More than half of all hourly workers say schedule flexibility is the top thing they enjoy about their current role. That’s a huge driver of employee engagement. And yet, fair and flexible scheduling is also one of the hardest points for businesses to get right.

When everything clicks, workforce scheduling can make your team more productive, reach your overarching business goals, and increase employee satisfaction.

But get it wrong, and you’ll hit problems like overstaffing shift schedules, scheduling conflicts between teammates, and employee burnout.

We know which we’d prefer! That’s why we’ve put this guide together to outline how to follow the right approach to scheduling.

TL;DR — Key Takeaways

• Workforce scheduling is the process of planning and assigning employee shifts so you have the right people working at the right times. A well-designed schedule helps businesses meet staffing needs, reduce labor costs, improve employee satisfaction, and avoid issues like understaffing, overstaffing, and scheduling conflicts.
• You could do workforce scheduling manually, but why bother? Digital workforce planning is more convenient, allowing you to automate tasks, remove manual errors, and share updates in real-time.
• Workforce scheduling software is equipped with different features, such as templates, shift bidding, and audit trails, which you might need based on your industry and individual preferences.
• There are several practical ways to improve your workforce scheduling, including frequent team communications, historical data, and making flexibility a priority.

Checklist: Do you need workforce scheduling?

Workforce scheduling is a staple of some business models, but is it right for your business?

Let’s say you run a coffee shop at its busiest from 7-11 am. With workforce scheduling, you can assign more baristas in the morning and fewer in the afternoon. You also avoid anyone working more than 40 hours per week or accidentally scheduling employees on their days off.

Not in the coffee shop trade? Here are some tell-tale signs that workforce scheduling would work for you specifically.

• You have shift coverage problems, with too many or too few people working at the same time (overstaffing and understaffing)
• You struggle with last-minute shift changes and finding replacements when someone can’t work
• Employees complain that their schedules are unfair, constantly changing, or don’t match their availability
• You have high labor costs because you regularly fork out for overtime, or overschedule people who sit around with nothing to do
• You miss business opportunities because customers wait too long or simply leave because you don’t have enough staff
• You have problems tracking hours, and can’t tell who worked when and how much
• You do a lot of manual scheduling, creating them in sheets and on paper, making small mistakes that lead to major crises
• You constantly worry about breaking the law and violating labor laws like required breaks, maximum work hours, or fair shift practices

If you face one or more of these challenges, your business can benefit from workforce scheduling.

Top benefits of workforce scheduling software

If you’ve previously created work schedules in Google Docs or on paper, you’ll know it can get old, fast. Of course, these rudimentary tools may suit your scheduling needs for a while, but you’ll quickly encounter problems like missed shifts and communication breakdowns between teammates if you depend on them for too long.

The alternative is to use a dedicated scheduling solution, which helps by:

• Automating a huge portion of the work: The tool assigns shifts based on availability, so you don’t have to manually adjust shifts in spreadsheets.
• Removing errors: You’ll see fewer double bookings, missed shifts, and legal violations.
• Providing better coverage: Smart employee scheduling software helps you match staffing levels so you can adjust to slow and busy periods.
• Satisfying your employees: Your team can set their availability and see all of their updates in real time. Talk about convenient.
• Improving compliance: Many scheduling tools adhere to labor laws, union rules, or company policies by default, so you don’t need to double-check everything.
• Providing real-time updates: Last-minute schedule changes show up in real time in your schedule management software, so when someone calls in sick or you change the schedule, everyone can see it immediately.
• Offering data and reporting tools: You can see data on labor costs, overtime, and staffing patterns, helping you make better decisions for future schedules.

If you’re doing fine as is, hats off to you. But if any of the features above resonate, it might be worth looking into dedicated software for workforce scheduling.

Workforce scheduling features to look out for (based on your top pain points)

The right scheduling tool can make a world of difference, but not every business needs the same set of features. The best way to choose software is to match its functionality to your specific challenges. Below, we’ve outlined common scheduling pain points and the features that can solve them.

⌛ Pain point 1: If you’re wasting too much time building schedules manually

• Auto-scheduling: Suggests or builds schedules based on rules you set (like availability and shift needs).
• Drag-and-drop editor: Lets you quickly adjust shifts without retyping everything.
• Templates: Allows you to save and reuse schedules for busy periods, weekends, etc.

⛔ Pain point 2: If employees are unavailable or unhappy with their shifts

• Employee self-service: Allows workers to set their availability, request time off, and swap shifts online and on their own.
• Mobile app access: Staff can view schedules from the palm of their hand.
• Fair scheduling rules: Ensures even distribution of preferred shifts and hours.

🌧️ Pain point 3: If you have shift coverage problems (too few or too many people)

• Demand forecasting: Predicts how many workers you’ll need based on sales, foot traffic, or past patterns.
• Shift bidding: Employees can claim open shifts, helping fill gaps faster.
• Qualification tagging: Schedules the best people for certain roles (e.g., only certified workers for specialized tasks).

🚨 Pain point 4: If you’re struggling with labor laws and compliance

• Overtime alerts: Warns you before assigning shifts that would cause costly overtime.
• Break and rest compliance: Automatically schedules required breaks and rest periods.
• Audit trails: Keeps a record of all schedule changes for legal or HR reviews.

🫨 Pain point 5: If last-minute changes create chaos

• Real-time notifications: Instantly alerts staff to schedule changes via text, email, or app.
• Shift swapping: This lets employees trade shifts (with or without manager approval.)
• Find replacement feature: Suggests available workers when someone calls out.

📄 Pain point 6: If you lack decent reporting and planning

• Labor cost tracking: Shows how much each shift or schedule costs you.
• Attendance tracking: Monitors who shows up late, leaves early, or misses shifts.
• Performance insights: Some tools can even show patterns like absenteeism or your most productive employees.

How to improve your workforce scheduling process

Improving your workforce scheduling depends on your industry, team structure, and how much flexibility your business demands.

A healthcare clinic might prioritize certifications and legal compliance, while a retail store needs agility to match unpredictable customer traffic.

No matter your setup, these best practices can help you create smarter, more efficient schedules that work for both your business and your team. Here are some general rules on how to improve the way you manage workforce scheduling.

Communicate clearly with your team

While better scheduling benefits the business, employees may see it as an extra hassle — unless you show them how it works in their favor. When people can share their preferences and availability, they’re more likely to get their preferred shifts and avoid conflicts.

Make it easy to gather this data. Try:

• A quick weekly survey
• A Slack poll at the end of the week
• A show of hands during team meetings

You’ll end up with the data you need and show your team that their input matters. Both enable you to plan ahead with confidence.

Use historical data to optimize schedules

Remember when you had 10 employees working a ghost town shift, followed by a solo employee struggling during peak hours? Neither of these needs to happen again. Once you commit to workforce planning, your historical data shapes what you do next time. Here’s how different industries do it:

• Retail teams align staffing with sales data, adding more coverage during seasonal rushes or after major promotions.
• Restaurants track reservations to schedule more servers during busy dining hours — and scale back when it’s quiet.
• Healthcare offices use appointment volume and no-show trends to balance staff across the week.

Build flexibility into your schedules

85% of workers across 35 countries consider work-life balance the most important factor when evaluating current or future jobs, outranking pay and job stability. Offering flexible schedule options plays a huge role in driving employee satisfaction and making you a more desirable employer. Try the following to become more flexible:

• Staggered shifts: Instead of having everyone start at the same time, employees can arrive and leave in waves to cover peak periods more smoothly.
• Overlapping hours: Scheduling slight overlaps between shifts ensures enough coverage during busy transitions without overstaffing.
• Remote work options: For roles that don’t require a physical presence, offering remote shifts or hybrid models can widen your talent pool and keep employees happier.

Flexibility won’t negatively affect your productivity. If anything, an increase in flexibility results in higher output, on top of improved employee engagement.

Prepare for unexpected changes

The best plan in the world won’t work if you’re hit with any last-minute absences or emergencies. Here are some strategies to prepare for the unexpected.

• Maintain an on-call system with employees willing to be on standby during the week. Keep them motivated by offering extra pay or time off.
• Cross-train employees so that an employee can replace someone else in a different role in a pinch. For example, a front desk agent in a hotel could assist with basic concierge services or serve tables during busy periods.
• Build relationships with freelance or temp workers who can step in and save the day when emergencies pop up.

Avoid overloading your team

If you overschedule shifts for certain team members, you risk leading them toward burnout and lower job satisfaction, even if they’re usually thrilled to do their jobs.

Prioritize employee preferences

Your top priority? Assign your employees the shifts they need to achieve a better work-life balance. The only way to do this is to have all the information in one place to account for time-off requests, personal commitments, preferred working hours, and other details.

Automate repetitive scheduling tasks

While you may need to adjust your scheduling to accommodate seasonal changes occasionally, the bulk of your scheduling efforts will remain the same throughout the month or year.

Workforce scheduling tools automate recurring shifts or assign schedules to your team members by default based on their availability.

You’ll spend even less time on scheduling while achieving even more efficiency. But don’t rest on your laurels because scheduling and capacity planning is not a set-it-and-forget-it type of activity, as Eli Rubel, owner of Profit Labs, warns:

“Most agency owners create a forecast once and never revisit it — that’s a huge mistake. You should be treating these as living, breathing documents.”

Comply with labor laws

Failing to comply with labor laws can result in fines, lawsuits, and reputational damage. Depending on your industry, you may have strict rules around how, when, and how much employees can work, and it’s your responsibility to stay on top of the latest red tape. Watch out for:

• Rest periods and breaks: Employees require legally mandated breaks during shifts and enough time off between shifts to rest properly.
• Age restrictions: Younger workers (typically under 18) are limited with the types of work they can perform and how many hours they can work, especially during school periods.
• Overtime tracking: Employers are required to accurately measure time spent on overtime work.

Review and refine schedules regularly

Make sure to periodically check in on your schedules so you can spot problems early, such as frequent understaffing during peak times, high overtime costs, or recurring employee dissatisfaction.

There are a few practical ways to review your workforce scheduling time and time again, such as:

• Reviewing key metrics, such as absentee rates, overtime hours, and shift coverage issues, to find patterns
• Setting up feedback loops, such as short employee surveys
• Acting on insights reported by employees that come up often, e.g., notice times that are too short
• Testing and tweaking small changes, such as adjusting shift lengths or adding extra coverage during certain hours

Toggl tips for better workforce management

Workforce scheduling is an ongoing effort that requires thinking ahead, protecting your team’s energy, and using the right data to drive smarter decisions. Here are some of our best tips for managing any workforce.

Track time to understand capacity and prevent burnout

As Eli Rubel emphasized in his conversation with Toggl, time tracking is a tool for visibility.

“Time tracking isn’t about micromanaging — it’s about making profitable business decisions. If you’re overworked, we can see that in the data and adjust. If you’re underworked, we catch it before it’s too late.”

Tracking employee hours measures actual workload capacity, prevents silent burnout, and engages in more accurate labor forecasting. Knowing your team’s actual utilization rates lets you adjust schedules before problems arise rather than after.

Build flexibility into your scheduling strategy

Sticking to rigid shift patterns leaves you vulnerable to no-shows, sick days, or shifting business demands.

But you can build a more resilient schedule that adapts without breaking by offering staggered start times, overlapping shifts, and part-time remote options where possible. Flexibility also supports employee morale, which directly impacts retention and service quality.

Review and adjust your schedule regularly

Scheduling should be treated as a living system, not a set-it-and-forget-it task. Take time each month or quarter to review staffing data, absentee rates, overtime costs, and employee feedback.

Eli Rubel suggests updating forecasts continuously based on real-time market shifts and fine-tuning your schedules to reflect changing team needs, customer demand patterns, and business goals.

“This is why I started Profit Labs. Agency owners need real-time data to make the right decisions. Our dashboards bring together financials, CRM data, and time tracking to show exactly where the business stands.

With Toggl Track, you can make data-backed decisions based on employee availability, past performance, and other details.

Achieve operational efficiency with Toggl Track

No matter which industry you’re in, you can’t take workforce scheduling for granted. At the very least, you can do it manually until upgrading to a full-blown scheduling system makes sense.

Take a good look at your existing scheduling practices to see if there’s room for improvement in your operations or employee satisfaction. If so, it might be better to skip the baby steps and use a dedicated tool for the job, such as Toggl Track.

With Toggl Track by your side, you can create detailed, robust time tracking reports and make data-driven decisions on who works when.

Improve your operational efficiency today by signing up for Toggl Track for free or speak to sales for teams of 20+ users.

Before 2019, time tracking was mostly about knowing who worked on what and for how long. Helpful? Definitely. Required by law? Not always.

Then, a Spanish trade union challenged Deutsche Bank in court for not recording work hours properly. The case escalated to the European Court of Justice, and the ruling was crystal clear: EU employers must track daily working hours using a system that’s reliable, objective, and easy to access.

This legal requirement ties back to the European Union’s Working Time Directive — legislation that’s been around since the ’90s to ensure employees get proper rest and paid leave and aren’t clocking 70-hour weeks without anyone noticing.

Today, we break down what the EU Working Time Directive means for EU employers and how you can prepare for and comply with this legislation. We’ll show you which laws apply in which country and how to comply, step by step.

TL;DR — Key Takeaways

• The EU Working Time Directive limits working hours and enforces rest periods to protect employee health and safety. It includes rules like a 48-hour average workweek, 11 consecutive hours of daily rest, and mandatory breaks after six hours of work.
• Each EU country applies the directive differently, so employers must follow local laws. For example, Spain requires companies to store time records for four years, while Greece uses a real-time Digital Work Card linked to a government platform.
• A compliant time tracking system supports local rules, employee access, and GDPR standards. Look for tools with customizable settings, strong data encryption, and clear audit trails that align with EU data protection laws.
• Internal audits and regular reporting catch issues early and prepare for inspections. Monthly reviews and automated reports highlight missing entries, overtime risks, and break compliance gaps.
• Time tracking laws also apply outside the EU, and global teams must adapt by country. For example, the US, Canada, and Australia have different record-keeping lengths and overtime definitions, so international companies need flexible tracking tools.

The EU Working Time Directive explained

The EU Working Time Directive was introduced in 1993 as Directive 93/104/EC and later updated in 2003 under Directive 2003/88/EC. Its primary aim is to protect workers’ health and safety by regulating working hours and ensuring adequate rest periods.

Key provisions of the directive include:

• Maximum average working week: 48 hours, including overtime, averaged over a reference period of up to four months.
• Daily rest period: At least 11 consecutive hours in a 24-hour period.
• Weekly rest period: A minimum of 24 uninterrupted hours per seven-day period in addition to the daily rest.
• Rest breaks: A break during working hours for workers on duty for more than six hours.
• Paid annual leave: At least four weeks per year.
• Night shifts: Night workers must not exceed eight hours of work in any 24 hours, on average, for roles involving special hazards or heavy physical or mental strain.

These standards promote work-life balance and support employee well-being.

Following this ruling, countries like Spain and Greece have taken specific steps:

• 🇪🇸 Spain: Implemented Royal Decree-Law 8/2019, mandating daily recording of working hours for all employees. Employers must keep these records for four years, making them available to employees, unions, and labor inspectors.
• 🇬🇷 Greece: Introduced the Digital Work Card system under Law 4808/2021, requiring real-time recording of working hours, integrated with the ERGANI II information system. This system improves transparency and ensures compliance with labor regulations.

How does the EU time tracking law apply to different countries?

Ever since the EU Working Time Directive was implemented, various countries within the EU have begun incorporating it into their labor laws or adapting it to suit their specific use cases. Here’s a glance at some EU countries with their legal requirements and fines for non-compliance.

Country	Implementation Highlights
Spain	Mandatory daily time tracking since May 12, 2019 (Royal Decree-Law 8/2019). Employers must record start/end times and breaks. Records kept for 4 years. Proposals to reduce workweek to 37.5 hours by end of 2025 pending approval.
Greece	Digital Work Card system under Law 4808/2021. Real-time recording integrated with ERGANI II. Implementation expanding by sector. Non-compliance leads to fines.
Germany	Working Hours Act (Arbeitszeitgesetz) requires tracking start and end times. Legislation being updated post-2019 ECJ ruling. Flexibility allowed via collective agreements.
France	35-hour standard workweek, max 48 hours with overtime. Employers must maintain working hour records. Details may vary by collective agreements.
Netherlands	Working Hours Act (Arbeidstijdenwet) mandates tracking of actual hours and overtime. 48-hour weekly average over 16 weeks. Special rules for night workers and minors.

How to comply with the European Working Time Directive

It’s a no-brainer. You want to give your employees the work-life balance they deserve while complying with the law. But how? Here are some practical ways to abide by the legislation.

Understand your country’s specific requirements

The EWTD is merely a set of guidelines, and each member country is responsible for putting them into practice through national legislation.

For example, Spain requires all companies to maintain daily time-tracking records for employees, including start and end times, as well as breaks. Employers must keep these records for four years and make them available to workers, unions, and labor inspectors on request.

On the other hand, Germany is currently updating its laws to comply with the 2019 ECJ ruling. While the existing Working Hours Act already requires time tracking in many cases, newer proposals are moving toward mandatory recording of start and end times for all employees. There is still some flexibility under their current agreements.

Implement compliant time tracking systems

There are countless time tracking solutions out there, and you should choose one that works with the EWTD and your country’s laws. Look for tools with the following features:

• The ability to keep accurate records of workdays, rest periods, and overtime.
• Break and rest period logging to comply with your country’s minimum standards.
• Compliance with the General Data Protection Regulation (GDPR) if you handle employee data in the EU (even if your company HQ is based outside of it). This includes data encryption, secure access controls, and clear data retention policies.
• Customizable rules by country. In addition to the standard features, such as timesheets, the tool should be easy to customize based on local laws.
• Employee self-access. This allows every team member to review the number of hours worked and supports audits or disputes if they arise.

