At first glance, manual HR processes like spreadsheets, email approvals, and paper forms can seem like simple, practical ways to manage people-related tasks. But beneath the surface, these methods often carry hidden costs that can slow business growth, drain resources, and even create compliance risks.
In this blog, we explore what manual HR involves, why some employers still rely on it, and most importantly, the often-overlooked costs. We also look at how automation can address these challenges and how to transition effectively.
What are manual HR processes?
Manual HR refers to handling people management tasks without dedicated HR software. Instead, tasks are often completed through:
- Spreadsheets, word processors, or even hand-written sticky notes
- Email chains for holiday or sickness confirmation
- Paper forms for onboarding and appraisals
- Filing cabinets or unsecured digital folders for storing records and sensitive personal information
Manual systems are heavily reliant on human input, and often lack centralisation or automation. While they may be manageable for small businesses, they become increasingly unsustainable as employee headcount grows and the manual human elements increase the risk of errors.
Why do businesses still use manual HR processes?
Despite the rise of cloud-based HR systems, many UK employers, especially small to medium-sized enterprises (SMEs), still employ manual methods for their HR processes. Common reasons for this often include:
- Perceived cost: Many small businesses fear that HR software is expensive, and a study by the Chartered Institute of Personnel and Development CIPD showed that cost was the third biggest consideration for employers when choosing a HR system. It’s important to remember that costing models will vary by provider. Some charge upfront set up costs, some have annual fees, and others have different pricing structures according to system bolt ons and functionality. Our pricing here at HRX is simple; it’s £2 + VAT, per employee, per month.
- Comfort with existing systems: Change can be daunting, especially if current methods seem to “work.” However, what’s familiar isn’t always efficient, as the saying goes, “if you always do what you’ve always done, you’ll always get what you’ve always got”. In order to take HR processes to that next level, businesses need to move on and embrace technology.
- Underestimating complexity: Some employers assume HR is just admin. But as businesses grow, tasks like compliance, payroll, absence tracking, annual leave management, and performance management become far more time-consuming, and if businesses don’t keep on top of these tasks then things can quickly go wrong.
What are the hidden costs of manual HR processes?
Many of the costs associated with manual HR systems are seemingly invisible at first but quickly mount up. Below are some of the most common hidden costs.
1. Lost productivity
Manual data entry, printing forms, and tracking down approvals all takes time. According to PwC, HR professionals spend around 40% of their time on administrative tasks. This inefficiency affects not only the HR team, but also line managers and employees waiting for responses.
2. Human error
Manual entry in spreadsheets and on forms increases the chance of errors. The European Spreadsheet Risks Interest Group has highlighted how even minor spreadsheet mistakes can have significant financial consequences and how around 90% of spreadsheets contain errors. In HR, errors in payroll, holiday calculations, or personnel data can lead to pay disputes or reputational damage.
3. Compliance risks
Manual HR often lacks built-in reminders for key legal requirements, like right-to-work checks or GDPR data retention. The UK Information Commissioner’s Office (ICO) has issued fines to organisations for mishandling employee data, something that could be avoided with secure digital systems.
4. Poor employee experience
A 2022 CIPD survey showed that poor people management processes are a leading cause of employee dissatisfaction. If your HR is clunky, inconsistent, or slow, it directly affects engagement and retention.
5. Limited insights
Without integrated systems, it’s harder to generate accurate reports on absenteeism, turnover, or various employee metrics. This limits strategic decision-making and may affect how well you meet HR obligations such as gender pay reporting or employee wellbeing tracking.
6. Lack of scalability
Manual systems do not scale easily. As you hire more people, tracking records manually becomes unwieldy and error-prone especially if your HR team remains small.
How can automated HR processes tackle these hidden costs?
HR automation can eliminate many of the inefficiencies described above and here’s how:
- Time savings and productivity gains: Tasks like holiday requests, onboarding, and document storage can be completed in a few clicks. A study by the Society for Human Resource Management (SHRM) found that 85% of employers that use HR automation or AI say it saves them time and/or increases their efficiency.
- Improved accuracy: Automation reduces manual data entry and provides in-built error checking. Payroll, for instance, can integrate directly with timesheets and absence data helping ensure people are paid correctly and on time.
- Better compliance: HR software often includes compliance alerts and secure document storage that meet UK GDPR standards. Many platforms include features to help track training, DBS checks, and right-to-work checks so that legal obligations are met.
- Enhanced employee experience: Self-service portals give staff instant access to their information – from payslips to absence records – and this boosts transparency and reduces HR queries. Staff can access their own record at a time that suits them with a web based system, and this autonomy improves the employee experience.
- Smarter decision-making: With built-in reporting and analytics, automated HR gives employers real-time insights into their workforce. The use of trusted, accurate data is crucial in helping businesses to make informed, data-backed decisions.
How to successfully transition to automated HR processes
Moving away from manual HR doesn’t have to be disruptive. Here’s a step-by-step process on how to do it in a structured way:
- Audit your current processes: Ask yourself what takes the most time and what’s most prone to errors? Start by identifying the pain points and then work forward from there.
- Choose a system that meets your needs: There are many HR platforms in the UK designed for all types of business. Look for systems that are GDPR-compliant and have strong data security features as must haves. Depending on your needs, you may want to research the software that delivers the best for your business. There is no point in purchasing and implementing a system that has features you don’t need and won’t use. Equally if a system doesn’t meet at least your basic requirements then find one that does. Look for client reviews and where possible, speak to companies who use the systems you are interested in to get an honest perspective of how it operates in a real world environment.
- Engage your team early: Involve key stakeholders in selecting and testing the system. Communicate how it will help them, sell the benefits of less admin, better insights, smoother processes, and use employees from different teams in testing to gather a range of feedback.
- Provide training and support: Ensure everyone feels confident using the new platform. Most providers offer onboarding support and online help centres.
- Track the benefits: Measure time saved, error reductions, and employee feedback. This will help you demonstrate ROI and further refine your processes.
Book a demo for our HR software today
Manual HR may seem manageable, especially in smaller businesses, but the hidden costs can significantly hinder productivity, compliance, and employee satisfaction. In a digital-first world, clinging to paper-based or spreadsheet-heavy systems puts employers at a disadvantage.
By embracing automation, businesses can streamline their operations, reduce costly errors, and create a better experience for both employees and managers. In the long run, this shift isn’t just about saving time, it’s about building a more resilient and forward-looking organisation.
At HRX, our HR software is a cost effective way for companies to save time, save money, improve productivity, and take away the pain of HR administration. We have robust data security measures in place and employees love using our system with its self-service features. Be sure to book a free demo today to see how it works, or get in touch with us for more information.
