By Randall Sanders
View Original article in HR Strategy and Planning Excellence Essentials Magazine
January 26, 2015
The running theme throughout this piece is compliance. Take a moment and Google the word ‘compliance’ and check out the recent news. You will probably find some very large organizations are in the midst of multi-million dollar issues relating to compliance. As one lawyer put it, “In this regulatory climate the role of compliance is becoming increasingly important.” (Adam Kaufmann, partner at Lewis Baach PLLC)
Since compliance impacts organizations, we’ll explore the top 6 reasons you should digitize your employee files. Most people probably don’t think about digitizing files when discussing compliance but the reality is, employee files, and other related documents, are subject to audits, regulations, controls, and specific retention periods, and relying on digital files instead of paper files dramatically reduces your burden of compliance.
#1 Scale – Spend your time wisely
The first reason stems from one of the on-going struggles HR departments face, the inability to scale with the organization. Typically, an HR department is one of, if not the last department to get approval for new headcount. This means “doing more with less” that makes it really important to understand how your team spends its time.
A typical worker spends, on average, 51 minutes per day looking for paper documents, files, and emails. Over 4 hours a week, or over 10% of the typical work week is lost looking for documents. Imagine having that time back? Think of all the things you and your team could accomplish. With all the responsibilities you are managing, how can you afford to waste this much time looking through employee files?
What if you could find documents in 30 seconds or less?
Think about that… Imagine having all business critical documents available at your fingertips. Now imagine those documents in an organized and structured environment allowing for targeted results so you aren’t spending time fishing through pages of results.
#2 Geography – Where are the documents?
The second reason is for organizations that are geographically dispersed. Don’t think this doesn’t apply to you because geographically dispersed can mean different states, towns, or even floors within a building. Typically hiring is done at an individual office while the paperwork is, or should be centralized. There are a couple of challenges with this process. The first is logistics. How does the new hire paperwork get from point A to point B? How does the hiring manager access those documents? Do they end up keeping copies? How much back and forth occurs ensuring paperwork is complete and filled out properly?
Challenges continue to occur with employee mobility. Here’s a scenario: An employee gets promoted to a new department. How does the paperwork flow from former manager to new manager? Similarly, if that employee moves between office locations, business units, or even regions, how does the new manager gain access to the employee file? And is HR creating multiple files for that individual?
Since paper is the medium of choice in many organizations, the paper shuffle is constant.
And of course, when an employee does poorly and the manager needs to take action, the problem is compounded. Consider your turnover rates and the costs, risks, and the chance of being out of compliance by having missing or incomplete information in the employee file. Who hasn’t faced an employee lawsuit and discovered the employee’s file was incomplete?
#3 Access – Who can see what and how do they get it?
Another challenge is HR documents aren’t static. You need a way to easily and securely share documents with internal people who need access in order to manage their employees. You also need to share these documents with external parties like the government, auditors or lawyers. The key is to share them in a secure manner. A survey of HR professionals, found that 69% of those surveyed share important documents with 3rd parties at least once a quarter or more. 11% need to share at least once a week!
The same poll also found that 76% use email as their primary delivery method, and 67% deliver physical copies of the files. Let’s describe why this creates a huge issue:
First, the document is scanned from a multi-function device, and is in your inbox.
You forward that email, with attachment, to the individual who needs it. Now a copy of that attachment is in your outbox and in the persons inbox.
Let’s assume you are super diligent and delete those 3 copies; guess what, they still reside on the email server. Plus, you don’t know what the receiving person has done with that attachment. Printed it? Forwarded it? That one sensitive document quickly turns into multiple unsecured copies.
Same with the physical files. Copies are provided to the requesting person but then what? What happens to those copies? Do they sit in an unlocked file drawer in the manager’s desk?
The reality is these records should never leave your possession. Period. Digitally or physically. And you should have a complete audit of who has viewed them, and when. And, you should be able to restrict access to view only, so no extra copies are made or forwarded.
Reason #4 Silos – Too many systems and not a single view of an employee?
No doubt you already have technology solutions that deliver one or more specialized functions. HRIS, Talent Management, Onboarding, and possibly Review and Succession planning. These HR technologies all serve a purpose but they have created information silos for organizations. It is hard to integrate them into a single comprehensive view of an employee. You need to log into each system and remember how each works. You are on a scavenger hunt to gather up a comprehensive view of an employee.
