appeal to economic woes.

Be fair to customers, and be open as well. If you have to increase prices, make sure that they understand why, and also make sure they know that it is good for them, as well. Sure, you may still lose some of them, but for those that stay, you will have retained an important recurring resource: loyalty.

During the economic recession, the concept of growth seems to have taken a backseat to the reality of survival. Perhaps no industry has faced more challenges than travel, and within that subset, travel agencies have it the worst. The internet, with its wealth of information and constant availability of online deals, has struck a major blow to agencies worldwide, rendering many of them extraneous. The devastating tragedy of 9/11 led to mass trepidation for travel. Now, the economic recession has caused even further cutbacks in travel related expenses for many individuals and organizations. With all of these devastating factors working against them, it is amazing that the word “travel agency” even exists in our modern vocabulary.

However, Anthony Travel has managed to not only survive all of those adverse conditions, but to thrive. Of course, savvy business acumen is responsible for this success. Though the portfolio of techniques that Anthony Travel uses is no doubt incredibly diverse, their use of the two following time management techniques has helped them avoid unnecessary pitfalls and make intelligent decisions.

Track Time to Projects

Anthony Travel initially tracked time simply for payroll, using a relatively unsophisticated system that did not give much insight into anything but employee hours worked. However, once they made the decision to switch to an automated solution, the opportunity to track time on a per-person, per-project basis opened up, and it allowed many benefits that were impossible with their previous solution. For one thing, they were able to get specific insight into where and when employees were completing assigned tasks and compare those to ultimate profitability. They were then able to reallocate resources and people in ways that made sense for their business. In addition, they could determine if employees were being put on too many projects, or if they were available for a new venture. This level of clarity allowed for precise decisions that increased the efficiency of everything from project completion to time-off requests.

Fire Problem Customers

Anthony Travel does business with several reputable college athletics teams in the United States, helping players get where they need to go. They track time to schools and even by team, approaching each as a separate project. With this information, they began to see some trends in the profitability of each of these, and eventually reached a somewhat surprising conclusion: some projects were tying up too many resources to maintain profitability.  This insight allowed them to focus on the most profitable customers and projects. Insight into the time and resources spent on customers allowed them to make intelligent -- and profitable -- decisions.

These strategies worked well for Anthony Travel, but what tools do you use to protect yourself from unforeseen circumstances and to increase profits?