Philip Morris scrutinizes labor with Web timesheets

By DAVID JOACHIM

Those of us who work in money-generating divisions don't think much about all the work the accounting, human resources and information technology departments do for us. We expect the IT guy to be there when we call for help, but we don't expect a bill for his services. Corporate magically pays him somehow, from that giant account labeled "overhead." Lean times are altering this perception. More companies are carefully watching labor hours devoted to corporate services, and they're using an accounting method called "chargebacks" to force units to pay for the services they use.

The hard part is keeping track of how workers spend their time. For example, most HR workers, especially those who work for small and mid-sized companies, don't record how many hours they spend to complete a training project for a particular internal "customer," such as a sales assistant.

It's a discipline that the Manhattan-based Philip Morris Cos. had to learn quickly two years ago when management demanded accountability for the cost of corporate services. That's when the $80 billion maker of Marlboro cigarettes, Miller beer, Post cereal and Kraft macaroni and cheese started requiring some workers to fill out timesheets using the corporate intranet.

"Our motivation was to get rid of paperwork," says Ambalal Patel, the company's manager of HR and finance systems. The old system relied on paper forms and Microsoft Excel spreadsheets that would be filled out on a computer but printed out and faxed for approvals and processing.

Patel estimates it used to take 10 to 15 minutes for a manager to approve a single timesheet, when you counted the time it took to print out the sheet, fold it, stuff it in an envelope, open it again and so on. Now it takes less than a minute per approval.

It's a big labor saver, especially when you multiply that process by the 1,600 people in the finance and IT departments who use Web timesheets today. Those workers work mostly out of Philip Morris' Park Avenue offices, but some are located in Rye Brook, N.Y., and Stamford, Conn.

Any employee who puts in overtime must record those hours on a Web timesheet, or the company holds the overtime pay. Philip Morris is less strict with regular pay.

But more than just automating the recording and approval of timesheets, the intranet application makes it much easier to monitor the cost of projects that cross departmental lines. Project managers can easily run reports telling them whether a project is over or under budget.

The payroll department was using Web timesheets for several months when the IT department became interested in the system to institute chargebacks. Now, if an IT worker upgrades PCs to Windows XP in the customer service department, that department is charged for the time.

Philip Morris uses software called Web TimeSheet from Replicon Inc. The Kraft unit of Philip Morris, in Chicago, now has 1,000 factory workers using the system and plans to add 14,000 more this year, Patel says. Web TimeSheet licenses run about $90 per user. Customers also pay an annual maintenance fee amounting to 20 percent of the license fees.

An upgrade that just came out, version 4.0, includes e-mail alerts. Alerts can be used to make sure employees comply with deadlines, says Replicon CEO John Eddy. "At 4:05, if I haven't filed my timesheets, I get an e-mail saying it's overdue," he says. "An hour later, my boss gets an e-mail" saying he's late.

Electronic timesheets are particularly useful for professional services firms that charge clients for their time. Law, accounting and marketing firms often don't bill clients until months after services are rendered, simply because it takes a long time to collect paper timesheets and reconcile them, says Replicon founder Raj Narayanaswamy.

"We have seen situations where the billing cycle is compressed from 90 days to a week" using Web timesheets, Narayanaswamy says.

The software can also be configured so that the employees themselves can see how well a project team is performing against corporate goals. They see a green light if they're ahead of schedule, a yellow light if they're a bit behind, and a red light if they're way behind. "It can be a real motivator," Eddy says.

Perhaps more than anything, collecting more data about how employees use their time is a practical first step to determine how effective your workforce is, says Tom Casey, a partner in PricewaterhouseCoopers' HR consulting unit.

"It helps you understand your costs and understand how people spend their time on a macro basis," he says. "That should be a normal part of doing business."