Educate your workforce about compliance

Even the best system falls short if employees don’t understand how to use it or why it’s important in the first place. Training your team is just as important as implementing employee time tracking. Try:

• Offering clear training sessions to your entire team. Explain the legal obligations and highlight that the system is there to protect their rights and not intrude on their privacy.
• Communicating why you’re tracking time. Aside from complying with the law, highlight that the practice is there for fairness, transparency, and legal protection.
• Addressing the issue of micromanagement head-on. Explain that time tracking is there to improve working conditions and comply with the law, not monitor every second of someone’s day.
• Selling the benefits of timekeeping to your team. Beyond employee productivity gains, explain that individual employees require proper rest periods, and their rights at work must be protected by law.

Establish internal audits and reporting procedures

Don’t wait for an audit announcement to get your records in order. Conducting regular internal audits keeps you compliant and prepared. Here’s how:

• Review time tracking on a monthly basis, looking for missed entries, unapproved overtime hours, or patterns suggesting that some employees are not getting the required rest.
• Set up automated reports to easily spot errors. Tools such as Toggl Track come with built-in reports for total hours, break compliance, and overtime trends. Review them regularly and watch out for risky patterns.
• Prepare for an audit in advance. Create a folder or dashboard that contains all the necessary documents, including a summary of logged hours per employee, system access logs (which verify that each employee has reviewed their records), notes on exceptions or corrections, and any other relevant information.

How to implement mandatory time tracking in your workplace

Now we’ve covered the basics, let’s get our hands dirty and start implementing mandatory time tracking in your organization.

Evaluate your current time tracking practices

Many businesses don’t actively track their time. Others do, but their practices are outdated. Here’s a simple process to check how you keep track of employees:

• Look at how time is being tracked today. Are employees logging start and end times, breaks, and overtime? Is it manual, automated, or a mix of both?
• Check your setup against national and EU laws. For example, does your system support real-time logging like in Greece? Are records stored for long enough, as required in Spain?
• Identify gaps and risks. Look for areas where time entries are missing or inconsistent, breaks and rest periods aren’t tracked, and employees can’t access their logs.
• Talk to your team. They may have insights on what’s working and what’s not. Ask them how easy it is to track time and if they feel confident using the system.

Choose the right time tracking tool

Your time tracking app of choice should meet the following criteria:

• Compliance with relevant EU laws (and the ability to customize the way you track your time to suit your needs)
• A user-friendly interface to increase adoption
• Accessibility for remote, hybrid, and mobile teams
• Detailed reporting with the level of granularity that meets your requirements
• GDPR compliance and data security
• Compliance-focused features such as break tracking, daily logs of start and end times, overtime tracking and approval workflows, data retention settings, and more

Create an implementation plan

Plan your implementation ahead of time to comply and make it easy for your team to adjust. Your plan will depend on your previous experience with time tracking, but it should roughly look like this:

• Set a clear timeline with milestones. For example, when to select the tool, when to start onboarding, and when to go live. Allow some buffer time for training, feedback, and on-the-go adjustments.
• Involve key stakeholders early. Legal, HR, IT, and department team leads are a great start. They can identify compliance needs and support your technical setup while also communicating the value of time tracking and its relationship to compliance.
• Run a pilot phase before going live. A structured rollout provides space to identify technical issues, gather feedback, and refine processes before implementing them company-wide.
• Prepare documentation and support materials. At this stage, you’re in a strong position to create internal guides or walkthroughs explaining how to use the system and why it’s important.
• Communicate clearly and often. Let your team know what’s changing, why it matters, and how it benefits them. Address concerns about privacy, micromanagement, or extra admin work upfront.

Train your employees

With your tools and systems in place, your employees need to learn how and when to track their hours of work. Here’s a great starting point for team training.

• Keep it simple and hands-on. Offer live demos or recorded walkthroughs showing how to log hours, track breaks, and access team time data. Use real-world examples from their day-to-day work so the training feels relevant and useful.
• Be transparent about the why. Clearly explain that time tracking is not about micromanagement. It’s about complying with legal standards, protecting employees from overwork, and improving visibility into workloads and project needs.
• Frame it as a win for them, not you. Help your team see the benefits, such as accurate overtime pay (e.g., for night work), proof of workload in case of audits, improved planning, and support for flexible work arrangements.
• Address concerns early on. Let employees voice any worries about being monitored. Reassure them that the goal is compliance and fairness, not tracking productivity minute by minute with surveillance.
• Provide ongoing support. Offer a helpdesk contact or internal resource where employees can go for assistance. Check in after the rollout to answer questions and make adjustments if needed.

Monitor and optimize the system

The work doesn’t stop once you’ve set everything up. To keep everyone tracking their time diligently, monitor progress and continually optimize your practices. To do so:

• Schedule regular system reviews. Check for missing entries, inconsistent logs, or unused features.
• Use feedback to improve adoption. Ask employees what’s working and what’s frustrating. A quick survey or informal check-in can uncover confusing interfaces, slow mobile apps, or uncertainty about break tracking.
• Make improvements based on data. If you see that certain teams consistently miss break logs or over-report hours, it may signal a need for extra training or a process tweak. Staying responsive shows your team that time tracking is a shared effort, not a top-down mandate.

Integrate time tracking with existing workflows

You shouldn’t track time in isolation from other processes in your business. Integrate your time tracking tool with the rest of your tech stack to increase data accuracy, streamline workflows, make it easy to pay people based on timesheets, and more.

• Connect with HR and payroll tools. Choose a time tracking platform that syncs with your HRIS or payroll software. This reduces errors and makes it easier to manage things like overtime pay, leave balances, and absences automatically.
• Automate wherever possible, using reminders to clock in/out, break notifications, and direct report generation can save time for both employees and managers. This keeps the system running smoothly without adding administrative overhead.
• Embed tracking into daily routines and encourage teams to log time at natural points during the day, like starting a shift or wrapping up a project. The less disruptive it feels, the more consistent your data will be.

Foster a productive and compliant workplace culture

If you don’t frame it the right way, mandatory time tracking feels like a chore. It’s up to you as the employer to introduce time tracking as something that helps everyone win instead of allowing you to micromanage.

• Emphasize fairness and transparency. Time tracking ensures everyone is treated equally, whether it’s receiving overtime pay, taking proper breaks, or avoiding excessive workloads.
• Lead by example. When managers log their time and follow the same rules, it sends a strong message that compliance isn’t just for junior staff. It’s part of how the whole company operates.
• Align tracking with your values. If your company promotes work-life balance or flexible scheduling, show how time tracking protects those commitments.

Other mandatory time tracking laws

EU member states are just some of the many countries worldwide that have laws on time tracking. If you’re in the EU but operating globally, it’s important to stay on top of time tracking legislation in other countries, too, for example:

• In the United States, under the Fair Labor Standards Act (FLSA), employers must track actual hours worked for non-exempt employees to determine overtime eligibility. The law doesn’t mandate a specific tracking method, but records must be accurate and retained for at least two years. Breaks and rest periods are governed by state law, not federal law.
• In Canada, federal and provincial laws require employers to track hours worked and keep records of overtime, breaks, and rest periods. For example, Ontario’s Employment Standards Act mandates keeping these records for at least three years. Penalties apply for failing to maintain accurate logs.
• In Australia, employers must record hours worked, start and end times, and break durations, especially for award-covered or non-salaried workers. Records must be kept for seven years and made available to the Fair Work Ombudsman upon request.
• In Japan, the Labor Standards Act requires tracking all working hours, especially to monitor for overwork. Employers may face serious consequences if employees exceed legal working hour limits or if logs are falsified.

Track working hours (and so much more) with Toggl Track

If you’re in the European Union and want to comply with the time tracking laws in your country, adopting a reliable time tracking platform such as Toggl Track is the kickstart you need.

Toggl Track does the heavy lifting and creates detailed time logs to stay compliant. The interface is simple and easy to use, so you won’t struggle to gain buy-in from your team.

Your data is safe with Toggl Track since we’re GDPR-friendly and ISO 27001-certified, and powerful reporting features make audits a breeze. As the cherry on top, Toggl Track also integrates with your favorite project management, invoicing, sales, productivity, and other tools.

Our time tracking system scales with your needs, giving you the features you need for your specific country and use case.

But most importantly, Toggl Track isn’t just about compliance. It’s a tool to make your team more productive and transparent about how and when they work.

Talk to our sales team today to learn how Toggl Track can support your team.

“Luck is what happens when preparation meets opportunity.”

This insight from Roman philosopher Seneca still rings true today, especially in business. While many businesses focus on short-term wins, the most successful look further into the future. The proof? Companies that prep for the future are 33% more profitable than those that don’t.

To produce these benefits, scenario planning is a powerful strategy that predicts potential outcomes, anticipates challenges, and keeps you ahead of the competition, no matter what the future throws at you.

This article discusses this strategic initiative in more detail, including real-life examples, and a clear step-by-step process you can follow to look into the crystal ball of your business.

TL;DR — Key Takeaways

• Scenario planning is a proactive strategy businesses use to explore and prepare for different possible futures.
• Scenario planning is more important than ever due to technological advancements, climate changes, economic downturns, and other factors.
• A good scenario planning process includes six key steps: identifying driving forces, defining critical uncertainties, developing different scenarios, analyzing their implications, creating action plans, and, lastly, monitoring and updating the scenarios.
• Common scenario planning mistakes? Avoid planning too far ahead, adding too many variables, planning only for the best- and worst-case scenarios, and not assigning ownership for the main scenario tasks.

What does scenario planning actually mean?

Scenario planning is a strategic methodology that businesses use to prepare for multiple future events. Instead of asking, “What will happen?” it asks, “What could happen, and how will we respond?”

The approach has its roots in military strategy, but futurist Peter Schwartz, a former Shell executive, is credited with introducing scenario planning to the business world in the 1980s. As global resources came under pressure, he recognized the need for companies to challenge their assumptions and build strategies that withstand uncertainty.

“Scenarios are the most powerful vehicles I know for challenging our ‘mental models’ about the world and lifting the blinders that limit our creativity and resourcefulness.” — Peter Schwartz, The Art of the Long View

At its core, scenario planning helps you:

• Identify driving forces
• Determine critical uncertainties
• Create multiple scenarios
• Test strategies
• Plan responses

Scenario planning example

Imagine you have a CRM tool for your real estate business, and want to use scenario planning to understand what would happen if a new competitor disrupts the market. The different scenarios would include:

• Best-case scenario: You quickly identify the competitive threat, adjust your pricing, and double down on brand loyalty and customer service to retain market share.
• Worst-case scenario: The competitor’s innovation shakes up the market and pulls customers away. In response, you invest in product upgrades, launch new features, and shift focus to niche segments with little presence, carving out a new competitive edge.
• Moderate scenario: The competitor gains traction, but your company differentiates through product quality and brand trust. You roll out targeted marketing campaigns and loyalty programs to reinforce your value and keep customers engaged.

Why scenario planning is becoming increasingly important for business success

Scenario planning gives your business a structured way to navigate uncertainty. It helps leadership plan, prioritize long-term strategy, and make faster, more confident decisions. All of these benefits are vital in 2025.

💹 Economic conditions shift overnight

The market is more uncertain than ever, no matter where you are and what you do. In April 2025, the United States imposed tariffs on imported goods, driving up costs, increasing inflation, and potentially unemployment rates, among many other things.

Companies that map out economic scenarios in advance are in a stronger position to adapt. Whether that means adjusting pricing, restructuring costs, or pausing expansion, the planning is already in place.

🦾 AI is changing how work gets done

Artifical intelligence is already reshaping entire industries. Leaders like Bill Gates claim artificial intelligence will replace a variety of roles, from teachers to doctors, within the next 10 years.

This kind of disruption isn’t something you can wait to address. Scenario planning helps teams think through how emerging technologies could affect talent needs or customer expectations (and what to do next).

🌪️ Climate risks are now business risks

In 2024, average global temperatures exceeded the 1.5°C threshold identified in the Paris Agreement as a critical limit. Since then, extreme weather events such as severe droughts, deadly floods, and powerful cyclones have become more frequent and severe.

Climate-related disruptions must be accounted for in any serious business plan, including how they impact your supply chain or energy consumption. When you forecast future scenarios based on environmental risk, your teams have a framework to stay operational and responsive.

Equally, when big opportunities arise, scenario planning lets you foresee possible outcomes so you know which route to take.

When scenario planning works: Shell and the 1973 oil crisis

In 1973, a global oil crisis forced companies to cut production and raise oil prices. While many struggled, Royal Dutch/Shell was prepared. Since the late 1950s, Shell had been gathering historical data and exploring long-term possibilities through “long-range studies.”

By 1965, these had evolved into structured scenario planning exercises, each simulation forecasting different possible futures for the oil industry. One possible scenario predicted a major supply disruption. Acting on that, Shell switched to producing light fuels, helping them become one of the few companies that made it through the oil crisis.

When scenario is missing: Kodak’s decline

Kodak dominated the global camera and film market for much of the 20th century, but its downfall began long before digital photography took over. In 1975, Kodak’s engineer created the first digital camera. Instead of exploring what the innovation could mean to the company and the broader industry, leadership decision-makers shelved the idea.

Meanwhile, competitors like Canon, Sony, and Fuji leaned into the digital shift throughout the 1990s. By the time Kodak entered the digital market in the early 2000s, the company was already behind. It filed for bankruptcy in 2012.

Toggl’s step-by-step scenario planning process

Toggl has been around since 2006, and we’ve weathered a few storms. As a remote company in an age when remote work wasn’t yet popular, scenario planning has been key to how we’ve grown and built resilience across multiple product lines and markets.

Here are some of the practical ways we use scenario planning.

Step 1: Identify driving forces

Good scenario development requires looking into internal and external factors that could impact your operations.

External factors

Use a PESTLE analysis to organize the external forces that could shape your future:

• Political factors:
  Consider how changes in government policy, trade regulations, or tax laws could affect operations.
  Example: A new regulation on carbon emissions may impact logistics and supply chain strategies.
• Economic factors:
  Evaluate market conditions like inflation, interest rates, and employment levels.
  Example: An economic downturn could reduce consumer spending, forcing you to adjust pricing or inventory.
• Social factors:
  Look at evolving demographics, values, and consumer behavior.
  Example: A growing preference for sustainable products may push you to change suppliers or product design to become more environmentally friendly.
• Technological factors:
  Assess how innovations or automation could disrupt current processes or create new opportunities.
  Example: The rise of generative AI may change how companies approach customer support or content creation.
• Legal factors:
  Keep track of changes in laws that could impose restrictions or open new markets.
  Example: New data privacy laws such as GDPR might require updates to CRM systems or marketing consent policies.
• Environmental factors:
  Consider factors like climate change, resource availability, and environmental regulations.
  Example: A drought affecting crop supply might disrupt a company’s food manufacturing pipeline.

Internal factors

Internal factors reflect your organization’s current capacity, limitations, and readiness to respond to change. They’re equally important as external factors when assessing the potential future of your business outcomes.

• Team capacity and skills:
  Understanding your workforce is essential for assessing how well your business can respond to future challenges.
  Example: If your scenario involves adopting new technology, but your staff lacks technical expertise, you must plan for hiring or training.
• Operational efficiency:
  How smoothly your internal systems can determine whether you can handle disruption or growth.
  Example: A company with outdated manual processes may struggle to pivot quickly in a crisis or expansion scenario.
• Technology and infrastructure:
  Your existing tech stack can either support rapid adaptation or become a barrier to change.
  Example: A business running on legacy systems may face delays in rolling out new services or meeting compliance needs.
• Financial health
  You need a clear picture of your financial position to assess risk and prepare realistic responses.
  Example: A financially healthy company might pursue growth in a high-risk scenario, while another may need to focus its financial planning efforts on cost-cutting and survival.
• Company culture and adaptability:
  The mindset and morale of your team will significantly impact how quickly and effectively your organization responds to change.
  Example: A rigid, top-down culture may resist strategic pivots, while an adaptive culture thrives on testing and iteration.
• Leadership and decision-making structure:
  Scenario planning requires timely and informed decisions, so it’s critical to understand how decisions are made and who makes them.
  Example: Companies with decentralized decision-making might be more agile in complex scenarios, while centralized ones may act more consistently but more slowly.
• Brand reputation and customer loyalty:
  Your public perception can influence what you can get away with during uncertainty.
  Example: A strong brand might retain customers even through major changes, while a lesser-known one may struggle.
• Innovation pipeline:
  Your ability to generate and implement new ideas determines how well you can seize opportunities or mitigate risks.
  Example: If a scenario suggests a market shift, a business with a healthy R&D function can pivot faster.

Step 2: Define critical uncertainties

Critical uncertainties are events or shifts that are both high-impact and highly unpredictable, such as sudden major changes in regulations or large fluctuations in demand. These variables dramatically alter your business’s future, but you can’t control or forecast them with precision.

Here’s what critical uncertainty looks like in different industries:

• Retail: Shifts in consumer spending due to inflation or economic downturns
• SaaS and tech: Introduction of new data privacy or AI regulations
• Manufacturing: Disruptions in global supply chains due to geopolitical events
• Finance: Unpredictable changes in interest rates or monetary policy
• Healthcare: Regulatory changes affecting insurance coverage or service models
• Energy: Government incentives or penalties related to green energy
• Education: Uncertainty around funding models or enrollment trends

Step 3: Develop scenarios

Based on your findings, develop plausible scenarios — fully structured stories telling you what could happen based on different outcomes. When doing a scenario analysis, most businesses focus on three possibilities:

• Best-case scenario: Everything goes in your favor. The market conditions are ideal, risks are minimal, and growth accelerates.
• Worst-case scenario: Key uncertainties break against you. Disruptions happen, resources dry up, and tough decisions are required.
• Moderate scenario: A realistic middle ground where some challenges emerge, but they’re manageable with the right adjustments.

Example of a startup preparing for Series A funding

Imagine you’re leading a growing SaaS company gearing up for a Series A funding round. The outcome of that round is your critical uncertainty; after some careful brainstorming, you’ve mapped out three possible scenarios:

• Best case: The funding round exceeds expectations. The team expands rapidly, enters new markets, and fast-tracks product development.
• Worst case: The funding is delayed or falls through. The company pauses new initiatives, cuts nonessential expenses, and pivots toward bootstrapped growth or alternative funding sources.
• Moderate case: Funding is secured but below your desired target. Growth continues at a steady pace with more conservative hiring and rollouts.

Each scenario outlines what might happen and what the business will do if it does.

