5 HR processes that should never be in spreadsheets
Eddy team — June 2024
Spreadsheets are great for handling basic data tasks, performing simple calculations, and creating straightforward reports. Their ability to quickly organize data makes them a go-to for many professionals who need a quick, customizable way to manage information.
But when it comes to complex HR processes, spreadsheets fall short. Very short. That’s because HR processes require so much coordination with other people and systems, have high data privacy requirements, and have to remain compliant with so many regulations. This is basically impossible to do with spreadsheets. Before we dive in let’s review why spreadsheets are the wrong tool.
Wait—what’s wrong with spreadsheets?
While we all love a good pivot table, spreadsheets, while useful for many business tasks, pose significant risks when used for managing HR processes, including:
- Data Security Risks: Spreadsheets lack robust security features, making sensitive employee information vulnerable to unauthorized access and breaches. Without encryption and advanced access controls, anyone with access to the file can potentially view or alter confidential data. This vulnerability can lead to data breaches, exposing the organization to legal liabilities and damaging employee trust.
- Human Error and Inaccuracy: Manual data entry in spreadsheets is prone to mistakes, whether it's due to typing errors, incorrect formulas, or accidental deletions. In HR processes, even a small error can have significant repercussions, such as incorrect payroll calculations or mismanaged benefits. Unlike specialized HR software, spreadsheets do not have built-in validation checks or automation features to minimize these risks.
- Lack of Scalability and Efficiency: As organizations grow, the volume of HR data increases exponentially, making it challenging to manage with simple spreadsheets. They become cumbersome to navigate, slow to load, and difficult to collaborate on when multiple users need access. This lack of scalability hampers the HR department's ability to efficiently process and analyze data, leading to delays and bottlenecks in critical functions.
- Difficulty in Data Integration: HR processes often require data from multiple systems, such as payroll, benefits, and performance management tools. Spreadsheets are not designed to seamlessly integrate with these systems, leading to fragmented data and siloed information. This lack of integration hinders comprehensive data analysis and decision-making, as HR professionals cannot easily obtain a unified view of all relevant data.
HR processes that should never be in spreadsheets
There are many HR processes that should never be done in a spreadsheet. Or if there is seriously no other option, you should work to move to a better tool ASAP. Ordered from most worse to less worse (but all are bad in their own way), here is our list of the HR processes you don’t want in a spreadsheet:
1. Payroll
Using spreadsheets for payroll management is just a really bad idea. We haven’t seen this as much recently, but if there is anybody out there still using a spreadsheet to calculate payroll, please stop!
The biggest issue with payroll-via-spreadsheets is accurate tax calculation. It is on you to correctly calculate federal, state, and local taxes based on current tax rates. You will need to look up the tax tables or use tax withholding formulas provided by the IRS and local tax authorities. While most U.S. cities and counties do not impose a local income tax, over 5,000 jurisdictions (encompassing counties, cities, school districts, and special taxing districts) in 16 states DO have a local income tax.
Tax remittance is another nasty challenge with self-managed payroll. Based on your payroll frequency and total taxes owed, you’ll need to deposit federal income tax withheld, Social Security tax, and Medicare tax. You would have to use the Electronic Federal Tax Payment System (EFTPS) to make these deposits. Then each quarter you would file Form 941 as well as your state and local returns. At the end of the year you’d file Form 940 and provide each worker with a W-2 or 1099. When it comes to remittance payments, be aware of the due dates for tax deposits and filings. Missing these deadlines can result in penalties and interest charges.
Because of the complexity and risk of errors, most businesses opt for payroll software or professional payroll services to handle these tasks more efficiently and accurately.
2. Time Tracking
While it's possible to track hours and calculate overtime in a spreadsheet, the process is time-consuming and error-prone. Getting all the employee clock in and clock out data is a challenge for spreadsheets. Preventing buddy-punching and time theft is challenging as is ensuring compliance with labor laws for overtime, shift management, and other labor laws. You'll find several challenges with tracking hours manually in a spreadsheet:
- Human Error: Manual data entry is prone to errors such as incorrect time inputs, calculation mistakes, and inconsistencies. These errors can lead to inaccurate tracking of hours worked, affecting payroll and compliance.
- Time-Consuming: Entering and verifying time data manually is time-consuming, especially as the number of employees and workdays increases. This process can take up valuable time that could be spent on more strategic HR activities.
- Lack of Real-Time Data: Manual tracking does not provide real-time data. Managers and HR staff cannot quickly access up-to-date information on hours worked, making it difficult to manage workforce schedules and respond to immediate needs.
