I think the biggest risk introduced by time tracking is well illustrated by a sibling comment:
> My boss knew how long particular task took and asked if I need some help afterwards. It was great support and mentoring. But I now experience exact the opposite. My managers come to me if it took me longer second time than first time to complain about me being to slow.
It produces a misalignment of incentives: If you do a great job one week getting visible things out the door, then you're punished for the rest of your time in that job, rather than rewarded for doing great. So you know in advance, it's better to deliver slower all the time.
I think a lot of people have in the back of their mind an instinctive trepidation for detailed time reporting, because of fears it will invite that sort of paradoxical push, preventing them from doing the best work they know they could be doing. "To speed you up we need you to attend more meetings."
I've also witnessed a different kind of time-tracking problem. Someone logs into a reporting system that, say, they worked 200 hours on a project so far, since the last 3 month report.
Some people don't take the person's word for it. I've seen bosses, peers, coworkers say "I don't believe you, no way that took 200 hours! You've done maybe 10 hours at best. I could do it in a weekend, if only I had the free time. Anyone competent could! If only I had the time to organise someone to replace you. You're lucky to work here, your job should be given to someone else who doesn't lie about what they've been doing. (etc.)"
What's really happening is the person has put in 250 hours (350 if you count that unpaid overtime they did on their holiday and weekends), but reduced it to 200 in the report because they know what their boss/peer/coworker is likely to say.
If freelancing, they only bill for 200 hours, feeling like in a just world they would bill 350, but it's not a just world, and if their client is unhappy, maybe their work doesn't deserve full rate.
Often, boss/peer/coworker is quite incompetent, and wouldn't be able to implement the thing in 200 hours, let alone 10 - their lack of ability or familiarity with the job is what's making them estimate such a low figure. And no surprise to anyone, they can't find a replacement who will do the same thing in less time - although they sometimes find replacements who say they will, and then don't. The cycle continues, rinse and repeat.
So unlucky time-reporting worker is forced to do things to "prove" they are telling the truth about the time they've put in at least, while feeling a heavy dose of imposter syndrome.
Things like ass-on-seat, make sure screen is visible to others at work (to prove not using social media), timing of repo commits designed around reputation rather than problem solving, participate in social chats/IMs just the right amount (too much = slacker, too little = slacker), same with meetings.
And weirdly, it works. Because visibility matters a lot more than results.
If the above sounds a bit like I might be talking about myself... not really. I've had those sorts of accusations a few times, but it's outweighed by the rather pleasant discovery that I've worked for people who are surprised that the hours I bill for (I often freelance) are lower than they expected.
However, the few times it's happened, I took from that the importance of not doing it to other people, even if I'm unhappy with their work. Because it's so undermining at a rather fundemantal level.