The former CEO of Intel, Bob Swan, said: “Scenario planning is not just about preparing for potential downsides; it is about equipping organizations to act on strategic opportunities and mitigate risks to the long-term strategy and vision.”

Planning tools like Toggl Track can operationalize your scenarios by showing how your team spends time and effort across each scenario. You can:

• Set up separate projects for each scenario (e.g., “Scenario A: Aggressive Growth,” “Scenario B: Lean Plan”)
• Track time spent on related planning, resource modeling, or research tasks
• Use tags to categorize activities by team, focus area, or priority level
• Analyze reports to compare how much effort is going into preparing for each path in a given time frame

Step 4: Analyze implications

Next, you’ll learn how each possible scenario impacts your organization’s goals, resources, and day-to-day operations. This lets you move from hypothetical business planning to real-world consequences. Here’s what to assess:

• Strategic management goals: Would your company’s objectives and goals need to shift? Are timelines for product launches, revenue targets, or market entry still realistic?
• Resources: How would each scenario impact your available budget, tech infrastructure, or partnerships?
• Team operations: Would staffing levels need to change? Are some teams under- or over-resourced in specific scenarios?

Example of a SaaS startup facing different funding scenarios

Best-case scenario (oversubscribed investment round)

• Goals: Accelerate hiring and product roadmap
• Resources: Increase marketing and R&D budgets
• Team: Build out sales, customer success, and development teams at a fast pace

Moderate scenario (partial funding)

• Goals: Maintain steady growth with new targets
• Resources: Prioritize spending on core features and key hires rather than investing in new ventures
• Team: Maintain lean operations with careful hiring

Worst-case scenario (no funding)

• Goals: Shift from growth to survival and a focus on retention and sustainability
• Resources: Freeze budgets, look for alternative funding or partnerships
• Team: Pause hiring, potentially reduce headcount, and redistribute existing roles

Step 5: Create action plans

The penultimate step of the process is to develop a clear action plan for each possible outcome. The plan should describe what to do and precisely when to take action, with the help of triggers, actions, and owners:

• Triggers: What signals that a scenario is unfolding?
• Actions: What happens when it does?
• Owners: Who is responsible for what?

Example of a SaaS startup translating scenarios into action

Best-case (oversubscribed round)

• Actions: Begin hiring for main roles, expand marketing efforts, and accelerate product roadmap
• Triggers: Signed term sheet above $5M; board approval for hiring plan
• Tasks: Post five new roles, allocate $50K for user acquisition, initiate MVP for premium features

Moderate-case (partial funding)

• Actions: Prioritize critical hires, trim marketing spend, focus on improving the core product
• Triggers: Signed term sheet under $3M; revenue growth below 10% QoQ
• Tasks: Freeze all nonessential roles, reallocate retention campaign budgets, and delay the beta launch

Worst-case (no funding)

• Actions: Pause hiring, cut operational costs, explore revenue-based financing
• Triggers: 90 days with no investor commitments; burn rate exceeds runway projections
• Tasks: Notify vendors of spending reduction, shift focus to upselling current customers, and explore grant programs

Step 6: Monitor and update

With your action plans set in place, don’t wait for the future to unfold. Circumstances change, and real-world developments can turn something unlikely into a matter requiring urgent attention.

As the CEO of JLL recently said, “I talk to people who say this is the worst time ever, and my next meeting could be with somebody who says this is the best time ever. We will see some of our best deals ever over the next 12 to 24 months.”

Example of a SaaS startup tracking and updating its strategy

For our tech startup preparing for different Series A outcomes, this would involve:

• Watching for key signals: Review investor responses, burn rate trends, and revenue performance weekly
• Adjusting action plans: If investor interest stalls or a trigger threshold is hit (e.g., runway drops below six months), the team should pivot to the worst-case playbook
• Updating scenarios: If a new opportunity arises (like a potential acquisition or government grant) that could open up an entirely new path, the company can add or revise scenarios accordingly

Toggl products can help here, too.

• Toggl Track’s reporting features monitor the time and resources dedicated to each scenario or task. These spot underinvested areas and confirm your team is executing on the right plan.
• Tags and custom fields track which scenario a task belongs to and generate reports to compare how priorities shift over time.
• With Toggl Focus, teams can block out time specifically for strategic reviews, planning updates, or course corrections, so scenario adjustment becomes part of the regular workflow rather than an afterthought.

Common mistakes leaders make with strategic planning

Figuring out different scenarios for the future of your business is incredibly valuable, but only when you avoid some common curveballs:

Planning too far ahead

Long-term thinking is at the heart of scenario planning, but pushing too far into the future can be a trap. As Oliver Baxter of Herman Miller’s Insight Group puts it:

“Sometimes when we’re discussing futurology or scenario planning, we can get too caught up thinking ‘What’s the next big thing? What’s coming down the line?’ In history, sometimes we jump too far ahead and miss some of the little things along the way.”

He points to a famous example: in 1969, humans landed on the moon. But it took another two years for someone to put wheels on luggage — an everyday problem hiding in plain sight. The lesson? Not every leap forward needs to be dramatic. Small, incremental improvements can reshape the business landscape just as much as moonshots.

The solution: Balance big-picture thinking with grounded, near-term planning. Build scenarios around the next 6–24 months, then revisit and revise frequently. If you’re always planning for the far future, you may miss what’s already happening in front of you.

Overloading scenarios with too many variables

Millions of factors and variables could impact any given scenario, and you’d struggle to predict some of them. After all, who would have believed a global pandemic was on the menu in 2020?

Adding too many variables can make scenarios overly complex and difficult to interpret or act upon. Teams may drown in the details and fail to focus on the most important strategic insights.

The solution: Keep scenarios focused on a few key drivers of change. This is typically a handful of variables like market demand, technology disruption, or regulatory shifts. For example, instead of trying to model 10 different economic indicators, prioritize the top ones that have the biggest potential impact on your business.

Planning only for worst-case or best-case scenarios

Focusing only on the extremes can seem attractive, but it misses the possible scenarios that happen in the middle.

The solution: Include several plausible scenarios, including moderate or mixed outcomes. Scenario planning is most powerful when it helps teams navigate uncertainty, not just survive disasters or chase ideal conditions for growth.

As the former CEO of Cisco said, “We’re going to go into an economic slowdown… So companies have to prepare for a bumpy landing, do scenario planning, and be prepared to act with agility,” which means that every company should prepare for multiple scenarios at any point in time.

Neglecting to assign clear ownership for scenario tasks

The difference between proper scenario planning work and a scenario planning exercise is assigning stakeholders. Even well-designed plans can fail if no one is accountable for executing or monitoring the response when a scenario starts to play out.

The solution: Assign roles and responsibilities for every scenario outcome. Clarify who will monitor indicators, trigger action plans, and communicate changes. Tie these responsibilities into your regular workflows.

For example, you can use Toggl Track’s team features to assign specific scenario tasks to individuals (e.g., “If supply chain delays increase by 15%, Alex monitors and triggers vendor switch protocol”). Add descriptions and comments in task timers so everyone stays aligned and accountable.

How Toggl enhances scenario planning

Toggl Track is an excellent piece of software to help your scenario planning efforts, especially if your data is scattered across different tools and platforms.

With Toggl Track, you can…

• Use time tracking for tasks related to scenario planning to find out how efficient your teams are
• Create reports that show how productive individuals and teams are and which resources they spent across different plans
• Create collaboration dashboards displaying what everyone does at any given point in time

Toggl Focus then comes in to finish the job. You can use this tool to make critical decisions and minimize distractions. With the scenario action plans ready, Toggl Focus lets you execute them properly by prioritizing what matters.

Focus on what matters

Scenario planning helps you prepare for uncertainty instead of winging it. It’s a structured process that readies you for anything in your country, industry, or business environment.

Get started today by analyzing your driving forces and setting a strong foundation for your scenario planning efforts.

Toggl Track delivers key insights about how you spend time in your business. Talk to our sales team today to find out how our time reporting features can help you and how they fit into the rest of the Toggl tool stack.

Take a look at any large company strategy, and we guarantee it’ll include a mention of these two things:

☝️ Increasing sales and driving growth

✌️ Managing costs and optimizing efficiency

Bringing in more money and reducing expenses are the two core building blocks of driving profitability. No arguments so far. But with external pressures such as inflation, rising operating expenses, and increased competition for new customers, achieving a healthy bottom line and improving a company’s profitability has never been harder.

If you’re a business owner, executive, finance professional, or Chief Revenue Officer (CRO) looking for new and innovative ways to boost profits, this is the article for you. After we’ve analyzed why achieving profitability is so challenging in 2025, we’ll explore ways to redefine your profit strategy and improve your chances of business success.

TL;DR — Key Takeaways

• In a high-inflationary economy, prices are rising fast, making it harder to drive profitability.
• With the average company’s net margin already squeezed to just 8.54%, reducing your prices isn’t a sustainable way to boost your profit levels.
• The best CROs manage costs by optimizing capital allocation, eliminating resource inefficiency, and implementing automation and data analytics while creating additional customer value through upselling, cross-selling, and bundling products.
• For most businesses, labor costs are the highest balance sheet numbers, so why not use Toggl Track to maximize your team’s productivity?
• Built on accurate time recording data, Toggl Track Insights unlocks crucial data that improves productivity, reduces waste, and drives better allocation of project resources.

Profitability in a challenging economy

Since the COVID-19 pandemic, price increases have put immense pressure on businesses large and small. During this time, yearly inflation has ranged between 4% and 8%, labor costs continue to increase by around 4.5% per quarter, and some businesses have reported a 40% increase in supply costs.

Higher prices drive higher business costs, making it increasingly tough to maintain profitability. But for most shareholders, investors, or senior executives, the data doesn’t matter — they’re still pushing their teams to achieve strong profit margins.

Focusing on new and innovative profitability strategies is essential to achieving your business goals. Whether finding ways to cut costs or implementing new tactics to accelerate growth, the best companies hit those profit numbers despite tough market conditions.

What are good profit margins these days?

In a world of rapid price rises, businesses have to be realistic about their profit margins. The profitability of your business was previously based on squeezing your margin, but unfortunately, there’s no more fat left to squeeze, so raising prices will only make you less competitive.

A ‘healthy’ profit margin looks different from business to business, often driven by your industry. Let’s take a look at some average 2025 net profit margin data from the NYU Stern Business School:

• Advertising — 3%
• Computer Services — 4%
• Farming/Agriculture — 5%
• Hospitality — 11%
• Information Services — 6%
• Software — 20%
• Utilities — 15%

Compare this with an average net profit margin of 8.54% across all industries, and you’ll get a sense of what a ‘good’ profit margin looks like for you.

As the cost of goods continues to rise, we predict the average profit margin will squeeze further, impacting financial performance. This will create an increased drive for operational efficiency and growth in new markets.

Other key metrics for measuring financial success

Profit margins are important, sure, but they’re not the only key metric influencing profitability. Some other metrics to assess the health of your business finances include:

• Cash flow: Businesses with a healthy cash flow prove they’re generating revenue and have demand for products and services. If cash flow is low, you might need to focus on driving sales before focusing on profit optimization.
• Operating expense ratio: OER compares your expenses relative to revenue. Most businesses aim for a 60-80% OER, so if you’re above this, consider becoming leaner and reducing costs. If you’re below or within this range, you’re doing a great job of managing resources effectively to drive profitability.
• Operating/gross profit: Businesses with a good gross profit have a strong customer base and ongoing demand. If gross profit is high while net profit is low, this may signal excessive operational costs or suboptimal pricing, especially if taxes or VAT are distorting the bottom line.

Remember, while profitability is a financial metric, non-financial metrics also pinpoint issues that may influence your profitability. Let’s look at some examples:

• Customer loyalty: Metrics such as customer retention rate, repeat purchase rate, and customer lifetime value (CLV) provide insight into your existing customers’ stickiness, allowing you to project better cash flow and revenue.
• Customer satisfaction: Similarly, metrics such as Net Promoter Score (NPS) deliver insights into how your customers feel about you and your products. If sentiment is low, you’re walking on uncertain foundations that could undermine profitability.
• Staff turnover: The average cost of hiring rose to $4,700 in 2023, up 14% from 2019. Staff turnover is a big indicator of operational expense, so the lower your turnover, the less you’ll have to shell out on recruitment fees.

Challenges to increasing profitability

Even with the right metrics, best customers, and high gross profit margins, increasing profitability is no easy task. This is because the global economic market is still so uncertain, with positive forecasts for growth (3.3% in 2025), offset by lingering inflation rates of 4.2%.

Let’s explore the leading profitability obstacles every business is facing in 2025 and why overcoming them requires intentional, out-of-the-box strategies.

Rising operational costs

As we’ve already seen, rising prices are putting pressure on operational costs, and that’s only set to continue into 2025. Increases in supply chain, raw materials, and recruitment costs aside, as inflation rises, employees demand higher salaries to maintain their quality of life.

Keeping rising costs under control requires creative solutions, with many businesses completing cost audits to identify costs that can be stripped out of their operations. Alongside this, businesses are also looking at ways to reallocate resources, develop partnerships, and outsource to reduce costs further.

Increasing market competition and pricing pressures

Rising prices lead to greater competition for new customers, with everyone fighting harder than ever to increase their market share. While cost is a big driver, companies are looking at other schemes such as referrals, partnerships, and cross-selling to maximize their customer value rather than spending big on new acquisitions.

Inefficient resource allocation

The old saying ‘work smarter, not harder’ has never been truer for modern businesses as they look for ways to do more with their limited resources. Mismanaged resources, such as time, money, or labor, lead to operating cost inefficiency. You’ll need to address each of them to stay profitable.

Many businesses are working to overcome common pitfalls such as overstaffing, unnecessary governance, and manual processes to optimize the resources they need to deliver their business operations.

Talent retention and labor costs

As mentioned, hiring and onboarding costs drain company finances, and recruitment costs only increase in line with inflation.

Investing in employee engagement, fair compensation, and continual professional development for staff is far more cost-effective than costly re-recruitment and onboarding, reducing expenses and driving increased profitability.

5 strategies for increasing gross profit

While profitability is difficult to achieve, it’s not impossible in 2025. Often, it’s about stripping things back to basics to uncover opportunities to reduce costs or drive additional revenue while being disciplined about the spending choices made across your businesses. Here are some practical tips to improve your bottom line.

1. Optimize capital allocation

A clear strategy for when, where, and why you spend money is fundamental to driving profitability. While all businesses must evolve, not every project or initiative is essential, meaning sometimes it’s better to say no.

Get around this by establishing a robust process around business cases, investment appraisals, and benefits tracking for new projects. Every project should drive a clear benefit (ideally financial!) that nudges the business toward a high-profit position.

For initiatives already underway, project managers and sponsors must be disciplined with their project cost management, sticking to their forecasts to ensure a positive ROI.

2. Leverage data for better decision-making

We’ve never had more data at our fingertips, so if you want to drive profitability, you must learn to use it. Data analytics can identify patterns, root out inefficiencies, and uncover new product opportunities — which are all essential for driving growth.

For example, you can use data analytics tools over the top of your financial statements to identify patterns of costs throughout the year or by department, uncovering the root cause of unnecessary spending.

Given labor costs are often an organization’s largest expense, tools like Toggl Track provide real insight into what your team is working on and how to improve their productivity.

Once your team uses timesheets, our newly revamped Reports tab is where you can go to dive deeper into your labor costs, identifying trends and opportunities to improve productivity.

Here’s a brief look at how we do it:

3. Streamline operations and reduce inefficiencies

Rooting out business inefficiency is another way to stifle costs and optimize resources. Reviewing operational processes using Lean Six Sigma, Systems Thinking, or Value Stream Mapping is a great way to do this — each highlighting bottlenecks, unnecessary touchpoints, and opportunities for automation and simplification.

Alongside this, optimizing team structures by reviewing spans of control, hierarchical or matrix structures, or implementing a renewed RACI chart boosts efficiencies and drives productivity.

How does this look in practice? If you completed a Lean Six Sigma assessment of a customer service process and identified some process steps that could be automated by your CRM system, you could reduce headcount (and cost) within the department.

4. Invest in employee training and engagement

Employee development is beneficial for morale and a great way to improve productivity. This sort of development is especially important in startups and small businesses, where teams often have to wear many hats without the right training to do those roles properly.

Upskilling also boosts satisfaction and reduces turnover, which, as we’ve seen, is a great way to avoid costly recruitment fees.

5. Enhance customer value through pricing and bundling

Businesses are always looking for new and innovative ways to increase revenue with pricing strategies that grow the value per customer.

A lot of this is underpinned by good market research, introducing new products through upselling and cross-selling, or merging existing products into larger bundles.

Common bundle models include BOGOF, buy-more-pay-less, or locking popular products into a ‘bundle-only’ sales model. Strike the right balance to ensure the bundle is perceived as a ‘better price’ by the customer and deliver that all-important increase in profitability.

The evolving role of technology in profitability management

Technology and data play a big role in driving profitability. Whether optimizing costs or finding ways to boost sales and revenue, several great tools on the market help CROs (and their colleagues) boost profitability.

Let’s explore some key ways technology helps teams boost profit and productivity.

⚡ Automation

Automation reduces repetitive, admin-heavy actions that are a time-suck for your employees. Most modern software tools include elements of automation, so this should be standard across all of your business functions. Examples include:

• Websites that take customer inquiries and automatically populate your CRM
• Sales tools that automatically engage with prospects based on their actions
• ERP systems that convert orders into dispatched deliveries
• Accounting systems that automate invoice generation and inventory tracking
• Customer service tools that answer frequently asked questions without human support

New to automation? It’s usually best to start small with automation so your business processes work as expected. From there, you can scale up to maximize the effectiveness and ROI of your technology investment.

📈 Financial forecasting and analysis

Many finance and budget management tools include complex algorithms to plan and predict the world ahead of you. Specifically, many budget tools automatically populate your strategic plan by combining previous spending data and future external market trends.

With the rise of artificial intelligence, these tools are becoming increasingly sophisticated. They predict risk events and issues before they occur and offer recommendations on how to optimize costs.

⏱️ Time and resource management

Time tracking and resource management tools keep a watchful eye over workforce efficiency, identifying resourcing bottlenecks and opportunities for optimization.

