According to our recent HR Employee Communication Survey, 23 percent of respondents say they use paper-based processes to communicate with employees, making it the most popular method. That means more HR departments are using paper than email (19 percent) or an intranet (18 percent). This is a potential ticking time bomb. Given the volume of HR documents and the complexity of data retention requirements, paper-based systems can quickly become unmanageable.
For example, HR is not just responsible for HR documents such as job profiles, salary structure, time off policies, and employee handbooks. Legal documents such as non-disclosure agreements, offer letters, and restrictive covenants (non-competes) are also within the domain of HR.
As for retention requirements, think about how complicated it would be to retain different types of documents for the appropriate amount of time. Hiring records (one year), payroll records (three years), separation/termination records (five years), Family Medical Leave Act records (three years after termination), retirement benefits (six years), employee tax records (four years) and countless other types of paperwork need to be stored securely for different periods of time before being responsibly destroyed.
Of course, some organizations keep every document forever, which creates another set of problems and risks. A study from eFileCabinet found that it costs $25,000 to fill a four-drawer file cabinet and $2,000 per year to maintain it. Paper documents are also a productivity killer as knowledge workers waste an average of 150 hours per year working with paper.
Paper costs far more to maintain than electronic records, which don’t require paper, ink or physical space. Paper is also more likely to be irreparably damaged by flood or fire, while electronic documents can be backed up to remote locations. And when you need to find a document, would you rather use search functionality to pull up an electronic version or go digging through boxes and file cabinets?
So why aren’t organizations converting to digital HR documents? For many organizations, management hasn’t issued such a mandate. Some still need physical signatures on paper, while others just don’t understand the paper-free options available. Some organizations simply prefer paper, while others blame suppliers and customers who continue to use paper.
Legal concerns are largely unfounded as long as the electronic version of a document maintains the integrity, clarity, legibility and authenticity of the original. From a legal standpoint, it can be beneficial to have a record of who has accessed a document, which is far easier to create and maintain with electronic documents. However, an electronic document can be falsified, so organizations need to take steps to make this as difficult as possible.
From a practicality standpoint, organizations must make sure electronic documents are properly tagged. This will ensure the documents can be searched and retention rules applied. Multiple backups are recommended to ensure accessibility in case of disaster, but access should be restricted to the appropriate personnel. Records that have data subject to privacy rules should be marked as such and stored separately according to compliance requirements.
A secure, well-organized HR portal is the ideal repository for your electronic files. A portal will make it easier to search for and control access to various types of data. If you’re hesitant to convert from paper and concerned about how you’ll manage electronic files, consider evaluating HR portals and the features and capabilities they provide.
Written and composed by Lyndsay Soprano, Director of Marketing