By: Michelle Craddock, Midwest Regional Account Manager
When I talk to clients, I like to compare managing employee information through an Excel spreadsheet to playing a game of Tetris. At first it’s easy to put all the pieces in place, but as it progresses and pieces – or in HR’s case, information – appear at a faster pace, it can get overwhelming and messy, fast.
That’s when we come in. I like to think that we’re kind of like that piece you’ve been waiting on for what feels like an eternity. We help slow the game back down, cleaning up rows and rows of blocks – or data – and help you, the HR department, better manage any new information that’s sure to appear through a workforce platform.
When we describe it as such, clients and prospects tend to get a pretty good understanding of both the power and efficiency of choosing a workforce platform. They see the benefits, recognize the opportunities and even get excited just thinking about all the possibilities and free time they’ll have to devote to other aspects of their jobs.
But every now and then we run into someone who doesn’t want to buy the cow when the (Excel) milk is free.
Don’t get me wrong, Excel is a great tool for a number of things. For awhile, it might have even been the best tool to help manage aspects of the HR process, especially for smaller companies with even smaller HR budgets. It just isn’t anymore. HR teams are doing more than ever and need a tool that can keep up with them. That means handling everything from payroll and benefits to talent management and performance tracking, all while maintaining compliance with local and federal regulations.
So, before you say no to an automated solution, take a look at these three areas to find out where your “free” solution might be costing you a lot more than you think.
Time is Money
If you’re handling payroll, HR and TLM administrative tasks in house then we’re willing to bet you don’t have time to do much else. In fact, according to a survey done by the National Small Business Administration, “In 2014, 40% of small business firms reported they spend more than 80 hours per year dealing with federal taxes – that’s two full work weeks spent on just federal taxes.” The survey also reported that respondents said they believe they “spend more than $5,000 on administrative federal taxes.”
But it doesn’t just stop with tax documentation. A quick browse through the Society of Human Resources Management’s (SHRM) website uncovers almost 60 (57, to be exact) possible spreadsheets and workbooks for HR professionals.
Ok, so you probably aren’t using every single spreadsheet available, but let’s assume you’re using 10 of them. And, of those 10, let’s say that each has a total of 30 different places where data needs to be keyed for a hypothetical workforce of 100 employees. Let’s also assume that it takes 5 seconds to enter each piece of data and that those spreadsheets need to be updated quarterly.
If my math is correct, that equals a little more than one full week each quarter (41 hours) for a total of four weeks each year spent entering data. Combine that with the 80 hours spent on federal taxes and your HR department is already losing 6 weeks annually to administrative tasks.
And that’s assuming all of the information entered is correct! Unlike word processing applications that put those handy red lines under your misspellings, tools like Excel are much more literal. Seemingly minor errors such as adding an extra PTO day to an employee record or misplacing a decimal point in an employee salary could end up costing your company some serious cash and damaging the credibility of your HR department.
Ever heard of the term “Premium Leakage”? If not, it’s something we often use to describe a situation where a company forgets to terminate insurance when they terminate an employee. Premium Leakage can – and often is – a very costly mistake that quickly adds up, too. In some instances, we’ve even heard of companies having to shell out nearly $10,000 per terminated employee. So, what often causes this costly problem? You guessed it, manual entry into multiple spreadsheets.
Know the Rules
Despite what you may have heard, rules are not made to be broken. This is especially true when it comes to maintaining compliance with the U.S. Department of Labor and major regulations, including COBRA and ERISA. Consider the following from the site Compliance Dashboard, “COBRA compliance is an actively litigated area with many pro-employee and beneficiary interpretations by the courts.” In two separate cases, a court even ordered plan administrators to pay up with a sum of $279,840 for failure to provide COBRA notices to two qualified beneficiaries in one case, and medical expenses of $125,000 and attorney fees of $27,000 in the other.
Much like COBRA, not complying with ERISA regulations can also cost companies a pretty penny. Once again, our friends at Compliance Dashboard have some compelling details that show many employers don’t even understand that most of their group insurance benefit plans – medical, dental, vision, life, LTD, STD – are subject to ERISA. They note that “Failing to follow ERISA’s reporting and disclosure requirements, such as filing form 5500, can result in penalties of $1,100 per day for each plan not properly reported.”
This isn’t a few hundred dollars we’re talking about either. Failing to comply with either of these regulations can end up costing companies sums in the hundreds of thousands. Money that could otherwise be saved by simply choosing to work with a partner whose job is to stay on top of the latest regulations and communicate details and needs to clients.
Have you run into issues with your own manual solutions or saved time and money by switching to a workforce platform? Tell us all about it in our comment section below.