We frequently see this with our customers at Toggl Track, where accurate time data helps teams drive actionable insights that uncover inefficiencies, redistribute workloads effectively, and enable them to make more informed financial decisions.

Want to learn more? Here’s how Talk Shop Media used our Toggl Track profitability report to improve the agency’s productivity.

🦿 Digital optimization

When it comes to driving digital efficiency, there is a whole host of tools focused on improving your website conversion. Whether A/B testing, click rate optimization, website heatmaps, or live chat support, tools that optimize your digital experience are worth their weight in gold.

Simple adjustments to your website can skyrocket your revenue and make big strides in your profitability with minimal effort.

Focus on what matters

In a world where costs are rising and competition is increasingly fierce, driving profitability is challenging for even the most talented CROs.

While many businesses focus on simply cutting costs, you must also find ways to improve project profitability, maximize customer value, and deploy resources more effectively.

Accurate time tracking is the key to profitability, enabling you to lift the lid on inefficiencies, resource optimization, and billing rates to improve your bottom line.

Why not sign up for a free Toggl Track account to test our timesheet, analytics, and profitability insight features? Better yet, if you’re a team of 20+, you can schedule a demo with our team to get personalized advice on how to meet your profitability objectives.

Time tracking is only as good as the insights it gives you.

Whether you’re tracking profitability, productivity, revenue, or team workload, reporting in Toggl Track delivers instant, actionable insights — without the complexity. You can easily zoom in on the details or step back for high-level overviews. With highly customizable filters and flexible report views, you get deep analysis of your time and revenue data — all while keeping everything intuitive and easy to navigate.

Let’s see what you can do in each of the Reports tabs.

Summary Report

👉 Get a quick high-level overview

Instantly access key productivity and profitability metrics, including total tracked hours, billable vs. non-billable work, total billable hour value, and performance trends.

Example of the Summary Report

Detailed Report

👉 Get a comprehensive view of all Time Entries

The Detailed Report provides a full view of time entries. Using Filters, you can conduct a comprehensive time entry audit, verify billable hours, and prepare accurate invoices.

Here’s how to make the most of it:

• Identify missing data in time entries by using the “is empty” condition in Filters.
• Exclude non-billable activities by applying “Does not contain” or “is not” filters — perfect for omitting meetings or internal admin time.
• Review related time entries together with the “Starts with” condition.
• Detect anomalies by filtering out time entries shorter than 1 minute or longer than 8 hours using the Duration filter.

Workload Report

👉 Timesheet view to evaluate your resources

Workload reports help you understand how time is distributed across your team, projects, and clients.

• Visualize workload by time or revenue: Assess team workload based on tracked time or revenue generated.
• Break down workload by Member or User group, Project, Client, Task or Tags. See where resources are allocated and optimize distribution.
• Revenue-based workload analysis: Identify high-revenue contributors and balance workload for improved profitability.

Profitability Report

👉 Get multi-level profitability analysis

We’ve made significant improvements to how you can analyze profitability. Analyze profitability, revenue, and labor costs — breaking it down by Members, User Groups, Projects, Clients, Tasks, or Tags for a more detailed view.

This way, you are now more equipped to improve pricing, staffing, and project budgeting decisions.

My Reports

👉 Build custom reports to fit your stakeholders’ specific needs

Here you’ll find all your saved and custom reports.

• Customize reports to display only the most relevant data.
• Visualize your data with a range of options to present insights clearly.
• Share reports from Toggl Track directly with your team and stakeholders.

A custom report: End-of-month financials, featuring client data

We get it. Choosing the right project management tool for the type of work you’re doing and the teams doing it can be massively overwhelming. What features do you need? Is the platform easy to navigate? Does it integrate with the rest of your tech stack? And, of course, how much does it cost?

There’s a lot to consider, and you don’t want to melt your brain trying to figure it all out. That’s why we’ve compiled this list of the 40+ top project management software tools to plan, track, and deliver great projects (updated for 2026!)

For each tool, we’ve covered their:

• Key features.
• Ideal use cases.
• Benefits and drawbacks.
• Price points and free plans (if available).

This is all backed by real customer reviews, as well as our experience, so you have everything you need to make the right decision. We’ve also recommended the right tool for the right team — whether you’re a budget-constrained startup or a heavy-hitting enterprise.

Let’s get going!

What to look for in the perfect project management tool

Before we jump into the tools themselves, it’s important to consider what makes a great project management tool. While you’ll have your own requirements, here are the common areas we recommend you think about when making your decision:

• Project & Task Planning: The backbone of any project management tool is how you plan your project and break it down into manageable tasks. You can do this in many ways (e.g., lists, Kanban boards, and Gantt charts), so make sure your chosen tool supports the task management format you like.
  
• Resource, Capacity, and Budget Management: All projects need resources and cash to make them happen, so make sure your tool can support you in that. For resourcing and capacity planning, focus on tools that give you clarity on who’s doing what (and when), with budget features that enable you to best manage your money as the project progresses.
  
• Time Tracking: The foundation of any great project is doing things at the right time, and that’s where time tracking is essential for a well-run project. Look for tools that have strong time tracking features, with the ability to turn timesheets into invoices if you bill by-the-hour.
  
• Reporting & Dashboards: Status reports are a big part of project management, and the best tools take the admin away when keeping stakeholders updated. Check that your tool aligns with the reporting you’ll need to do as a PM.
  
• Methodologies: While many tools are adaptable, make sure your tool fits your chosen project methodology/framework. If you’re working heavily agile, you might need a tool that’s sprint-based, whereas waterfall teams might prefer a Gantt-style interface.
  
• Integrations: Your project management tool won’t operate in isolation, so think about other systems it may need to integrate with. This could be an HR tool (e.g., Workday), finance tool (e.g. Xero), or collaboration tool (e.g. Slack).

The best project management tools for teams, freelancers, agencies & more (30+ options)

Now that you know what makes up a great project management tool, it’s time to get started! Use our handy filter below to find the tools that are best for your team’s needs 👇👇👇

Todoist

Hive

From $5 per user/mo (Free plan available)

Hive is a simple and versatile powerful project management tool that connects teams on projects without complexity. With options for Kanban, Gantt, list, and calendar views, it gives flexibility at a project level, while offering a comprehensive portfolio-level overview.

Features

• Create and manage tasks with Kanban, Gantt, list, and calendar views
• Quickly switch between personal and team views
• Monitor performance against business goals
• Use Buzz AI and templates to streamline everyday tasks

Is Hive right for you?

Hive is great for small teams that want an easy, yet flexible tool for managing projects. But it may lack the deeper functionality of solutions like Wrike and Asana for more complex projects.

Pricing

Hive’s free plan is great for up to 10 users. For additional features or multiple projects, prices start at $3 per user/mo, ranging up to $6 per user/mo for the “Teams” plan.

Reviews

• “Hive features a mostly intuitive UI across browsers and desktop/mobile devices with its Hive App. The service makes tracking project status and related notes effortless, while offering customizable status fields and columns.” – Steven, Broadcast Engineer
  
• “I’d like to be able to customize my board more. Sometimes the app takes a while to update. It lacks some management-related features, and I can’t insert multimedia content into cards.” – Marco, Marketing Specialist

Airtable

From $20 per user/mo (Free plan available)

Airtable is a spreadsheet-style productivity and automation tool that doubles up well as a flexible project management companion. With features for task and team management, it sets a strong foundation, using its flexible app engine to automate team workflows, report on progress, and manage resources.

Features

• Task management and tracking at project and program level
• Simplify resource management to quickly know who’s working on what
• Automate processes with project templates and workflows
• Build intuitive dashboards to quickly report on the metrics that matter to you

Is Airtable right for you?

Airtable is great for project teams that are used to spreadsheets and repeat similar projects time and time again. But if you want more advanced and dedicated project management features, other solutions on this list will likely be easier to start with.

Pricing

Airtable has a free plan for individuals and small teams of up to five. Plans start from $20 per user/mo, adding Gantt charts, more storage, and integrations.

Reviews

• “Airtable allows you to create workflows and organize data the way you want for your project. This is truly an all-in-one platform with so many features that I haven’t even scratched the surface after months of usage.” – Marc, Video Editor
  
• “The interface functions still need some work, making them more available and functional on the mobile app. There have also been situations where I can’t quite get the data I need due to Airtable’s limitations.” – Verified User, Non-Profits

5 Project management software types for specific needs and use cases

As you can see, there’s tons of solutions that fall under the “project management software” category. Here’s a slighty different breakdown by different criteria that can also make your search easier.

1. Best free project management tools

Many project management platforms offer free plans, typically with some limitations on features, users, or projects. For freelancers and early-stage startups, these plans often provide just enough to get started. Upgrading to entry-level paid options, often available for under $10 per user/mo, can unlock valuable extras that significantly enhance productivity and collaboration.

Another route? How about open-source project management software, which comes with no subscription fee, although you do have to take care of hosting yourself. This is unlikely to be practical unless you’re an IT professional.

Examples from this guide include Toggl Focus, Trello, and Asana.

We have compiled a separate list of the best free project management tools, which may suit your needs if you’re on a limited budget.

2. Best marketing project management tools

Marketing campaigns need precise planning and execution to succeed. Similarly to web design projects, you often need to collaborate with external partners and vendors, too.

Whether you’re an agency or an internal marketing team, you’ll need a project management tool to plan, track, and manage your marketing campaign as well as collaborate with internal and external teams.

Examples from this guide include Toggl Focus, Adobe Workfront, and Basecamp.

We have compiled a list of the best marketing project management tools – check it out.

3. Best Kanban project management tools

Kaban-based project management makes it really easy to visualize the work on your shared to-do list, keeping everyone in the loop on what’s happening now and what’s to come. In addition, Agile software development teams use board-based project management to manage sprints and product backlogs.

Examples from this guide include Toggl Focus, Trello, Kanban Tool, and monday.com.

Kanban tools come with a simple, visual board that shows your project’s progress. Take a look at the best Kanban project management tools.

4. Freelance project management tools

Freelancers need light-weight project management. Often freelancers work alone, so they rarely need collaboration features.

But they still need to plan their work and vacation time. In addition, freelancers also use project management software to communicate project progress to clients.

Examples from this guide include Toggl Focus, Trello, and nTask.

Take a look at the best freelance project management tools available today.

Manage your projects with Toggl Focus

There’s no one best project management software. The choice depends on the features you need, your budget, and your project methodology. Whatever you choose, you want to make sure that your team actually enjoys using the software.

Use the tools and filters at the top of this article to shortlist the tools that fit your workflow. Most of these project management tools come with a free plan, just like Toggl Focus, so why not give us a try for free? We promise you won’t regret it!

Frequently asked questions (FAQs) about project management software

To finish off, here are some of the top FAQs we see and hear when people come to ask to find their next project management software tool.

What is project management software?

Think of it as your project team’s ecosystem. It’s a centralized place for you to plan, track, and deliver your projects from start to finish, using features such as planning, task management, and time tracking. Instead of hunting through messy email threads or outdated spreadsheets, it gives everyone a single source of truth for what’s happening and when.

What does project management software do?

Put simply, it organizes the “who, what, and when” of your projects. It gives you and your team a central place to break down big goals into manageable task assignments, set deadlines, track time, costs, and capacity, and report your progress. 

For that bill-by-the-hour, some project management tools also generate invoices, manage team holiday, and tracks quotes and proposals.

What are the benefits of using project management software?

The biggest win is moving from chaos to clarity, by bringing everything together into one place. It improves team collaboration, ensures factors like resourcing, capacity, and costs are managed, and keeps stakeholders in the loop without constant status meetings. By centralizing everything, you reduce “work about work” and give your team more space to actually focus on delivery.

What features should I look for in project management software?

Look out for project planning and task management features, time tracking, resource and capacity planning, integrations, and reporting. 

You’ll likely have your own specific requirements too (e.g. invoicing, quotes), so make sure you have a clear view of what you need before diving into your search.

What is the best project management software?

There’s no “one size fits all” answer—it depends on your requirements. The “best” tool is simply the one your team actually enjoys using every day. For creative and marketing teams, visual and intuitive tools like Toggl Focus often win out over overly complex, enterprise systems.

Which project management software is best for small teams?

Small teams usually thrive on simplicity and speed. You want a tool with a shallow learning curve so you can get up and running in minutes, not weeks. Tools like Toggl Focus are fantastic for keeping things lightweight and simple (while still being powerful), with others like Trello great for those who want simple Kanban boards.

Which project management software is best for large teams or enterprises?

For the big players, it’s all about scale, security, and portfolio management. Tools like Planview, Kantata, Sciforma are built to handle hundreds of projects at once, offering advanced resource leveling and deep “big picture” reporting that larger organizations need to stay aligned.

What is the easiest project management software to use?

If you want to avoid getting a headache, look for tools with a drag-and-drop interface and a clean UI. Toggl Focus and Basecamp are specifically designed to be simple and easy-to-use, meaning your team can spend more time doing the work and less time learning how the tool works.

What is the difference between project management software and task management software?

Task management is about the detail of individual tasks and checking off individual to-dos (like a digital grocery list). Project management is for the entire ecosystems, supporting not just tasks, but the things they’re associated with, like timelines, team capacity, resourcing, budgets, time tracking, finances and organizational goals. 

How much does project management software cost?

Most tools use a “per user, per month” model. You’ll find great free plans for solo users or tiny teams, while mid-tier plans usually range from $5 to $15 per user. When you’re venturing into enterprise-level features, you’ll usually need a bespoke quote. But, for most teams, there’s a sweet spot that won’t break the bank.

How do I choose the right project management software for my team?

Start by getting clear on your current pain points. For example, are you missing deadlines, or is the team burnt out?

Then, once you’ve shortlisted tools you like, we’d recommend getting your team involved in the trial process. After all, if they find a tool clunky or boring, they won’t use it. 

Once you’ve found a tool you all like, we’d recommend starting your rollout small (maybe with one team or just on one project). From there, test and learn as you roll it out to more and more teams.

175 new websites go live every minute. But while website development projects are common, they’re far from easy. Without a clear website project plan, things can spiral — think missed deadlines, disorganized teams, and scope creep, all combining to create unhappy customers.

Luckily, thanks to the almost 1.2 billion websites worldwide, there’s a lot of knowledge out there to draw from to plan the perfect new website to build on time and without chaos.

This article provides an easy-to-use checklist so you can deliver your next web design project without fuss, hassle, or stakeholder drama!

TL;DR — Key Takeaways

• A website project plan is a roadmap for your project team, helping everyone understand what needs to be done, when, and by whom.
• Project plans align everyone on the goals, objectives, scope, tasks, and risks of a project while helping you avoid unnecessary delays and spend.
• To create a project plan, start by defining the project specifics before diving into a detailed scope of work. Once that’s agreed upon, break down your tasks, plan out the schedule, and put it all in your project management tool to track going forward.
• Toggl Track and Toggl Plan are the perfect partners for planning and managing projects, giving you full oversight of your schedule and milestones while tracking your team’s time and cost.

What is a website project plan, and why do you need one?

A website project plan is a structured roadmap that guides the entire process of building or redesigning a website. It outlines the project’s goals, scope, timeline, tasks, and responsibilities, ensuring everyone involved knows what needs to happen, when, and by whom. They’re pretty handy, so we believe all web projects should have a project plan — period.

You see, creative web design projects have many moving parts and often require multiple rounds of redesign revisions. Without a plan, you risk getting caught up in this noise and complexity, leading to:

• ❌ Wasted time on endless discussions that put you behind schedule
• ❌ Spending budget you don’t need on costly resources
• ❌ Delivering poor quality outputs that don’t meet your objectives

A good project plan avoids these pitfalls by setting a clear foundation of the ‘what’, ‘when’, ‘how’, and ‘who’ of a successful delivery. This includes:

• ✅ Defining the project’s goals and objectives to align everyone on what success looks like
• ✅ Setting the project scope of what will (and won’t) be done
• ✅ Breaking down the step-by-step tasks, how long each one will take, and their costs
• ✅ Scheduling the work to highlight any dependencies or bottlenecks
• ✅ Assigning the right team members to each task to create ownership and accountability
• ✅ Uncovering the risks that might trip you so you can take action to avoid them

Sure, any project can still go wrong, but you exponentially increase your chances of success if you have a good project plan template to lean on.

How to plan a website development project

Let’s break down the steps to planning a fantastic website design and development project. These tips are a mix of our experiences, feedback, and input from our agency customers, who are building new websites every day.

Of course, these tips are a high-level guide. You should always adapt them to suit your processes, workflows, and clients to deliver the best results.

1. Define the project

Before racing into planning your project, step back and clarify what you’re delivering. Definition is about uncovering and agreeing on the project specifics, including questions like “What does success look like?” or “Who is the target audience?”

Here’s how to break it down.

Strategy & context

Work with your client to learn why they need a website project. What’s wrong with the website they have right now — what’s working and what isn’t?

Alongside this, understand how this project contributes to their broader company strategy. Are they looking for enhanced functionality to drive more sales? Are they undertaking a full rebrand? Do they need to improve their e-commerce user experience?

Whatever it is, get clear on your client’s ‘why’ to maximize your chances of delivering something high-quality and impactful.

Example: GreenNotes creates premium, 100% recycled notepads for consumers and businesses, enabling them to do their jobs while reducing their environmental impact. Having grown to $100,000 revenue per year, their strategy is to increase revenue to $500,000 in 3 years through a digital-first transformation.

Goals & Objectives

Once you know the background, get clear on the future and what success looks like from a successful website design project.

Work collaboratively to define your goals and objectives so everyone agrees on the outputs and outcomes. We’d recommend using a goals and objectives framework:

• SMART — Specific, Measurable, Achievable, Relevant, Time-bound
• PACT — Purposeful, Actionable, Continuous, Trackable
• FAST — Focused, Aligned, Specific, Time-bound
• OKRs — Objectives and Key Results
• WOOP — Wish, Outcome, Obstacle, Plan

Example: GreenNotes set five objectives for their website project to meet their strategy goals:

• The team plans to optimize the website for search engine optimization (SEO) and be compatible with Google Analytics.
• The website will integrate with GreenNotes CRM platform and social media accounts.
• The website will be live with at least 10 unique pages within 8 weeks.
• The website will receive at least 100 daily unique users with a 5% conversion rate within six months of go-live.
• The website will rank in the #20 on Google for 5 relevant keywords within one year of go-live.

