Many founders struggle to understand where their team’s time is really going. This session will explore how one founder tackled productivity concerns by implementing a time tracking system that goes beyond billable hours. You’ll hear how aligning the team around a shared vision, building customized expectations, and embedding tracking into core systems led to more transparency, accountability, and better decision-making. Learn how this approach helped identify when to scale with contractors, optimize team utilization, and avoid the trap of just “throwing more bodies at it.” If you’re looking to build a smarter, more efficient firm—this story is for you.
TRANSCRIPT
Greg Alexander: Hey, everybody. This is Greg Alexander. You’re listening to the Pro Serv Podcast. This podcast is dedicated to founders and leaders of boutique professional services firms that are trying to make more money, make scaling easier, and make an exit achievable. So if you’re in the expertise business, this show is for you.
Greg Alexander: On today’s episode, we have a pet peeve conversation of mine, and that is, we’re going to talk about time tracking inside a marketing agency. Now, why the heck is it a pet peeve of mine? Time tracking in professional services—think law firms, accounting firms, consulting firms, etc.—is just the way things are done. But when I talk about this with marketing agencies, they resist. They say, “Hey, we don’t do that. We’re a creative agency,” etc. And I think they’re missing the point. I think marketing agencies could greatly improve their operations if they did this. To help me make that point, we have a fantastic member. His name is Leo Falkenstein, and Leo runs a company called Consume Media, which is a marketing agency, and he’s got quite the tale to tell us about his journey with time tracking. So that’s what we’re going to talk about. Before we do that, Leo, would you please introduce yourself to the audience?
Leo Falkenstein: What’s up everybody? Leo Falkenstein. I’m one of the founders here at Consume Media. We are a video marketing agency. We’ve really narrowed in on only doing video services and providing video solutions to our clients. I’ve been a member of Collective 54 for almost a year now. My agency had grown, and I wanted to get over a hump I was in. The resources that Collective 54 provided have been amazing and helped me put a lot of new structures and systems into my team.
Greg Alexander: Okay, awesome. All right. So I’m gonna jump into the questions. I’m gonna try to follow a chronological timeline to highlight your journey with time tracking. So, as I understand it, Leo, you started tracking time, but only for billable tasks. The reason you were doing that, and I really want to highlight this, is because you wanted to make sure you were staying in scope and you wanted to make sure you understood how to scope future projects. So tell us about those two things in particular, because most of your peers that run marketing agencies do not do this.
Leo Falkenstein: Yeah, totally. It’s a difficult world. And you said it—creatives and marketing agencies tend to resist this. I think the main reason is because of the creative element, right? You want to give your team the ability to be creative. But for me, I wanted to stay in scope, have happy clients, and also provide different levels of service for my clients. If there’s a gold package that’s 100 hours, and a silver package that’s 50 hours, but we’re putting the same effort into both, why would anyone pay for the gold? We needed to productize our service, which meant understanding how much time we’re putting into it. On kickoff calls, when all these ideas start flying out, I had to say, “Whoa, can we do this within the hours we estimated?” Often, the answer was no. So we had to say, “We’ve got to stay in scope.” If I’m doing a testimonial video, for example, the gold package might be 24 hours of editing and the bronze 12. We gathered enough data to productize the service. What’s important is having a set output for each package, and for us, that’s based on time spent.
Greg Alexander: Okay, fantastic. So now we move to the next milestone in the journey. You shared that at some point last year, you were getting frustrated with some of your team members around productivity. You were asking them to do things, and they were saying they didn’t have the bandwidth. You were scratching your head, thinking, “How could this be? I’m tracking the time,” and then you had an epiphany. You weren’t tracking non-billable time, which is a mistake I’ve made myself—and many others make it too. It results in frustration. So tell us a little bit about that, and what you did.
Leo Falkenstein: Yeah. I was hearing in project management meetings that certain team members didn’t have enough time. I looked at their workload and saw only 4.5 hours of work per day. I’m like, “We pay you for 8. So where’s the other 3.5 hours going?” They’d say it was spent on non-billable time. I’d ask, “What exactly are you using that time for?” I’d do some mental math and think, “That doesn’t add up to 3.5 hours—maybe an hour or 30 minutes.” But they couldn’t explain it clearly. I wasn’t frustrated with the quality—they were producing good work—but I wanted to double the output. If they have 4 hours of extra bandwidth a day, we should be using it to move projects forward and grow. That’s when I had the epiphany: we need some sort of system to track non-billable hours. At the very least, we’d gain visibility into where time is going. Do we really need contractors or another full-time hire? I was skeptical. In some cases, yes—a short-term contractor made sense. But long-term? I needed to see where our team was spending every hour.