- Difficulty in Managing Large Data Sets: As the organization grows, managing a large volume of data in spreadsheets becomes cumbersome. Finding specific records, making bulk updates, and generating reports can be challenging and inefficient.
- Compliance and Reporting Issues: Ensuring compliance with labor laws and regulations can be difficult without automated alerts and validation checks. Manual tracking may lead to non-compliance issues due to overlooked errors or incomplete data.
- Limited Data Analysis Capabilities: Spreadsheets have limited capabilities for analyzing time-tracking data. Generating comprehensive reports, identifying trends, and making data-driven decisions is more complex and less efficient compared to using specialized time-tracking software.
Not to mention if you have workers in multiple time zones or if you want to pay differential rates for different work. Overall we definitely recommend using software to track hours worked.
Case Study
Learn how one small business made the leap from tracking time using spreadsheets to using modern software.
Case Study
Learn how one small business made the leap from tracking time using spreadsheets to using modern software.
3. PTO accrual
Over the years we’ve seen dozens of examples of companies trying to manually manage PTO—and it is a constant battle. Tracking PTO requests, approvals, and accruals manually is a great way to go insane. Especially in a growing organization. Just responding to employee requests to check a balance or make requests can become a huge hassle.
And the pain is felt by employees as well as HR pros. Sharing spreadsheets with company time off data is a privacy problem, so most of the time when PTO is manually administered the requests for time off, or to check a balance is done by email, leaving HR pros with a lot of email to answer each day.
4. Recruiting
An Applicant Tracking System (ATS) is a key part of any HR tech stack. While using a spreadsheet for recruiting and applicant tracking is possible, it is so labor-intensive and prone to errors that it is a solution-of-last-resort for most businesses.
Tracking candidates via spreadsheet is difficult because all the resumes are either printed on paper or are in someone’s email inbox. Having all the candidate info scattered makes it very difficult to quickly review and decide on candidates—and especially more difficult to get input from members of a hiring team. Communication via email is disjointed and disconnected from the candidate so it takes longer to gain context and make decisions. In recruiting speed-to-hire can be crucial and spreadsheets are too slow to keep up.
Part of the slowness has to do with not being able to easily automate key actions, like rejection letters, scheduling interviews, plan interview questions, and coordinate with the hiring team.
We recently talked with one company about their recruiting process that was dependent on spreadsheets. Tara said (understatedly) that things were not organized to her satisfaction. Their processes were complicated and involved a lot of spreadsheets. Tara says “We were tracking applicants in an Excel spreadsheet.” The primary problems they faced were related to efficiency—the process was very time-consuming to manage as they ramped up hiring, and Tara says the mental strain of keeping track of everything manually was exhausting.
Case Study
Learn how Tara saved time and removed a ton of stress by moving away from spreadsheets and into Eddy.
Case Study
Learn how Tara saved time and removed a ton of stress by moving away from spreadsheets and into Eddy.
5. Onboarding
When you create your onboarding process, a reliable checklist is one of the most important parts of the process. A spreadsheet can work to document the checklist and the status of each task, but it falls apart when it comes time to automate the tasks on the list. Documents need to be signed. Forms like the I-9 and W4 need to be filled out quickly and require a signature. Communicating with the new hire what to wear and what time to show up on day one can’t be done in a spreadsheet.
Team tasks also require communication and follow through to make sure you get things like an email address created or a uniform ordered. If you track this info manually you also have the extra effort of entering duplicate information into your spreadsheet as you move from candidate to offer letter to onboarding.
Onboarding also requires a lot of training for new hires, as well as documenting existing licenses, permits, or certifications. Spreadsheets do not provide easy access to the training materials and make it difficult to send out reminder emails when a training or license is up for renewal.
And finally, measuring the success of your onboarding process is much more difficult in a spreadsheet. It’s important to look at employee retention rates, time-to-productivity, and new hire satisfaction in order to measure how things are going with onboarding.
Onboarding software should help you be more efficient, improve compliance, and also make the employee’s lives easier at the same time.
Final Thoughts
Effective software simplifies all these processes immensely. Software can automate work, provide real-time updates, and enable seamless collaboration among team members. This reduces errors, ensures timely completion of tasks, and enhances the overall employee (and HR pro!) experience.
Plus, software can generate comprehensive reports and analytics, helping you identify and address any issues promptly, ultimately saving time and money for the organization.
Buying HR software is not easy. Check out our guide to creating the ideal HR tech stack. Over 800 companies use Eddy to simplify their work and create better HR processes. See Eddy for yourself by scheduling a demo today.