Customers & Target Audience

To define design aspects such as color schemes, landing pages, and page layouts, it’s important to know who the client’s customers and target audience are.

The best website design projects optimize the functionality, usability, messaging, and tone for the target audience, maximizing adoption and engagement once the website is live.

In most projects, this information comes from the clients themselves. But in some instances, they may ask you to support with persona mapping, competitive analysis, or target audience definition.

Example: GreenNotes has a solid understanding of its target market, which is broken into two categories:

• Eco-conscious professionals aged 30-50 who need high-quality notepads for their day-to-day work
• Organizations buying premium notepads for events with a focus on sustainability

Project stakeholders

Projects are people-focused endeavors, so be clear on who’s involved, both within your organization and from the client’s side.

Specifically, assign a project manager, project sponsor (the decision maker), and contributors for design and development activities. This is everyone you need to make fast progress, solve issues, and make decisions.

Example: GreenNotes nominates a Project Sponsor, the Head of Sales & Marketing, to lead the project and make decisions. They also bring a Sales Executive, Brand Associate, and Marketing Manager into the wider project team to support the agency development team.

2. Create a scope of work

Once you’ve set the project foundation, create a detailed scope of work (sometimes called a statement of work) that aligns everyone on exactly what the project includes and excludes.

The process of creating a scope of work defines the deliverables (such as wireframes, prototypes, or content strategy drafts) and establishes boundaries to avoid unnecessary scope creep later on.

Here’s how it works.

Requirements

Project requirements are the specific features, functions, and outcomes that stakeholders expect from a project. Capturing these with your stakeholders is a great way to build your project scope.

In most cases, project teams will host requirements workshops, working collaboratively with stakeholders to uncover what they need. This is a crucial part of website planning, delivering a clear view of what’s required.

Example: The project team works with GreenNotes to discuss their project requirements. In total, they capture over 50 requirements, including:

• The website must have a homepage to host key information
• Product pricing should be clearly visible and display any eligible customer discounts
• The website must allow integrations with other systems

What’s in?

From your list of requirements, define what’s in scope for your project. This provides a list of outputs for the project team and sets the baseline for the project’s progress.

Define this clearly to remove ambiguity from the brief. This is especially important for a design agency, as profit margins can quickly erode if the project experiences scope creep later.

What’s out?

On the flip side, a good scope of work will also clearly define what’s ‘out of scope.’ This is an important addition that’s often forgotten. Defining what’s out of scope sets clear boundaries and aligns everyone’s expectations from the start.

Example: After further discussions, the project team agrees with GreenNotes that the following items will be in and out of scope:

• In — Website build of 15 web pages, including building the website structure on WordPress
• In — Redesign of GreenNotes branding and marketing materials, including social media, logo, fonts, and style guide
• Out — Custom website development using HTML or CSS
• Out — Copywriting will be completed by GreenNotes and provided to the project team for upload

Scope of work document

Like many parts of good project management, it’s best to formalize your scope in an official scope of work document. This gives everyone a clear point of reference if there’s any ambiguity or conflict later.

Learn more by checking out our step-by-step statement of work guide.

3. Identify project phases and activities

All projects follow a very similar lifecycle, and a website redesign project is no different. To keep everyone on track, we recommend breaking your project down into logic stages, each including clear objectives and activities. Here’s an example of the types of phases you could use on your website build.

Design foundations

In this phase, you establish the foundation of your web design project by agreeing on a clear statement of your design and brand principles.

By the end, your global design elements will underpin the design of your website pages. This is a highly creative phase, where you’ll work closely with the client to generate concepts and agree on a final specification.

Content preparation

After confirming the outline of your website, gather all the content required for the website. The sitemap and the page layout styles created in the previous phase guide the necessary content.

You may find that some content is already available from the client’s current website or other marketing materials; alternatively, work from scratch if things require a refresh.

Design & software development

The project team starts designing and developing the website’s pages using a chosen development methodology. Activities in this phase depend on the sitemap, layouts, and content collected in the previous two phases and your preferred hosting technology.

Testing

In this phase, you validate the website’s functionality and verify that it matches the requirements you captured earlier.

Depending on the client’s needs, various types of testing, including functional, accessibility, and performance testing, may be necessary. In some cases, you’ll also need to test the website for SEO optimization and streamline pages to boost usability.

Go live & handover

Once you’ve tested the website and resolved any issues, it’s time to put it live to the world. As part of this process, you’ll also hand the website over to the client, training them on the backend management tools so they can update their site in the future.

4. Create a project schedule

Once you’ve set your project phases, it’s time to make a detailed project schedule. This breaks down all the tasks in each phase, estimating how long they’ll take and assigning an owner to each. Here are some tips for creating a project schedule:

Task breakdown & estimation

Tools such as a work breakdown structure break complex projects down into clear, manageable tasks. There are several estimating techniques to plan how long each task will take, including:

• Top-down: Estimate the project duration as a whole, then divide it into smaller task estimates based on experience or historical data
• Bottom-up: Estimate each individual task separately, then roll them up to get the full project timeline
• PERT (Program Evaluation and Review Technique): Use optimistic, pessimistic, and most likely time estimates to calculate a weighted average for each task.

Remember, alongside time estimating, also complete project cost estimating. Nothing comes for free, so whether it’s labor costs, software licenses, or cash costs for external support, estimate the cost of each project task, too.

Assign resources

With your tasks estimated, assign a team member to each one. Doing this early on gives you a clear view of the resources you’ll need to deliver the project.

Optimizing project resources is a crucial part of great project management, so it’s key to have the right people at the right time without causing bottlenecks or conflicts.

Once you’ve assigned project team members to each task, you can build out a project resource plan to visualize who you’ll need when, enabling you to plan your team capacity.

Use Tools like Toggl Plan

The best projects use tools to plan their tasks, create schedules, manage resources, and visualize their plans with Gantt charts.

With Toggl Plan, creating a project timeline is as easy as one, two, three. Here’s how it works:

1. Click on the ‘+’ sign to create a new project. Give it a name, assign a client, and add an overall estimate.
2. From the Board or Timeline view, begin adding your tasks, including when they start, when they are added, and what they are.
3. Once they’re created, assign them to the right members of your project team and automatically add them to their to-do lists.
4. If you’re working to hard deadlines, click on a date to add a project milestone, giving you a clear target for your team to aim at.
5. From there, you’ve got everything you need to run a successful project, with one central place for your team to collaborate, track work, and keep tabs on your progress.

More of a visual learner? Here’s an explainer video to show you how to create beautifully simple project plans in Toggl Plan. 👇

Don’t forget to plan your communications, too

A common mistake project teams make is focusing solely on the functional work to build a slick website. Within your project plan, create a communications plan, too, making time for routines such as weekly check-ins, reports, and feedback sessions with your client.

This is especially important in the development phase, where you’ll want to get feedback at the end of every sprint to align your website closely with your client’s expectations.

The best way to manage your web development project?

Creating a project plan is only half the battle. Once you’ve mapped out your tasks and resources, you’ve got to actually….deliver a new website. Project tracking, whether it’s timelines, budgets, or scope, is key to hitting deadlines and ensuring deliverables meet the objectives.

Once you’re up and running on delivery, here are some best practices to guide you:

• 🦁 Stakeholder management is king. Project management is a very people-focused activity, so focus on building stakeholder relationships. This can be as simple as daily project updates, weekly check-ins, or more formal touchpoints to align on progress, make decisions, or solve problems.
• ⚠️ Pay attention to risk management. The best project managers dedicate regular time to identifying, analyzing, and mitigating risks in front of them. Of course, every project will experience bumps in the road, so ringfence time to get ahead before they cause a significant problem.
• ⏲️ Automate time and milestone tracking. Many project managers waste time manually tracking time and milestone admin, bogging them down in unnecessary detail. Time tracking tools, like Toggl Track, simplify these processes, giving managers real-time insights into how long different tasks take and where to reallocate resources.
• 📚 Learn lessons to be better in the future. While most website projects share similar characteristics, no two projects are completely the same. To improve from project to project, complete a lessons learned assessment, capturing what went well and what you could improve on in the future.
• 📊 Get comfortable with data. In the modern world of project management, it’s important to capture and analyze project data. Project metrics such as progress vs. plan, spend vs. budget, resource utilization percentage, and milestone status illuminate areas of concern and enable the team to make well-informed decisions.

Toggl tools for project and resource management

Great, you have everything you need to create your next website project plan, maximizing your chances of success and keeping your clients happy.

Remember, project management software is your best friend when planning and managing creative projects. Luckily, our two tools, Toggl Plan and Toggl Track, work perfectly together to guide you through the planning and management process. Here’s what they offer:

• Toggl Plan is perfect for scheduling, task assignments, and visually tracking progress through its intuitive timelines. A beautiful design and simple functionality make it easy to spot dependencies, bottlenecks, and potential conflicts so you can eliminate risks before they turn ugly.
• Toggl Track provides crystal-clear clarity into how time is spent on each task or project phase. It strikes a balance between enabling your team to log their time without feeling like you’re spying on them, with automatic timesheets reducing admin while generating instant project insights.

The best news? Get started with Toggl for free, allowing you to start testing timelines or tracking your time with no upfront commitment. Create a free Toggl account and start your test drive today — just two clicks, one login, and no credit card required!

Remote work might seem like a dream setup. But for many managers, it presents a tough challenge: How do you stay involved with your remote team without slipping into micromanagement?

The rise of remote monitoring tools like screen recording, keystroke tracking, and webcam surveillance make it easy to track your team’s every move. In fact, 70% of leaders admit they’re comfortable using these tools to spy on their remote employees.

But just because you can do something doesn’t mean you should — and in most cases, micromanagement does far more harm than good.

If you’re worried about crossing the line (or want to check you haven’t overstepped already), this guide is for you. We’ll explore micromanagement in remote settings, including how to recognize the red flags and build a high-performing team without constant oversight.

TL;DR — Key Takeaways

• There’s a fine line between staying informed and taking control. Set clear goals and expectations, then give your team space to deliver. Check in at planned intervals, not every time someone breathes.
• You might be a micromanager if you constantly monitor your team’s availability, struggle to delegate tasks, give step-by-step instructions for simple tasks, rework every deliverable, and react negatively to minor mistakes.
• Micromanagement can lead to increased stress, reduced confidence, high turnover, slower workflows, and a lack of innovation.
• To avoid micromanaging your remote team, set clear expectations, trust your team’s process, schedule regular check-ins, provide autonomy, and give regular feedback.

The thin line between micromanagement and check-ins in a remote work setting

When does checking in on your direct report turn into micromanagement? Honestly, it’s easy for those helpful nudges to spiral into controlling behavior.

One day, you’re offering support, the next, you’re breathing down someone’s digital neck. The line between micromanagement and support is super thin, but we can spot the difference by exploring two versions of the same scenario.

Imagine you’re a Chief Human Resources Officer, and you just hired a new HR manager. You assign them the critical task of developing an onboarding plan for a new role.

Micromanagement approach

You assign the task and check in daily to monitor progress. Before the work is finished, you offer feedback, suggest how you would approach it, and compare their version to your past work.

It might feel like you’re being helpful and staying involved. But in reality, you’re undercutting their confidence and turning a leadership opportunity into a hand-holding session that feeds into your ego. As Tim McClure, an advertising executive, said, “Micromanagement is the opiate of the insecure manager.”

Supportive check-in approach

You assign the same task, but this time, you clearly outline what the finished product should achieve and set a reasonable deadline. You check in every few days to see if they need support, clarification, or more time.

When the deadline arrives, they deliver a thoughtful, complete plan without you hovering at every step. The outcome? In the first scenario, you take control. In the second, you build trust. Stepping back gives your team ownership of their work and allows them to grow in their roles.

Signs you’re micromanaging your team

Micromanagement often disguises itself as “just being thorough.” But over time, it chips away at morale and trust. Here are some common red flags to watch out for.

Constantly monitoring employee availability

Imagine ordering filet mignon at a Michelin-starred restaurant and pestering the chef every five minutes to check if it’s ready. You’d ruin the meal and infuriate the chef.

It’s the same in remote teams. Constantly checking if your employees are online or actively working might feel like due diligence, but it communicates a lack of trust. You may get some insights about employee productivity, but at the expense of stress and distraction.

Taha Hussain, an engineering leadership coach, recounts a clash with a micromanaging boss early in his career:

Often, this behavior stems from not understanding what your team does on a daily basis. For example, a marketing leader might think a developer being “idle” means they’re slacking when in reality, they’re deep in problem-solving mode.

Julie Chenevier, a business growth and expansion consultant, offers a theory for this disconnect: “Usually, micro-managers are simply managers with low self-esteem. As they don’t trust themselves, it’s hard for them to trust anyone else.”

Reluctance to delegate tasks

Back in that kitchen, if the same head chef insists on trying to cook every dish solo, the whole operation falls apart. And that’s exactly what happens when leaders refuse to delegate.

When you hold on too tightly to every task, you’re saying, “I don’t trust you to do this well.” It’s demoralizing and unsustainable, as explained by Zoila Solano, VP of Talent and People Operations at Golden Steps ABA:

Over-detailed instructions for simple tasks

You might feel you’ll get better results if you give detailed instructions for every bit of your employees’ work. But there’s a world of difference between setting your team up for success and scripting their every move.

For example, giving a designer a wall of text on Slack about how to set margins and which color combinations to choose is about control more than clarity.

SME coach Westley Harnett offers a simple remedy: “Micromanagers think they’re raising the bar, but they’re actually lowering morale. A simple fix? Swap ‘Do it this way’ with ‘What’s your approach?’ It builds confidence and ownership.”

Give context, define success, and trust your team to fill in the gaps. That’s how you get buy-in — and better results.

Reviewing and revising every piece of work

Constructive feedback is part of good leadership. But if you’re reviewing every task in detail, you’re controlling rather than coaching. Mike Dalisay, CEO of Codalify, recounts how easily he slipped into this bad habit:

Overcome this by occasionally providing meaningful feedback on portions of your team’s work. Instead of reviewing every single detail of their process, look at the finished product and evaluate the outcome.

Negative reactions to minor errors

How you give feedback reflects your management style. Do you often praise or criticize? When you do criticize, is it about big, impactful errors, or is it about minor details?

If you find yourself constantly nitpicking, you’re probably under a lot of pressure and want to see good work delivered every time. But if it ends up with constant arguments over minute details, it means you’re micromanaging employees, which has a negative impact across the board.

How micromanagement kills productivity (and morale)

If you’re a manager, owner, or co-founder, you may not see micromanagement as a huge deal. Staying on top of things maintains quality and accountability, right? Wrong! In reality, micromanagement in a remote setting can have plenty of downsides.

Increased stress

When employees know you’re watching their every move, this crushes their well-being and can even cause stress and burnout. According to Forbes, 85% of micromanaged employees report a negative impact on their morale, and 36% even changed their jobs due to micromanagement.

Reduced confidence

Excessive surveillance and control force employees to stop believing in themselves and the good work they can deliver. They won’t have the confidence to tackle tasks they can do blindfolded.

Slower workflows

Micromanagement is a major timesuck that can lead to unnecessary delays. Managers waste time checking up on everything that happens during working hours, which slows down work for everyone.

Plus, your employees waste precious time explaining why and how something was done instead of delivering the work.

Lack of innovation

Micromanagement goes beyond slowing things down to silence forward-thinking ideas before they ever surface.

According to the 2025 Toggl Productivity Index, 44% of companies rank innovation among their top three most important values for improving performance in 2025. But when micromanagement takes hold, innovation stalls because people don’t feel safe to experiment or fail.

High turnover rates and lower retention

Trust is a top driver of employee retention. Take it away, and your people will understandably start looking for work elsewhere, all at a productivity cost to your company.

You’ll lose significant time and money hiring and training their replacement. And good luck finding that new hire if the word gets out that you’re a serial micromanager: this is a red flag for 73% of potential employees.

Overall, micromanagement slows work and drives great people out the door. Beyond being a habit, it’s often a symptom of something deeper. As marketing author and professor Philip Kotler said, “When managers overdo micromanaging of others, they probably hired the wrong people or failed to give them a clear idea of what each one is to accomplish.”

In other words, micromanagement can be overcome with better leadership. Here’s how we approach it at Toggl. 👇

Toggl tips for avoiding micromanaging your remote workers

Toggl has been remote-first since day one. Today, with 130+ team members across continents and time zones, we’ve learned how to build a high-performing, asynchronous team without constant oversight. Here’s how we avoid micromanaging:

Set clear expectations upfront

Define your project goals, deliverables, milestones, deadlines, and stakeholders early on. This avoids constant follow-ups and informs your team about the kind of output you expect.

At Toggl, we set firm quarterly goals and looser monthly goals tied to those. Managers can check in with their direct reports to keep them on track, but ultimately, trust they’ll reach their goals. It doesn’t really matter how or when they work.

Trust your team’s process

Do you care how the chef cooks your filet mignon? Or just that it tastes delicious?

At Toggl, we focus on outcomes rather than the workflows leading up to them. We encourage our team to find their own methods to work, experiment, and innovate.

One of the ways to achieve that is by using time management apps such as Toggl Track to understand how and where you invest your time without using surveillance.

According to our research, a whopping 41% of companies measure their productivity based on total hours worked. But this is a holdover from factory-floor thinking that doesn’t align with knowledge work.

Instead, we empower people to work in the way that suits them best, as long as the outcome meets expectations.

Schedule structured check-ins

Structured check-ins are more supportive than hopping on Zoom to address every single roadblock.

As a best practice, aim for a regular cadence, such as weekly team meetings and monthly one-on-one catch-ups. There’s no one-size-fits-all approach — what matters most is having a clear and consistent schedule that fits your team’s workflow and communication style.

At Toggl Hire, we typically meet biweekly. This rhythm works best for us because our expectations are already well defined, and our team members know how and when to raise blockers.