Leo Falkenstein: I was skeptical. I did not think that, you know, in some instances, yes, we needed to bring in a contractor for a couple of weeks to get a project across the finish line. But I was skeptical that that was the long-term solution, and I needed to just have some sort of visibility into where my team is spending pretty much every hour of their day, right.
Greg Alexander: Yep, okay, very good. All right. So the next step was, you were having a coaching session with Jeff Klaumann, who’s the president of Collective 54. And he introduced this concept called the Expectations Framework. That was taught to us by members in our community who come from IT services. And this is standard operating procedure in the IT space, but it’s not SOP in marketing agencies. And this is the benefit of cross-collaboration. So tell the audience what an expectations framework is, why you chose to embrace that, and a little bit about how you implemented it.
Leo Falkenstein: Yeah, so this is actually a funny part. First of all, you hear those two words together—expectations framework—and you’re like, “Well, of course that’s what I need,” even if you don’t really know what you need. I’m in this conversation with Jeff, and he’s telling me about it. He shows me what his looks like, and I realize I need to make these for my team. You’re right—my most senior people shouldn’t be doing eight hours of billable time a day. It should be a certain amount of non-billable and a certain amount of billable. The individual contributors should be doing mostly billable work. So I got excited about this. I put together, over the course of a week or two, an expectations framework for every single employee at my company, and I was so excited—just stoked. But when I went to roll it out, I had a gut feeling something was off. I wondered, “Why can’t I do this?” Around the same time, I started hearing about EOS and your sessions on EOS and the Collective 54 framework—that you’ve got to have a vision, mission, and core values, which is the basis of everything. So we paused and ultimately decided to self-implement EOS and build that foundation. Because I realized I was about to put these documents in front of people who would ask, “Why should I work harder? Where is this company going?” It took us a few months to go from these documents I was so excited about to understanding that we had a more foundational issue we needed to fix first. Once we shared our vision, mission, values, core focus, and everything like that, I felt like our team was bought in. Then we could roll this out and get people tracking time.
Greg Alexander: You know, it’s a great learning, and congrats to you for having the courage to hit the pause button. Sometimes we get so into these initiatives, we just want to go, go, go. But it would have fallen flat if you didn’t have a vision and explain the “why” behind what you’re doing. And also congrats on self-implementing EOS.
Greg Alexander: We’ve had several members embrace EOS, and we use EOS internally—we love it. But many hire one of those implementers and follow it by the book. EOS needs to be customized for the use case of a boutique professional services firm, and your example shows exactly why. Now you’ve got the vision, you roll it out to everybody, you explain the “why”—what it is that you’re doing, and why you’re doing it.
Greg Alexander: Then you hit them with the Expectations Framework. As I understand it, it was received very well. People are leaning in, and it’s kind of a new boost of energy. Is that true?
Leo Falkenstein: It is. First of all, when you tell your company where you’re going, people get excited to work on the business, not just in the business. It’s like, “Okay, we’re going to march together.” We have a motivated, excited, strong team. We’re going to work together, and we should be excited about tracking this non-billable work, because ultimately these things we’re spending time on are so important—in many instances, more important than the actual billable work. People are excited to work on non-billable tasks. They now see them as just as important. We had to approach it with the same structure. Personally, I’m not great at setting processes, but my business partner is brilliant at that. He was able to take the mindset of “What are we doing with our billable work?” and apply a similar—but different—approach to the non-billable work. You’re essentially pressing the time tracking button the same way, it’s just being tracked in a different part of our system.
Greg Alexander: Yup, yup. And I know this is fairly new, but I want to hear—how is it going so far? You got to the number one metric for any professional services firm, at least in my opinion, and that is profit per employee. The reason why that’s the number one metric is because for all the services firms out there, when you look at your P&L, you realize 80 to 90% of your cost is labor—payroll cost. So, therefore, when you get to time tracking, chargeability, and utilizations, you can see exactly where every payroll dollar is going and therefore optimize for profit. And as the owner, that’s what you care about, because you want to pay yourself as much as possible. So tell me a little bit about how you’re reporting on profit per employee.
Leo Falkenstein: Yeah. The reporting element is definitely the number one thing we are focusing on improving at this moment. We use ClickUp—that is our system. ClickUp is really good at a lot of things, and their time tracking reporting is getting better, is what I’ll say. My business partner and I are in the feedback section of ClickUp every single day or week saying, “You need to fix this.” And you know what, Greg? Last week I got an email saying, “We are working on this one right now.” I sent that to Michael and said, “Look, being annoying is working.” But to answer your question, right now I can see exactly how many hours people are spending each week on every project and every non-billable task. It shows me what’s billable, what’s not, and the percentages. I started referencing benchmarks from Collective 54—senior members should have X percent billable, individual contributors should have X percent billable. That’s part of our framework and part of our EOS scorecard. Each week, we track what percentage of time people at each level are spending on billable work. That gets down to what percentage of total time across the organization is chargeable. That number needs to be at a certain point, and the higher it is, the more money my business partner and I are making—and that makes us happy.
