Why Spreadsheets Are a Threat to HR Employee Data Management

The spreadsheet has had remarkable staying power. Even today, many businesses still use manual spreadsheet files for functions ranging from budgeting to contact lists, data analytics, payroll, inventory tracking, and more. Spreadsheet software tends to be inexpensive, easy to use, and customizable. 

As a company grows, however, a simple spreadsheet is no longer enough to meet its HR needs. Employers that use spreadsheets rather than HR management software risk serious problems, including inaccurate data and security breaches. Keep the concerns below in mind if you’ve been considering the switch to employee relations software for more effective HR employee data management.

10 Potential Problems with Using Spreadsheets for HR Data Management

The reality is that MS Excel came out over 35 years ago. It no longer best suits the task of managing HR employee data, but a recent survey of CEOs and HR professionals – all in businesses with over 1000 people – revealed that 1 in 4 say that spreadsheets and emails are key to their operations. 

As Commercial Director of the study, Michael Campbell explained: 

“It’s clear that although the majority of organizations are at the midpoint of the HR transformation curve, a quarter still rely on siloed and outdated solutions, such as spreadsheets and emails, to manage people data. It’s surprising that, in spite of the digital transformation acceleration that’s taken place in the last couple of years, a significant proportion of large enterprises still lack the connectivity and data visibility needed to deliver a data-driven approach to people strategies.”

Numerous problems may arise from the continued reliance on obsolete technology like spreadsheets. These ten are some of the most common or most serious:

1. Slow Updates, Lack of Real-Time Data

Spreadsheets typically rely on data entry by employees. Transferring data to a spreadsheet from email, paper forms, or other media takes time. The company does not have access to potentially critical information until data entry is complete.

2. Errors in Data Entry

Data entry is prone to human error. Research suggests that employees tend to find spreadsheets to be excessively time-consuming. Boredom or frustration can make errors even more likely. Without careful review of spreadsheet data, these errors can lead to major problems.

Examples of these costly errors have been making news for decades, from the cut-and-paste error in an Excel that cost a Canadian power company $24 million in 2003 to the single keystroke that oversold 10,000 tickets at the 2012 London Olympics. As recently as May of 2021, a single error in a spreadsheet resulted in a $10.47 million disaster for Crypto.com. An employee trying to refund a customer a hundred dollars made a typo in one cell that actually refunded more than ten million. This error wasn’t even detected until seven months later after the customer had sent $4 million to an offshore account and bought multiple homes, vehicles, and other luxuries.

In the context of HR, data entry errors can impact sensitive matters like investigations and major decisions in employment-related matters like hiring, promotions, and eligibility for benefits.

3. Lack of Standardization

In order to keep a spreadsheet organized, it is important to use standardized formats for data. When numerous employees work on entering data into a spreadsheet, however, they may use different formats for items like dates, names, or addresses. This can make data analysis difficult.

4. Risk of Fraudulent Data

Many spreadsheet applications have collaboration in mind, which makes it easy for individuals to make changes to a document. Without controls over who may access and edit a spreadsheet, it may be possible for someone to enter false data or make fraudulent edits.

5. Inability to Track Changes

Determining who entered certain records or who made certain edits can be difficult with spreadsheets, especially if the file has moved from one computer to another. Employers might not be able to determine who is responsible for inaccurate or fraudulent data.

6. Limited Analytic Features

Spreadsheets can be an excellent tool for collecting and organizing raw data, but they are limited in their ability to analyze that data. They cannot meet many of an employer’s needs, especially when it comes to analyzing historical data

7. Minimal Scaling

A spreadsheet might work for a small employer with a handful of employees. The more people an employer hires, the less useful that spreadsheet will be. The likelihood of errors becomes significantly greater the larger a spreadsheet gets.

8. Potential for File Corruption

Many spreadsheet applications allow multiple users to collaborate on a file stored on a shared network. In other cases, a spreadsheet file might travel from one computer to another, transmitted via email, on a flash drive, or by other means. Every time a file changes hands, the potential for corruption grows. A corrupted file can mean the loss of a massive amount of HR data.

9. Incompatible File Formats or Systems

Now that various alternate work arrangements, such as remote work, are becoming more common, employers need to consider software that can work across multiple platforms. Employees who work from home on one type of laptop, for example, might need to contribute to HR data collection on a different operating system.

10. Minimal Security Features

Data security is not necessarily a top priority for spreadsheet applications. Using a spreadsheet for data management in HR might expose that data to significant security risks. This can lead to legal liability for an employer.

Alternatives for HR Employee Data Management

Employers need employee relations management software that provides accuracy and consistency in their data and enables collaborative work through a unified platform. LaborSoft provides software for employers that puts matters like incident tracking, grievance management, and other employee relations features at their fingertips. Employers can see employee data in real-time, which enables them to track performance and address issues quickly and efficiently.

Contact us today to set up a customized demonstration and learn about how LaborSoft can meet your HR data management needs.