Use collaborative platforms to communicate

If you want to know what your team is up to at any given time, you don’t have to ask. Simply check your collaboration tool to see the task and its progress. Some great examples include:

• Toggl Plan: A visual project planning and task management tool with timelines and drag-and-drop simplicity.
• Trello: A Kanban-style board system great for organizing tasks and workflows in a visual, column-based format.
• ClickUp: An all-in-one productivity platform offering docs, task management, goals, and time tracking.
• Asana: A task and project tracking tool ideal for managing work across teams with clear timelines and dependencies.
• monday.com: A customizable work management platform for project tracking, workflows, and team collaboration.

Provide autonomy with accountability

Instead of constantly checking in with your team, make them accountable for their work while giving them freedom to perform well.

This is easy to achieve when you use Toggl Track, which provides time-based insights into who’s working on what, without resorting to invasive surveillance. Team members manage their own schedules while managers stay informed through transparent reporting.

You can also reinforce accountability using:

• Dashboards that show progress toward goals in real time
• Scheduled performance check-ins (for example, monthly or quarterly)
• Goal tracking tools that tie work to measurable outcomes
• Peer feedback loops to promote ownership within teams

Give positive feedback and recognition

Too often, feedback only shows up when something goes wrong. But consistently recognizing what’s going right is just as important — if not more.

83.6% of employees would feel more motivated to succeed at work, and 77.9% would be more productive if their positive contributions were recognized more frequently. So, make it a habit to acknowledge good work, celebrate wins (big and small), and highlight individual and team progress.

The more recognition your team receives, the less you’ll feel the need to constantly check their work — they’ll already be motivated to deliver their best.

Time tracking as an alternative to monitoring software (and other helpful remote tools)

When done right, time tracking can be a powerful way to improve performance and accountability — without micromanaging your team. The key? How you track time.

Some time tracking tools go to great lengths to spy on users. These types of employee monitoring software track mouse movements and keystrokes or take random screenshots throughout the day. That’s not productivity tracking — it’s digital surveillance. And in many cases, it’s worse than an in-person micromanager hovering over someone’s desk.

Tools like Toggl Track take a different approach. They give teams visibility into how time is spent without violating trust. Managers see where time is going and spot patterns across projects, while employees retain full control over their workflows and schedules.

But time tracking is just one part of a well-functioning remote toolkit. Here are some other tools for boosting clarity and efficiency across distributed teams:

• Toggl Plan for project management: Plan, prioritize, and visualize work across teams and timelines
• Slack for communication: Async messaging, team channels, and quick alignment
• Timetastic for time off management: Simple, transparent vacation and leave tracking
• Notion for knowledge management: A central source of truth for docs, processes, and team resources
• Miro for visual collaboration: Digital whiteboards for brainstorming and cross-functional planning
• Zapier for workflow automation: Connect your tools and eliminate repetitive tasks

Increase remote employee productivity with Toggl Track

Toggl Track boosts productivity while building trust. It strikes the perfect balance between efficiency and accountability without crossing into surveillance.

With our in-depth reports, you’ll always know who is doing what and what their progress is without looking over their shoulders. Your team can work independently without the burden of someone tracking their mouse movements, keystrokes, or screen activity.

Ready to lead without micromanaging? Try Toggl Track for free today!

Like a chef who burned his food or the painter wondering how his acrylics got mixed up with his oils, mistakes are inevitable in any line of work. But some are more costly or life-threatening than others…(we’re looking at you, surgeons). And the field of recruitment is no exception.

Nobody wants to make a bad hire. But it happens, right? The good news is you can avoid these mistakes if you know what to look out for.

Every hiring manager should be aware of several common interview red flags to avoid making a costly mistake. This guide walks you through how to spot each of them to save your hiring team some trouble!

TL;DR — Key Takeaways

• Red flags when interviewing a candidate are warning signs that suggest the applicant may have a problem. They can even help foretell whether the hire will work out.

• There are many examples of recruitment red flags to look out for, ranging from the more obvious, like unprofessional behavior and disrespect, to more discreet warning signs, like microaggressions and changing the subject.

• Some people just interview poorly, and you shouldn’t give up on them too easily. Hiring managers have to judge for themselves which red flags suggest a bad hire or just nerves. And there are different ways to help you do so.

• For example, try guiding the interview to help the candidate better answer your questions, assign homework, use an interview scorecard, or use skills tests to explore their abilities and personality.

What are ‘red flags’ in recruitment, anyway?

Red flags aren’t reserved for the dating world. In recruitment, they’re the subtle warning signs that something’s off, whether with a candidate or employer. Those gut-check moments make you sit up and take a little extra notice during the hiring process.

For hiring managers, red flags might be candidates who show up late, give strange excuses, or don’t know basic details about the job they’re interviewing for. But it’s not a one-way street — candidates are on the lookout, too.

Interviewers who seem checked out, give conflicting answers, or can’t explain what success looks like in the role? Yup, all red flags. And according to Harvard Business Review, job seekers should pay close attention to how interviewers act and what current employees say (or don’t say) about their current work life.

Because here’s the kicker: 19% of workers say their workplace is very or somewhat toxic. One in five is a pretty big gamble. So, spotting red flags early, whether you’re hiring or job hunting, can help you avoid costly mistakes and unhealthy work environments.

Job interview red flags to look out for as a candidate

If you, as a candidate, start noticing any waving red flags during a job interview, it could be a telltale sign that the workplace is toxic. That said, it’s worth remembering that not every hiccup needs to be a dealbreaker.

Interviews aren’t always perfect. A last-minute schedule change or vague answer might be more about internal misalignment than a blazing red flag. Sometimes (often embarrassingly), the hiring process is where teams realize they don’t fully understand what the role requires.

While it’s important to be vigilant, don’t jump to conclusions too quickly‌ — ‌give the company a fair chance to show off its true colors (red or green). So, what should you actually be looking out for?

1. Disorganized interview process

All hiring managers should be trained to conduct proper interviews. If the interview feels disorganized, gets pushed back, or doesn’t have a clear structure or agenda, it might reveal a lack of professionalism. Everyone has off days, but if the entire process feels like an afterthought, the role might be, too.

2. Negative talk about current or former employees

When interviewers speak negatively about current or former employees, it’s a clear red flag that the company suffers from a toxic work environment or its managers don’t handle conflicts well. A healthy work culture should foster respect and positivity, not encourage gossiping or bad-mouthing.

3. Lack of transparency

Pay attention to how different team members speak about their job responsibilities, company culture, work-life balance, or even future plans. Vague or inconsistent answers indicate a lack of internal alignment and poor communication, which can lead to a whole lot of confusion and dissatisfaction down the line.

4. Aggressive sales tactics

A job offer shouldn’t feel like a carton of milk that’s about to spoil if you don’t drink it right away. If the company pressures you with a super-soon expiration date, it shows they’re more focused on filling the position than finding the right fit.

5. Unprofessional questions

You shouldn’t be asked about things related to your age, marital status, race, or anything else that feels personal and inappropriate. Trained recruiters should have an interview guide or playbook to follow and know these questions are off-limits.

If a hiring manager is so bold as to ask ‌them, you can assume the company tolerates this kind of inappropriate behavior. They might even have some unconscious biases embedded in their recruitment processes.

6. Lack of connection

Sometimes, it’s not what’s said — it’s how it feels. If you just don’t gel with the interviewers or the company, it could be a sign that the company’s values or culture don’t align with your own. When the conversation feels forced or one-sided, it’s tough to bring your best self forward, and it may signal that the team dynamics or values don’t align with your own.

7. Too many interviews

Thorough is good — to a point. But if you’re being shuffled through 10+ interviews, that’s a bad sign. Odds are, if the role is this challenging to fill, there might be some deeper issues within the organization. Unless you’re applying for a senior executive role, an overly long process could point to deeper issues, like unclear expectations or a lack of trust in decision-makers.

8. Discrepancies between interviews

Conflicting information about job responsibilities, company culture, or expectations between interviews suggests a lack of communication and alignment within the organization. The company might have unclear roles or a dysfunctional team, signaling the job could be super challenging (not in a good way!) and unsatisfying.

9. Bait and switch

Not all conflicting information comes from disorganization — sometimes, it’s intentional. A classic bait-and-switch move might look like this: the job posting highlights flexible hours and remote work, but once you’re in the final stages, the team casually mentions it’s actually an in-office role with rigid hours.

If the role seems to shift dramatically from what was advertised, the company may be trying to reel candidates in under false pretenses — and that’s a major red flag.

10. Lack of preparation

Interviews are a two-way street. Hiring managers expect candidates to present their best selves and do their homework before an interview, so why shouldn’t you expect the same? Watch out for hiring managers who clearly haven’t reviewed your resume, prepared any specific questions about your career goals, or done their due diligence for the interview. Are they interested in you at all?

The most common red flags to look out for as a hiring manager

Hiring managers need to be just as alert in spotting potential issues during their interactions with candidates. Many of the warning signs that signal a bad employer can also point to a problematic candidate: poor communication, lack of preparation, or disrespect for others, to name a few.

To spot potential problems and avoid a pesky high turnover rate, we’ve created a list of 19 red flags hiring managers should watch out for when interviewing candidates. We’ve grouped them into five categories so you can easily spot them and make informed decisions during your hiring process.

Do any of these sound familiar?

Section I: How job candidates present themselves

1. Subject changes or ramblings

It’s a bad sign when the candidate in front of you starts rambling when you ask them a question. Candidates should focus on making their best impression in an interview and use their limited time wisely.

2. Not-so-humble brags

It’s great if your candidates are proud of their accomplishments…..buuuut excessive bragging as a response to a behavioral interview question is a big red flag. It suggests a lack of humility and a desire to take all the credit. While they might just be nervous or proud, this could also indicate the candidate isn’t a (good) team player.

3. Unkempt appearance

We all have our bad days (or laundry days!), but a scruffy job seeker suggests the person might not care about how they present themselves or represent your company.

4. Reschedules

It’s okay to reschedule interviews. Life happens. But constantly rescheduling the same interview shows a lack of time management and respect for your organization. It also leads to a drawn-out interview process and prevents hiring managers from filling the role with the right candidate.

5. Late

The first interview is all about making a good impression. Of course, we’ve all suffered from traffic jams and broken down trains, but if the candidate is extremely late and doesn’t have a good reason why, it’s an interview red flag. After all, what if they were late to visit one of your customers?

6. Unprofessional humor

Having a sense of humor and telling jokes is an excellent way for a candidate to break the ice and reveal more of their personality. But inappropriate humor in a job interview is a glaring red flag and a potential HR violation!

7. Inappropriate or casual language

Using slang, overly casual language, or even accidental swearing during the interview can signal a lack of respect and professionalism. This red flag might be less worrying in a very casual company culture — but it’s still important to ensure the candidate can maintain a level of professionalism when needed.

Section II: How the candidate acts in the interview

8. Poor enthusiasm

A candidate who lacks enthusiasm in the interview might not bring the right energy or motivation to the job. That’s why this is one of the most important interview red flags for employers to consider. After all, nobody wants an unenthusiastic employee on their team as it can dampen the overall morale.

9. Lack of questions

A quality interviewer won’t just interrogate — they’ll also make space for the candidate to grill them. When candidates don’t ask any questions about the job description, role, or company, it’s a sign they might not be truly interested in the opportunity. This omission could also suggest that they haven’t done their research and may not be fully prepared for the position‌ — ‌another huge red flag.

10. Inappropriate questions

Asking inappropriate or off-topic questions to the potential employer during the interview suggests the candidate hasn’t done their research or isn’t serious about the opportunity.

11. Microaggressions

Microaggressions are subtle forms of bias or discrimination that may show up during the interview process. For example, a candidate may make inappropriate remarks like “You speak really good English — what’s your background?” or “You don’t look like a developer.” These kinds of remarks may seem minor on the surface, but can point to deeper issues with respect, inclusion, and cultural awareness.

Section III: How the candidate explains their past experience

12. Vague or inconsistent answers

If the candidate’s employment dates, manager names, responsibilities, or even a rundown of their roles differ from their CV, it might suggest that some of the information was fabricated. An unwillingness to talk about their previous experience might also suggest that they didn’t have significant responsibilities or accomplishments in their previous roles. Or maybe they’re unprepared to discuss their experience in detail.

13. Lies and exaggerations

Exaggerating past experience or lying about qualifications are big warning signs. Integrity and honesty are must-have traits in any employee, so confirm a candidate’s claims carefully before proceeding with the hiring process.

Section IV: How the candidate views their past employers

14. Speaks badly of them

If a candidate badmouths their previous boss, coworkers, or company, take note. Even if their complaints are valid, the way they talk about their past employers matters. Candidates who speak badly of their past employers may have a negative attitude toward authority or difficulty working in a team environment. 

Exception: If a candidate brings up past challenges in a constructive, balanced way, focusing on what they learned or how they grew, that can actually be a green flag. The key is in the tone: Are they blaming, venting, or reflecting?

15. Gossips

You don’t need to know what Gail said in that one meeting or what Geoff did behind closed doors, right? So, why is the candidate telling you all of this?

If a candidate starts gossiping about previous employers or others they’ve already met with at your company, politely steer the conversation back to their professional experiences by asking, “Can you tell me more about your specific contributions or projects?”

Section V: How the candidate made you feel

16. Sexist/racist/homophobic

This is an obvious red flag. If a candidate makes comments about the interviewer’s race, religion, sexual orientation, appearance, or anything else, it’s grounds for immediate removal from the hiring pool.

17. Condescending

A condescending attitude from a candidate during an interview creates an uncomfortable and negative situation for the interviewer. Just because you don’t know much about MySQL, sales, or user research doesn’t give the candidate the right to talk down to you.

18. Dismissive

A dismissive attitude toward the hiring manager will negatively affect an interviewer’s impression of a job candidate and the overall interview experience. It’s a big job interview red flag that your hiring team shouldn’t overlook.

19. Poor body language

Someone who slouches during the interview process, let alone the first interview, may not be taking the process seriously. Albert Mehrabian, a pioneer researcher of body language in the 1950s, found that the total impact of a message is 7 percent verbal (words only), 38 percent vocal (including tone of voice, inflection, and other sounds), and 55 percent nonverbal.

Should one red flag kill the interview process? Nope!

No, one red flag shouldn’t auto-kill the interview process, but it does warrant a closer look.

Obviously, red flags like discrimination or disrespect are non-negotiable and justify cutting the interview process short and eliminating them from the recruiting funnel altogether.

But other warning signs might stem from nerves, poor questioning, or a simple misunderstanding. It would be a shame to lose a top-caliber candidate in these scenarios, wouldn’t it? Before you make a final call, take a moment to assess the severity and context of what you’re seeing.

Here are a few practical ways to course-correct when red flags appear, whether you’re the interviewer or the candidate.

#1. Talk it out

Calling a candidate out on their behavior keeps the interview on track and separates the nervous candidates from the actual bad hires.

Another way to assess a candidate’s fit is to talk about their interests outside of work to get an idea of their personality, values, and how well they might fit in with your team.

Equally, candidates should also be brave enough to pause the interview and clarify any potential red flags in front of them.

#2. Consider a skills test or a trial period

If you’re unsure about a candidate’s fit, consider using skills tests or have them complete a trial period.

This can give you a sense of their capabilities in a hands-on environment and how well they work with others. Likewise, for candidates, a trial period also delivers valuable insights into the company’s organization, timely payments, and the overall happiness of other employees.

#3. Seek a second opinion

If you’re the only person who’s noticed a red flag, don’t make the call in isolation. Instead, bring in another team member for a second interview. If they agree with your evaluation, you were probably on to something. But if they see things differently, it could have just been a bad day or an overreaction. Another perspective is always invaluable.

#4. Consider the context

Before reaching a final decision, think about the context of the red flag. Every role is unique, so the red flag you’ve spotted might not apply to the job they’re interviewing for. 

Maybe you’re hiring for a software developer, and they struggle with small talk. Communication skills are important, but they’re not the primary focus for a technical role, so you can overlook it.

#5. Trust your gut

Your instincts matter, but they’re only useful when paired with evidence. If something feels off, dig deeper. Use tools like peer interviews, skills assessments, reference checks, or even a social media screen to validate your concerns.

Just be mindful of your unconscious biases. A “bad feeling” shouldn’t be the only reason to pass on a candidate, but it can be the reason to ask more questions.

Employee performance metrics show how well (or not so well) your people contribute to business goals through their work, outputs, and engagement.

They’re a key part of the performance management process, something most businesses have in place, but only a fraction do well. Only 20% of companies rank their performance management process as very effective in providing employee feedback, increasing individual performance, and developing talent. 

The reason? Most managers lack meaningful data to make objective evaluations and coach people to do better in their roles. But that can be fixed, as we’ll explain in this post!  

TL;DR — Key Takeaways

• Employee performance metrics aren’t a grading tool — they’re a method for collecting insights for business growth. The right data helps you spot top performers, fix broken processes, improve resource allocation, and increase business profitability. 
• Your people, in turn, benefit from clearer performance expectations, constructive feedback, and greater recognition — a ‘recipe’ for high engagement and top-level productivity. 
• To get a valid take on your business performance, blend hard data (e.g., task completion rate, error rate, RPE) with qualitative insights (e.g., engagement rates, peer feedback, and collaboration scores).
• Performance metrics should guide strategy, not pressure people into performative work. Align metrics with company values, personalize OKRs, and combine short- and long-term data to get a full picture of progress. Keep expectations transparent and review cycles shorter to catch issues early and support real growth.
• To improve employee performance evaluations, align metrics with business goals, involve employees in defining success, and use different groups of metrics to get a 360-degree view of people performance. And skip the surveillance tools; focus on outcomes, not sham activity, to build trust and track real progress. 

Why measure performance metrics?

As the adage goes, “If you can’t measure it, you can’t manage it.” When you don’t know how different parts of your organization function and contribute to the shared goal(s), it’s easy for efforts to be misplaced. And that’s already a big problem. 

Globally, only 37% of businesses consider their people high-performing and engaged. And the media also paints a bleak picture of ‘problematic Gen Z work ethics,’ ‘global productivity crisis,’ and ‘growing number of burnout nations.’ 

