Both require a certain amount of input. You have to somehow tell it what it needs to know (duh). It's all about finding a good balance. On one hand, you can have your people doing nothing but clocking in and out, and it will detract from their work. On the other hand, if you do nothing, you're where you (probably) are now.
As a general rule of thumb, don't make your employees walk more than 10 seconds to a computer. Buy some cheap netbooks for $200 and strap them right to the machines! Track things that matter, things that you're going to measure.
The first is a time card, which basically replicates the time clock you might have hanging on the wall. Employees clock in, clock out, and you pay them for being there. They get paid to go to the bathroom, play pranks, and talk to each other.
The second is a time tracking system that tracks how much time each employee works on a specific order. You can get rich data if your shop is using this tool. You'll be able to tell which jobs are more profitable, see which processes take the longest, and so much more.