Greg Alexander: Yup, yup. You’ve effectively solved the age-old problem, which is throwing more bodies at it. At Collective 54—and Leo, as you know, but for those listening who might be new—our framework has three stages: grow, scale, and exit. The first stage, grow, is all about brute force—throwing more bodies at problems. Then you get to the scale stage and say, “Wait, there’s got to be a better way.” You start working smarter, not harder. That’s what you’re doing now. You stop throwing bodies at it and start paying yourself what you’re worth. I mean, being an entrepreneur in a boutique pro serve firm is not easy, so it better come with big bags of money—or it’s not worth it. I’m glad you’re doing that. I have one follow-up question regarding systems and ClickUp. I like ClickUp and have used it. A lot of our members use it. But sometimes people graduate from what I’d consider a generic tool like ClickUp to a purpose-built tool called Professional Services Automation. There’s implementation and it’s more expensive. Have you considered that, and why haven’t you done it yet?
Leo Falkenstein: I have considered it. I know there are at least a few members of Collective 54 who either sponsor or have one of those PSA tools. I remember a session last year focused entirely on time tracking. We’ve considered it lately. The reason we haven’t made a change is because ClickUp lets us do almost everything we’ve wanted up to this point—except for this one issue. That’s why we’re so persistent with ClickUp—“Fix this, fix this!” We don’t really want to change. We’ve spent so much time and energy building out our systems, how ClickUp works, our automations—everything. Also, we implemented ClickUp about two years ago, and I don’t want to be changing systems every other year. So, it’s definitely worth considering as we grow, but we’re holding off for now.
Greg Alexander: Well, let’s hope ClickUp listens to this and they add this feature, because the last thing you need is another system. And the last thing you need is to replace the system, now that you’ve got two years invested in it. So I understand it completely. But you know, I guess my closing question would be, Leo: If you were to speak directly to your peers—these would be guys and gals that run marketing agencies—who might be dragging their feet on time tracking, tracking non-billable time, getting to profit per employee, utilization rates, chargeability rates, etc., what advice would you give them?
Leo Falkenstein: I would say I think most marketing agencies are worried about this because they don’t want to stifle creativity. I think that ultimately what you need to do is build in creative hours into your standard operating procedures under each project. If they have two, four, six hours just to brainstorm and be creative—and they’re tracking time for that—that’s good. You’re saying, “You have time just to be creative.” And there’s also something magical about pressing that start button, where you feel like, “I’m on the clock. I want to get this done for me, my team, and everyone I’m working for.” So I wouldn’t worry about creativity being stifled. You just need to build that into your process. Budget X amount of hours per project for creativity. Beyond that, you’re just missing out on data. And there’s really no value in missing out on data—data drives decisions. Let’s embrace the data rather than be scared of having it.
Greg Alexander: It’s great advice, particularly the part about something magical happening when you click that button. I remember earlier in my career, when I was the person clicking the button, what I used to say to myself was, “Okay, I’m now on the clock. What am I producing for the client? What are they getting for the money they’re spending with me right now?” It’s almost this subtle accountability tool, which culturally is a very positive thing, I think.
Leo Falkenstein: And even for me, it’ll be things I don’t want to do. I’m like, “I really don’t want to do this task.” And then I’m just like, “Alright, I’ll press that button,” and then—okay, now I’m doing it.
Greg Alexander: Yeah, and how quickly can I get it done?
Leo Falkenstein: Right.
Greg Alexander: Yeah. Well, Leo, listen—you’ve only been with us for a year, so you’re still within that honeymoon period. But this is an example of you being a great member and contributing to the community. These types of communities only work when members are willing to make deposits in the knowledge bank. So on behalf of all the members and everyone that’s going to listen to this, I just wanted to thank you for sharing your story with us. It was very educational.
Leo Falkenstein: Thank you, and thanks for having me. I love being part of this community.
Greg Alexander: Great. Alright, a couple of calls to action. If you are a member of Collective 54 and want to pepper Leo with your questions, attend the private Q&A session—you’ll see an invite for that shortly. If you’re not a member and after listening to this want to become one, go to collective54.com and fill out an application, and we’ll get in contact with you. Until next time, I wish you all the best of luck as you try to grow, scale, and exit your firms.
Note: This transcript was generated by Zoom.