As always, the devil is in the details. Employee performance isn’t one number — it’s a mix of key performance indicators (KPIs) that capture different sides of impact. While metrics like ‘total number of work hours’ might be down, others like ‘productivity per hour’ might be on the rise. 

A mix of qualitative and quantitative metrics highlights who’s really driving the results (and who’s just busy being busy). This leads to better employee recognition, project staffing decisions, resource allocation, and overall organizational performance. 

Benefits for organizations

• ⚙️ Improved business productivity. Metrics level-set individual effort and business goals, describing what success looks like. You give employees a clear target and give reasons to aim higher (through regular recognition and financial perks).  Over time, that clarity drives better focus and higher employee productivity.

• 📮 Better resource allocation. Only half of managers think their company effectively aligns budgets with corporate strategies. This translates to under-staffed teams, underfunded training programs, and delayed deliverables, crippling business growth. Performance metrics help you better understand which teams and organizational initiatives drive the most impact and budget accordingly. 

• 🪜 Effective succession planning. With the rapid ageing of the population, companies are losing skilled leaders. Metrics identify high-potential talent early on and support their progression to build a stronger leadership pipeline. You also get fewer ‘surprises’ post-promotion as your succession decisions are backed by evidence, not gut feelings or personal biases. 

• 💰 Higher profitability. Metrics shed light on high-impact activities, helping your people do more of the ‘right stuff.’ They also draw attention to inefficiencies, resource waste,  and other blockers, stalling progress. By doubling down on the former factors and eliminating the latter, you can grow a healthier profit margin. 

Benefits for employees

• 📊 Clarity on performance expectations. Metrics enable management by objectives, a structured process for defining performance goals via personalized OKRs. This clarity builds better trust in performance management, something 61% of managers and 72% of workers currently lack. 

• 🎨 Opportunities for skill development. Effective performance measurement isn’t punitive — it’s a tool for growth and guidance. By knowing where your people fall behind, you can develop better organizational development initiatives and prioritize learning and development opportunities to upskill your staff. 

• 🥳 Timely feedback fosters employee satisfaction. Regular, constructive, and personalized feedback ignites performance. When managers provide daily feedback, employees are 3.6x more likely to be motivated to do outstanding work, and metrics make this easier to do. 

• 🪴 Predictable career growth. Stalled careers lead to open exits. Alarmingly, 65% of workers report feeling ‘stuck’ in their careers, rising to 70% in the tech sector. Metrics help managers establish better competency grading systems and chart predictable paths for promotion, improving retention. 

Key employee performance metrics to track (and how)

The most effective performance management strategies blend hard data with qualitative insights (like peer feedback or leadership potential). This mix gives you a more accurate, fair, and holistic view of how different employees contribute, enable, and support your business growth.

If that’s the kind of insight you need, here’s a breakdown of what performance metrics to monitor and how to actually use them.

Task completion rate

Task completion rate shows how well work gets done by tracking the percentage of crossed-off tasks, resolved tickets, or delivered assets. The higher the task’s completion rate, the more efficient your team is at translating intent into impact! 

Marketing managers can track the number of launched paid ad campaigns versus those stuck in “review limbo.” Sales teams can look at the number of closed deals or scored leads to gauge performance. Agile software engineering teams, in turn, use Sprint burnout charts that measure remaining work (user stories, bugs, technical debt items, etc) in each boxed timeframe. 

Quality of work

Let’s be clear: Organizational success isn’t about volume outputs — it’s about making targeted, meaningful progress. If your team produces a lot of real (or sham) outputs, but the quality of work is meh, you’re in trouble. 

Quality-focused metrics like the number of errors, revision rate, or stakeholder approval scores tell you how well the work gets done. For design teams, you might monitor brand adherence or UX testing success rates. Customer service teams track quality metrics like first contact resolution rate, customer satisfaction score, and average response quality rating. 

Most teams rely on quantitative quality indicators from business tools and qualitative manager evaluations, peer reviews, and structured customer feedback loops. This way, you can spot recurring mistakes or missing employee abilities, which can be addressed through process redesign or training programs.  

Revenue per employee

Revenue per employee (RPE) metric tells how much monetary yield individual employees produce for your business, giving you a snapshot of operational efficiency and workforce impact. 

Unlike others, this metric isn’t universal, as many important back-office roles only contribute to revenue indirectly (e.g., HR professionals or facility managers). But it’s a good one to track for customer-facing teams like Sales, Support, Account Management, Procurement, or Field Services, where every missed day can mean a missed deal or lost business opportunity.

Employee engagement

Fact: Happy, driven, and inspired people make productive teams — and work environment factors like company culture, work-life balance, and recognition programs strongly affect the employee experience.

Employee engagement may be a human resources domain, but great managers track the pulse, too. You can spot motivated people by the way they show up. They seek out ways to improve workflows, bring new ideas to the table, and volunteer to pick up extra slack when the situation calls for it. They care deeply about their work and feel more invested in the company’s success, and this should be reflected in their performance evaluation. 

Disengaged people, on the contrary, show signs of withdrawal. They don’t actively participate during meetings, show little initiative, and harbor negative attitudes. Measures like quick pulse surveys, one-on-one check-ins, and project retrospectives help managers better reward top performers and offer timely support to those falling behind. 

Absenteeism rate

In the worst-case scenario, disengaged employees resort to absenteeism — they miss work unexpectedly or more often than usual.

These absences can increase due to sickness, burnout, stress, and mental health issues. Employee burnout alone resulted in 20% of UK workers taking time off work last year. 

Overall, rising pressures at work increased annual absence rates to 14% in countries like Czechia, Germany, and Belgium — meaning employers aren’t doing enough to support their people’s well-being. 

When monitoring absenteeism levels, managers can step in early and start supportive conversations to avoid disruptions to team performance. Instead of defaulting to discipline, they can adopt a more empathetic mindset to retain their people. Organizational changes like more flexible schedules, overtime bans, or mandatory vacation leaves are also worth considering. 

Such employee wellness measures are effective at preventing burnout and increasing engagement, which compound to higher employee productivity.

Time management

Time management metrics reveal a lot about how your business works. Rather than guessing who’s overloaded or distracted, you can tell exactly where most efforts go with time tracking categories like billable hours, meetings, deep work, client communication, or learning. 

Tools like Toggl spotlight teams’ work patterns without the slimy feel of micromanagement. Users can log (and edit) their daily activity to get insights into their focus areas, common blockers, and time wasters. Managers, in turn, benefit from better visibility into workload allocation, process efficiency, expense trends, and capacity needs. 

By seeing what’s working (and what’s not), you can coach your teams to adopt better time management strategies to work smarter (not longer). Try time blocking to tackle similar tasks in one productivity burst. Or use the Covey Time Matrix to prioritize tasks more effectively.  

When combined with project management software, time insights also give managers better clarity into deadlines, task priorities, dependencies, and scheduling conflicts — aka everything that usually derails timelines and balloons operating costs. That kind of visibility turns reactive firefighting into proactive planning and keeps projects on track.

Error rate

Error rates measure how often slip-ups happen in an employee’s work, whether typos in a client proposal, skipped steps in a manufacturing process, or incorrect data entries in a report. 

No person produces 100% error-free work every time. But consistently high error rates hint at underlying issues like skills gaps, overly complex processes, or missing instructions.

A root cause analysis will lead you to the right remedy. For example, you might improve the handoff process between teams, create a targeted training program, or upgrade legacy software to streamline error-prone processes.

Customer satisfaction score (CSAT)

CSAT offers feedback on how well client-facing employees perform in the eyes of the people who matter most — your customers. Typically measured with a quick survey after a recent interaction, such as a support chat, a sales call, or a service appointment, CSAT tells you how you can make your customer experience even more delightful. 

Low CSAT scores for individual employees can mean they lack essential customer service skills like active listening, strong communication, and empathy. They can also indicate deeper problems in your processes. 

Net Promoter Score (NPS)

Similar to CSAT, NPS is a key indicator of customer loyalty and satisfaction. High NPS scores mean almost guaranteed business growth because people stay loyal to your brand and advocate for it publicly. 

Tying NPS to employee performance reveals what your customer teams are nailing and what’s holding the experience back. For example, if one client success manager consistently gets top promoter scores, they can coach others to copy their approach.

Effectively, individual NPS scores become jumping-off points for shared team learning, customer knowledge sharing, and, ultimately, better company-wide customer experience strategies. 

Work efficiency

The most profitable businesses know how to achieve optimal results with limited resources. Unlike raw productivity, which can focus on volume alone, efficiency looks at how work gets done. 

Work efficiency metrics like output-to-input ratio quantify how business results (e.g., number of sales or units produced) correlate with the total number of resources used (e.g., employee hours or budget). Meanwhile, cycle time tells you how long different tasks take to complete. All of this helps you assign better goals, build more realistic timelines, reduce repetition, and unlock greater work efficiencies.  

Teamwork and collaboration

Team productivity is the sum of individual contributions plus interpersonal synergy. Measuring collaboration, communication, and emotional intelligence shows how well your people actually work together. 

Observe how different team members contribute to group discussions, communicate across roles, manage handoffs, and accept feedback. This way, you can understand not just who’s productive but who helps others be productive. 

Tools like peer reviews and 360-degree feedback can make this process more structured and objective. Netflix famously ditched annual performance reviews for shorter, less formal  360-degree feedback loops, where everyone in the company regularly suggests what their peers should stop, start, or continue doing (including the CEO). This helped the company build one of the strongest cultures, which drives high employee performance and retention. 

By using a similar approach, you can better identify collaboration rockstars and ‘glue people’ who secretly hold it all together! 

Task prioritization

Productivity drops when people get buried in busywork — attending meetings, doing endless admin, or ‘following up’ with unresponsive colleagues. Important tasks then get moved to the back burner, which is no bueno. 

Task prioritization teaches your people to choose the right tasks to focus on when work gets hectic. It also helps employees feel less stressed and decision fatigue, both essential for great well-being. Teams that prioritize well consistently hit goals faster and avoid getting sidetracked by low-value distractions.

You can coach your people to get better at task prioritization by:

• Using frameworks like the Eisenhower Matrix to sort tasks by urgency 
• Linking tasks to company ORKs or team goals to communicate impacts 
• Adding points to user stories to mark priority levels 
• Reviewing priorities during standups or 1:1s to realign as goals shift
• Celebrating crossed-off high-impact tasks to reinforce the value of smart prioritization

By mastering task prioritization, your teams won’t get sidetracked as easily by conflicting priorities and the occasional operational chaos. 

Employee retention rate

Employee retention (and employee attrition) rates signal how valued and supported employees feel in their roles. 

High retention rates often point to an effective hiring process, proactive onboarding, good managerial leadership, and a healthy workplace environment. On the flip side, when people leave en masse, it’s a tell-tale sign you’ve got some deep issues boiling. Workers cited a higher pace of change (and lack of equivalent salary growth), career ambitions, and problematic culture among the top reasons for leaving their last job. 

If spotted early, all of these issues can be effectively addressed to prevent attrition and the painful costs of hiring a new employee. For example, job enrichment can retain people who feel uninspired in their current role and seek growth. Cultural initiatives like manager training or inclusive team-building can build better trust and improve morale. 

Ultimately, retention should be viewed as a long-term metric closely tied to employee engagement and workforce development efforts.  

Learning and development participation

Businesses must critically upskill their workforce as talent gaps grow bigger for in-demand skills and the pace of technological change accelerates. 

By measuring how often people take part in training or skill-building activities, you can:

• Identify people with a growth mindset for reskilling 
• Nurture candidates for internal recruitment 
• Sharpen your internal mobility strategy 
• Find motivated course authors or mentors 
• Justify bigger L&D investments with participation data

…and progressively build a culture of learning at your company by linking L&D goals to career progression plans so your people see a clear payoff. 

Managerial effectiveness

Managers are responsible for 70% of the variance in team engagement and performance. Leaders with top people management skills know how to guide, support, and empower their team to hit all the performance benchmarks. And those with so-so ones? They drive top performers away and breed mediocrity. 

To evaluate how well managers cope with their role, track:

• Team goal achievement rate to evaluate how consistently the team meets set OKRs. The manager may have poor project management, prioritization, or workflow planning skills if the team often underperforms. 

• Cross-functional collaboration score tallies feedback from peer or partner teams on how well the manager enables cooperation. Low scores can indicate territorial behavior, lack of transparency, or misalignment with wider business objectives. 

• Direct report retention rate. 7 in 10 people quit their jobs last year over a bad manager. If one team has significantly higher attrition rates, you might want to check in with the manager. 

• Internal mobility enablement. The goal of a great manager is to nurture a future bench of talent. High frequency of promotions, lateral moves, or upskilling facilitated by the manager are all great signs of a job well done.
  
• 360-degree feedback score shows how well the manager is perceived by direct reports, peers, and senior leaders, which indicates their ‘fit’ with your company. 

A combination of KPIs tied to things like team retention, goal completion, and cross-functional collaboration allows you to easily distinguish (and laud!) your best managers. 

Call resolution efficiency

Top-notch customer experience is a combination of speed and effectiveness in customer issue resolution. A combination of call resolution efficiency metrics can give you insight into how effective your reps are at problem-solving. 

For example, a high first-call resolution rate and low call transfer rate indicate strong competency of your L1 service teams. Low average resolution time, paired with a low repeat contact rate, indicates effective troubleshooting workflows. 

Human capital ROI

An employer’s human capital ROI is the difference between the revenue generated by an employee and their costs in terms of compensation, benefits, and training, expressed as a percentage. 

It helps managers: 

• Identify high-impact roles to place top performers 
• Justify talent development initiatives
• Advocate for higher compensation 
• Develop better talent retention strategies 

But there’s a caveat: since not all roles bring direct revenue, HC ROI can be misleading without extra context. Some of your best data scientists, for example, may show negative ROI on paper but produce innovative research that will pay back 10x in the long term. Similarly, market shifts (e.g., seasonality in sales) or team dynamics (e.g., recent employee exits) can also skew an individual’s ROI. 

To avoid tunnel vision, pair this metric with qualitative insights and broader workforce insights like leadership potential, work efficiency, or collaboration effectiveness. 

Self-assessment scores

Employee self-scoring sparks reflection and accountability, helping your staff assess their contributions, strengths, and areas for growth. Because people use their own words to express their achievements, goals, and challenges, you gain even more meaningful insights that regular performance reviews may not surface. 

The practice also builds better trust in the performance evaluation process, effectively providing managers with ‘talking points’ so they don’t overlook essential contributions and focus clearly on actual struggles. 

Similarly, it avoids perception gaps that emerge when an employee overestimates or underestimates their impact. This opens doors to more meaningful coaching opportunities, transparent communication, and constructive performance conversations. 

How to measure employee performance metrics

Employee performance skyrockets when metrics guide your strategy rather than box everyone into the same mold of inflated expectations. 

Your people should never be in the dark about what you’re measuring or why you’re focusing on a specific metric. Lack of understanding brings resistance and mistrust. Or worse — a ‘productivity theater’ strategy aimed at superficially inflating the metrics instead of doing meaningful work.  

To get the best results: 

• Align metrics with company values. Don’t measure what’s easy — measure what matters. If collaboration is a core value, track team contributions, not just solo results.

• Set personalized OKRs for each role. Work with your people to develop OKRs that reflect their unique responsibilities and career goals. Tie each objective to team or company priorities, then define 2-3 key results that are specific, measurable, and achievable. 

• Combine short- and long-term metrics. Monitor weekly progress (e.g., task completion rates or error rates) to spot drift early on and track trajectory metrics (e.g., employee engagement or human capital ROI) to detect performance plateaus or persisting structural challenges.  

• Make performance expectations crystal clear. Employees should know exactly how you evaluate their performance, how it contributes to their career development, and what they can do to influence their results.

Best practices for getting started with performance management

Whether you’re building from scratch or fine-tuning what’s already in place, the next three tweaks to your performance management process make a big impact. 

Align metrics with organizational goals

Effective performance ladders up to business objectives like profit growth, customer satisfaction, or employee retention. When employees understand how their daily actions drive (or derail) company priorities, they see greater meaning in their work and get better at task prioritization. 

The best way to reach alignment is to involve your team in metric selection. Ask how they’d define success and what impacts they’d consider measuring themselves. Collaborative goal setting increases buy-in and creates a stronger sense of accountability. 

Balance qualitative and quantitative data

Hard numbers like sales volumes or completed tasks only tell part of the story. Adding qualitative data like peer feedback on collaboration, enablement, or professional development contextualizes the ‘soft’ factors that drive team success. 

Use anonymous surveys and peer feedback tools to collect unbiased qualitative insights. Reiterate the purpose of such reviews: their goal is to provide constructive feedback, not pass off snap judgments or shift blame. 

Use the right tools (invasive tools are a huge no)

As our Productivity Index report shows, managers seek evidence of employee productivity. But oftentimes, they’re after the wrong metrics. Three-quarters believe they should have access to employee activity tracking and screen monitoring at any time to ensure employees are working efficiently.

Obsessive employee surveillance over ‘vanity metrics’ like number of logged hours or daily desktop activity only backfires: People become less engaged, creative, and vested in their work. 

A better approach is to focus on outcomes — what gets done and how it aligns with business goals — rather than obsessing over every click or keystroke. Select a time management tool that collects meaningful performance data and doesn’t invade your employees’ privacy. 

Build a better business with Toggl

Toggl can help you easily implement time tracking across your entire organization. Intuitive, versatile, and automatic time tracking ensures fast and easy team adoption, while our 100+ integrations allow everyone to track time inside their favorite tools.

For managers and team leaders, this means getting clear and accurate data into profitability, capacity levels, project success rates, and employee contribution — metrics that matter more for your business than the number of bathroom breaks your worker takes during the day. 

Book a free demo today to see our platform in action. 😉

Ever feel like your project costs have vanished into thin air? You plunge time, money, and resources into the work, only to see expenses pile up with no long-term benefit to your balance sheet. But what if you could turn some of those costs into assets, spread out over time to improve your company’s financial outlook?

That’s exactly what capitalizing project management costs does. Instead of immediately expensing certain costs, you’ll treat them as investments and amortize them over several years. By doing so, you’ll improve your financial picture and allocate your resources more effectively.