The same documents or information might exist in more than one system, but they may be different versions. In some cases people are printing out documents from one system to add them to another or to put them into a paper personnel file. Unfortunately, paper is frequently the only common integration mechanism that all of these systems understand.
Over the last few years there has been an increase in companies adopting onboarding or recruiting software. Forrester’s 2011 Research revealed that 74% of companies surveyed had 4 or more systems in addition to their HRIS. Some software ‘suites’ claim they have HR document management but attaching a document to an employee record one document at a time is not helpful. Real HR document management goes beyond simple attachments. Remember, the underlying theme is compliance, not just some place to put things.
What if you could tie it all together and easily create a single comprehensive view of an employee?
What if there was a way to connect diverse systems and paper files. The answer is to have the various systems all feed into one central digital repository offering a complete view of the employee. There is no need to replace existing systems, and there is no need to physically copy all of the information into one repository. Your HR document management system should reference information that is managed in the other systems and serve as a monitor to ensure compliance. For example, if one system tells you an individual is a commercial driver, but your commercial drivers license system doesn’t show them as having a commercial license, your HR document management system should identify the problem and trigger a workflow to get it corrected. Now that’s compliance.
#5 Confidence – How do you know the files are complete?
Ask yourself this question – “How confident are you that all your employee files are complete?”
Can you say with confidence that you have a complete set of documents for all of your employees? Are you sure they are all up to date? Are they fully executed copies and not drafts? Unfortunately our files don’t tell us when documents are missing. The moment when you need a document is the wrong time to find out you don’t have it.
Another poll asked business users that same question. It turns out they weren’t very confident at all. Only 6% of respondents were very confident their employee files were complete. That means 94% of respondents were worried or think they are missing some or parts of their employee files.
What if you knew with certainty that the files were complete?
What if you could get to 100%? Would that help you sleep better at night or be prepared for that internal audit? With strong workflow and monitoring controls, your HR document management system should constantly scan through all employee files, testing for completeness and looking for expiring documents and those needing updating. Let your system do the worrying.
#6 Retention – Are you keeping only what you must and eliminating what you should?
You probably have a records retention policy. According to a survey given to senior IT executives at 500 enterprises the need to have a formal retention plan is certainly getting more attention. But the growth isn’t large enough.
~Source: January 2013 Information Retention and eDiscovery Survey Global Results (http://symantec.dcig.com/2013/01/cleaning-up-clutter-top-priority-2013.html)
The issue with most organizations, according to this survey, is the implementation of retention policy. Due to silos of information, paper records, and email as the primary methods of sharing information, how confident are you that you are implementing and following your company’s retention policy?
For HR documents, you need to ensure records are kept as long as needed, but no longer. Conversely, your CFO probably wants to ensure that all records are destroyed as soon as they are eligible so that you have a strong position of consistently following policies in the event a destroyed document ever becomes a legal issue (also known as spoliation of evidence).
How DOES digital document management help?
Each document type has a specific retention schedule. In most cases the retention period is triggered by an employees termination date, but some documents have other triggers. When HR documents are on paper, they all go into a folder, and it is totally impractical to constantly monitor each file and clean out the ones that need to be destroyed. Frequently, the folders for terminated employees are put in a box and shipped off-site, where nobody is going to rummage through them ever again.
Your digital HR document management platform should manage each document according to its unique policy. The system will automatically trigger the elimination of documents according to policy.
Perhaps most importantly, a system that understands information governance also includes a “Litigation Hold” mechanism. In the event there is a legal dispute, an audit, or regulatory issue, it is critical that the system freezes the related documents, and prevents them from being destroyed. With a digital platform and a strong information governance solution, the HR managers and the CFO each achieve their goals.
We started with a focus on compliance, and each of the six reasons to digitize your HR documents has tied back to that theme. Chances are that one or more of these reasons resonates with your situation. As an HR professional, you have a broad range of responsibilities, but it is important to recognize that creating a proper environment for the safe, secure, and compliant management of HR documents is a vital part of those responsibilities.
Moving from a paper-based HR document environment to a digital platform is a big leap forward in your ability to perform this critical responsibility. However, ‘going digital’ is more than just scanning documents and attaching them to a bunch of different systems. To get real value out of going digital, you need a system that drives compliance and visibility into your files to ensure completeness.
About the Author:
Randall Sanders is a Senior Solutions Specialist with Archive Systems. He has spent over 15 years in the records management industry, and assisted numerous HR departments with their digital initiatives. He can be reached at: firstname.lastname@example.org