The catch? You can only capitalize project hours if you’ve tracked them with precision. This guide explains how capitalization works, why it’s so important for managing project expenses, and how the right time tracking tools can unlock this world of (what feels like, to us non-financial folk) financial wizardry.

TL;DR — Key Takeaways

• Project cost capitalization is a finance process used to convert expenses into assets before spreading that asset’s value across its useful life.
• Capitalization is a general accounting principle, meaning you can apply it to all types of projects, including software, construction, manufacturing, and business projects.
• Accurate data is the key to capitalization, making time and project tracking software key. Combining automatic time entries with advanced reporting gives you accurate and auditable labor cost data that is perfect for capitalization decisions.
• Toggl Track is the perfect partner for enabling project cost capitalization. You can sign up for free with just two clicks.

What does it mean to capitalize project management costs?

Capitalization is a finance and accounting process that converts expenses into assets before spreading that asset’s value across its useful life to maximize efficiency.

It’s a useful accounting tool that enables businesses to manage their financial performance, increase their company value, and optimize their resources.

Examples of costs that can be capitalized in various industries

Capitalization is a generally accepted accounting principle that spans every industry and type of cost. So long as a cost contributes to the creation of an asset, there’s a good chance it can be capitalized.

Here are some creative examples across different industries.

• Construction projects: Any cost incurred during the construction period, such as supervisor salaries, site preparation costs, raw materials, and real estate acquisition costs, can potentially be capitalized.
• Software development projects: Whether direct costs, such as engineer salaries, or indirect costs, such as software license fees, anything that contributes to the creation of a software asset is eligible for capitalization.
• Manufacturing projects: Where manufacturers retain an asset for their use, e.g., purchasing a laser cutter, they can consider it a capital expenditure.
• Business and investment projects: Outside tangible assets, other costs such as sales tax, interest costs, trademarks, patents, and copyrights can also be capitalized if they directly contribute to capital assets.

Traditionally, capitalizing costs was straightforward for tangible projects, such as construction, where the outputs were physical and measurable. But in modern-day business, it’s important to also consider intangible assets such as software, patents, and branding, to maximize opportunities for capitalization.

To capitalize or not to capitalize…that is the question

Capitalization only happens if you and your finance department consciously decide to do so. And many businesses question whether they even should capitalize certain costs or not. Here are three factors to consider when making the decision:

• The useful life of the asset: Does the project create an asset that will benefit the organization for more than one year? If so, you should consider capitalization to optimize your financial reporting.
• Materiality: Are the costs substantial enough to justify capitalization? While there’s no universal materiality threshold, capitalizing only certain costs ensures the effort is worthwhile.
• Policy and regulation: Do the project costs align with your company’s capitalization policies? If capitalized, the asset’s value must be adjusted over time through accounting treatments like amortization and depreciation.

5 common challenges when capitalizing costs (and how to overcome them)

Unfortunately, capitalization isn’t as easy as estimating some project numbers and asking your finance team to work their magic. Here are some common challenges you’ll need to overcome to capitalize correctly.

1. Lack of clear documentation and tracking systems

Like many financial decisions, you need a clear audit trail for any costs you capitalize. This is important for all types of costs, especially development, administrative, and labor costs, which are harder to track.

Tools like Toggl Track capture clear and consistent time data for labor costs, giving you a solid foundation to calculate your project capitalization. Built-in automation reduces the chances of error while encouraging team members to engage with the platform.

2. Difficulty allocating shared costs among projects

Many businesses struggle to capitalize shared overhead costs, such as software licenses, utility bills, and legal fees, due to a lack of visibility on how they’re allocated.

This is another area where accurate time tracking can help you understand the percentage of time assigned to different initiatives. If you have confidence in this, you can use it to allocate shared costs across your projects.

3. Complexity in complying with accounting standards

Capitalization is a complex financial treatment, with many regulations, such as GAAP and IFRS, governing how it should be managed.

For any fixed assets you hold over a long period, it’s always best to get expert advice from consultants, accountants, or auditors to ensure everything is above board.

4. Risk of overcapitalization

On a similar vein, many organizations run the risk of overcapitalization — mistakenly categorizing operational expenses as capital assets. This can inflate your income statement, leaving your balance sheet open to fines or reputational scrutiny from auditors, investors, and shareholders.

Again, we’d recommend seeking external advice to sense-check your financial logic.

5. Resistance from employees to adopting new workflows

Capitalization comes with strict governance, so project teams that capitalize their costs must be on top of their admin. This inevitably means teams have to adopt new workflows and document more of their day-to-day work.

Tools like Toggl Track make it easy for teams to track their time across every project (especially for team or project leads managing multiple people with different billable rates). An intuitive user interface, simple support, and automated features make it easy to come on board and minimize the learning curve.

Why time tracking is essential for cost capitalization

Are you ready to start capitalizing your project costs? Great. Start tracking your team’s time! When it comes to labor costs, time tracking allows you to base your capitalization decisions on hard data rather than gut-feel resource allocations.

Precise time tracking that shows how much time each employee works on each project gives you the granularity and data to accurately capitalize assets once they’re placed in service.

Here’s what Toggl Track offers:

• Automated time tracking, which takes the admin out of timesheets, with instant start/stop timers capturing employee work time ⏱️
• Time records that can be allocated to individual projects, enabling project managers to optimize resources, measure profitability, and track costs accurately 💰
• Combine time records with billable rates to provide a clear view of capitalization amounts, with detailed reporting allowing you to drill down into the data 📈

So, whether you’re tracking developer hours for your R&D project, designer time for a new creative, or billable hours on your next legal case, Toggl Track is the perfect tool to manage your project cost capitalization.

5 best practices for capitalizing project management costs

While capitalization may look different for specific projects, there are some best practices every project can follow to optimize the process. Let’s finish up by exploring five capitalization best practices.

1. Start with clear cost categorization

Before diving into your project, get clear on which costs can and can’t be capitalized. As a general rule, you can capitalize any capital costs but should omit any operational expenses. We recommend simplifying your admin by using your time tracking tool to manage your cost categories.

2. Document costs in real-time

Project cost management works best when project managers track their costs in real time. This helps avoid errors or missed details when updating budgets retrospectively. Toggl Track’s real-time tracking aligns with this, automatically capturing timesheets for employees without you and your team having to lift a finger.

3. Collaborate between departments

As we’ve seen, capitalization is actually a finance and accountancy process, so project teams must collaborate across operations, finance, compliance, and risk departments to get it right. It’s easy to share Toggl Track’s time reports directly from the platform, giving everyone the insights they need to make crucial cost allocation decisions.

4. Select the right time tracking software

Time tracking tools simplify project-level tracking and timesheets, but should double up as project cost management software. This will boost engagement while keeping all costs in one place for complete clarity, compliance, and simplicity.

5. Provide employee training to ensure accuracy

Tracking project costs always works best when everyone has a part to play. When implementing capitalization, ensure employees have consistent and complete training to help them understand the concepts, processes, and new tools.

Take control of your project costs with Toggl Track

Whether you’re a start-up, SME, or enterprise organization, capitalizing project costs is a great way to boost the economic efficiency of your projects, creating valuable assets on the company’s balance sheet.

But for capitalization to work effectively for your company, you need to maintain clear, auditable data to support your financial decisions.

For labor costs, this is where tools like Toggl Track are a game changer (hate to use that phrase, but it’s true), unlocking detailed, accurate employee time data in a simple, easy-to-use way, and slots perfectly into your team’s workflows.

If you like the sound of that, it’s easy to sign up for Toggl Track for free in just two clicks. Better yet, if you’re a team of over 20, schedule a time to speak to our sales team to learn more about how Toggl Track can level up your specific project management processes!

If you’re an HR professional, you know it’s painful to see a new hire fall flat or disappear faster than a slice of cake at an office birthday party. If you’re tired of this endless cycle of hiring and firing, measuring and improving your quality of hire (QOH) is the solution.

Quality of hire is a crucial metric demonstrating the value of every joiner’s contribution to the company’s overarching goals. The problem? Putting a numerical value on a new hire’s performance is easier said than done.

This guide walks through how to measure quality of hire using proven HR metrics like new hire attrition, employee engagement, and hiring manager satisfaction — and how to improve them using a skills-first, data-driven approach to make consistently better hires.

TL;DR — Key Takeaways

• Quality of hire is a vital hiring metric that reflects a new employee’s value to the organization.
• Measuring and improving QOH helps hiring teams avoid the costs of a bad hire, attract top talent in a competitive market, and boost employee engagement and productivity.
• There’s no easy way to measure quality of hire. Instead, consider which recruiting metrics are most important to your team or organization and prioritize those to improve new hire success.
• Relying on a data-driven hiring process, gathering candidate feedback, and implementing a skills-based hiring process are all simple ways to improve your quality of hire metric.

What is quality of hire?

Quality of hire is a hiring metric that reflects the value a new employee brings to an organization. It encompasses the pre-hire and post-hire experience as a comprehensive way to measure how successful they’re likely to be in their role.

💥 Pre-hire quality checkers include assessment scores, work samples, and structured interviews

💥 Post-hire quality measures include time to proficiency, time to productivity, and performance metrics, such as goal achievement, project impact, or manager ratings in performance reviews.

By establishing a baseline for each quality of hire measure, you can check which factors correlate with your most successful hires to predict quality and achieve hiring success.

How to measure quality of hire

While quality of hire is a key recruiting metric, you measure it using other HR metrics. There’s no unique formula to measure quality of hire, which is why it’s often so difficult for teams to track and improve.

Generally, there is no one-size-fits-all metric for quality of hire because it depends on what your priority is. Common quality-of-hire metrics include turnover rates, job performance, employee engagement, and cultural fit measured by 360 ratings.

Ji-A Min, Research Analyst at Ideal Candidate

The bottom line is that how you calculate your overall quality of hire score depends on your needs, internal processes, and preferred outcome.

Here are eight of the most common ways — all are great starting points for measuring this metric, but you can adapt and customize the way you measure QoH depending on your organization’s needs.

Use one or more of the following:

1. End of probation

Most new hires are expected to showcase what they can offer a company within a specific period. Typically, the period to reach full productivity is three months from their start date (or 90 days), which is just long enough to evaluate the hires’ on-the-job performance and decide whether to continue employment, extend the probation period, or terminate the contract.

2. Ramp-up time for new hires

Ramp-up time refers to how long it takes new hires to reach their full potential within the organization. This will likely differ according to the department and company. In some cases, it can take up to 90 days for a new hire to reach full autonomy, or much shorter for entry-level roles.

Here are a few ways to measure ramp-up time:

☝️ Observe and take notes during the first few weeks on the job. Precise? Definitely. But it’s also pretty time-consuming.

✌️ Ask hiring managers how the new hire is doing after 30, 60, and 90 days. This is less precise but still provides valuable data for the process.

3. Acceptable productivity

This is a variation of the ramp-up time metric. It measures how long until a new hire is productive enough to work independently without assistance.

The main difference is that this metric looks at overall productivity, not just how fast someone reaches their full potential. Measure this hire score using the same methods as for ramp-up time.

We spoke to Steve O’Halloran, Talent Acquisition Lead at Embeddable, who stresses the importance of being consistent with your KPI strategies. He warns:

“A crucial and often overlooked aspect is that the criteria you use to evaluate candidates in the interview process must be tightly linked to how you evaluate their performance once they’re through the door. Hiring someone for ABC, then evaluating them against DEF once they start the job, sets nobody up for success. Hiring teams getting this right from the start will save a lot of heartache down the road.”

4. Hiring manager satisfaction rating

Hiring manager satisfaction is a vital recruitment metric that measures how satisfied the hiring manager is with the company’s hiring process and new employees. As hiring managers aren’t part of the HR department (in most cases), they can provide valuable insight into how effective the recruitment process is.

Taken a few months after the new hire starts, hiring manager satisfaction surveys optimize the recruiting process and create a better quality of hire. Crucially, they differ from candidate satisfaction, which looks at jobseekers’ experience of your talent acquisition process.

5. Job performance reviews

Performance reviews offer a formal approach to measuring quality of hire and understanding how well a new hire is doing. Usually, a hiring manager conducts these reviews and includes a score on a scale (1-5, for example) to assist in measuring quality.

For a more accurate and well-rounded performance review, incorporate 360-degree feedback from a variety of sources, such as peers, managers, direct reports, self-evaluations, and other relevant stakeholders. You’ll gain a wide range of perspectives, spot trends, and eliminate any bias.

6. Promotions

Promotions are a lagging indicator but a valuable way to measure the quality of hire. Promotion rate and promotion frequency are standard quality of hire metrics, calculated by tracking how many new hires are promoted within their first year and how often they are promoted since joining the company.

It’s a no-brainer. Quality candidates will get promoted more often and more quickly, which means that their overall quality of hire is superb.

7. Culture fit

Culture fit is notoriously hard to measure as a qualitative metric, because, company cultures are equally as hard to define. But this is still an important area of focus, as bad culture fit can significantly impact your cost per hire. Consider the following questions as part of your evaluation process:

• Does the hire uphold and adhere to the company values?
• Are they a good representation of the organization?
• Do they contribute positively to team dynamics and collaboration?

Since these are inherently subjective, the best way to gather meaningful insights is to ask the people who work with the new hire day-to-day. Send a short survey to their team and manager a few months after the start date to gauge how well they’ve integrated.

8. Employee turnover and retention rate

Turnover and retention rates show whether your new hires stick around long enough to make a meaningful impact. Start by tracking first-year turnover, or simply how many hires leave the company within the first 12 months. A high rate signals deeper issues with onboarding or role expectations.

Through a more positive lens, new hire retention rates explore how many new employees are still with the company after their first year. Both metrics highlight patterns, like certain roles, departments, or hiring managers with consistently stronger or weaker outcomes.

How to improve your quality of hire

Improving something that’s extremely difficult to measure might sound like Mission: Impossible. But once you define what quality means for your team and set clear benchmarks, it’s actually very doable.

Your mission (should you choose to accept it) is to build a hiring process that consistently brings in top performers, then sets them up for success. Here’s how to make that happen:

1. Define what quality of hire means for your company’s long-term success

The first step in improving the quality of hire is to sit down with your team and define what a successful hire looks like.

• What skills and experience are required?
• What are the key indicators of success?
• What qualities or traits allow someone to thrive within your team and organization?

With a clear definition, you can start measuring and improving the quality of hire.

2. Rely on a data-driven hiring process

Improving quality of hire means relying less on gut instinct — and more on real data. That includes assessment results, hiring manager feedback, candidate performance, and retention insights.

Dedicated hiring platforms helps you stay on top of the data throughout the entire hiring process. A good platform should let you can set pass thresholds to automatically filter out unqualified applicants, track how different hiring steps are performing, and spot patterns that lead to better hires over time.

They also offer dashboards that turns raw candidate data into clear, actionable takeaways — helping your team work faster and smarter, without losing sight of what matters: hiring great people who stay and succeed.

3. Align the hiring team with the right requirements

Are your hiring managers aligned with the requirements of the role? If not, you run the risk of hiring someone who’s not a good fit for the team. This can lead to a high turnover rate and a drop in productivity.

To avoid this kind of miscommunication or misalignment, create a candidate scorecard that includes factors such as:

• Hard and soft skills
• The level of knowledge the candidate needs
• How long they’ve worked in specific or adjacent roles

Instead of relying on resumes or LinkedIn profiles, scorecards objectively measure the quality of candidates during the interview process and prevent the hiring team from acting on impulse or being influenced by their unconscious bias.

4. Use skills assessments to increase recruiter productivity

Resumes and interviews can only tell you so much. Without clear evidence of ability, recruiting teams spend too much time chasing the wrong candidates — and that slows everything down.

Skills assessments streamline the hiring process and improve recruiter productivity by showing you exactly who can do the job. Whether using pre-built tests or customizing your own, competency skills assessments give you instant clarity on candidate strengths and gaps long before the interview stage.

5. Improve the onboarding experience for new hires

Let’s be honest: candidates talk to each other, and a sloppy onboarding process can have a major impact on your employer brand and other key metrics like employee retention and attrition.

To improve your onboarding experience, assess whether candidates:

• Understand your organization’s core goals and missions
• Understand the principles of how the organization works
• Receive hardware and system access promptly
• Feel welcomed by the team and their manager

Regardless of your current process or how you improve it, the goal is to help new hires adjust to their new environment and get up to speed quickly.

6. Gather feedback from former employees to improve your process

Former employees and candidates offer valuable insights into which aspects of your hiring process are working and which aren’t.

In fact, when tracking feedback from former employees, exit interviews are a must-have for any growing company. They offer valuable insight into why employees leave (and how to keep future top performers around longer).

Why is quality of hire important?

Tracking and improving quality of hire takes time, coordination, and consistent effort — but the return is undeniable. When you get it right, it directly impacts the long-term success of your business. Here’s why it’s worth prioritizing:

• Improved productivity: High-quality hires ramp up quickly and start contributing value from day one, which improves overall team efficiency.
• Lower turnover risk: When people are a great fit, they stay longer. That means fewer replacements, a lower cost per hire, and less disruption.
• Better company culture: Employees who align well with the company’s values and culture positively influence morale, teamwork, and organizational cohesiveness.
• Improved innovation: High-quality hires bring valuable skills, creativity, and fresh perspectives, fostering innovation and growth.
• Boosted employee engagement survey scores: Top talent contributes to stronger team dynamics and morale, which can lead to measurable improvements in engagement scores over time.
• Stronger employer brand: Consistently hiring the right candidates boosts your company’s reputation, attracting more top-tier talent over time.
• Cost savings: Better hires lead to fewer hiring mistakes, reducing costs associated with poor performance, rehiring, training, and lost productivity.
• Higher customer satisfaction: Quality employees deliver better services and products, leading to happier customers and improved loyalty.

Final thoughts on improving the quality of hire

You can’t improve what you don’t measure, so arming yourself with the right hiring metrics is job one as a hiring manager. Investing in a good process will improve the quality of your team and lower your turnover rate. So, everybody wins.

Follow the steps and tips above to create a process that works for your business — one that sources and retains the best of the best. If you want to create better job descriptions, hire for the right skills, and attract better candidates, try a full-cycle recruitment software built for skills-first hiring.