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How To Relieve The Burden Of Paper Employee Files

(10-12 minute read)

The human resources department is responsible for maintaining personnel and other employee-related files. Each file contains considerable information pertaining to hiring, job performance, compensation and termination—which is cumbersome and costly to manage in paper format. For this reason, businesses are increasingly going paperless. According to iPost, an email marketing provider, a company with eight employees can save an estimated $10,000 per year with a paperless system, while a company with 370 employees can save a staggering $1 million.

The Real Cost of Paper Systems

The Minnesota Office of Environmental Assistance reported that the average office uses around 10,000 pieces of paper per employee each year. With the typical four-drawer cabinet holding around 16,000 sheets of paper, it costs around $2,000 just to maintain that cabinet each year.

According to PricewaterhouseCoopers (PwC), the average company spends around $20 in labor to file a paper document. Organizations shell out approximately $120 in labor to look for a misplaced document and about $220 in labor to recreate a lost document. On average, 7.5 percent of paper documents are lost completely—and of the remaining files, 3 percent are misfiled.  

Due to the scope of time and expense involved in storing and maintaining paper files, there’s a big chance the HR staff will become stressed out. Therefore, employers should consider an online system that enables easy and secure management of employee records.

Data Management in the Cloud

There are several options available to companies looking to transition from paper files to a paperless or online system. The most popular among them are document management systems and cloud-based HR software.

A document management system casts an extensive net, focusing on a wide range of needs rather than those solely linked to HR. Conversely, a cloud-based HR system is built specifically for human resources needs, making it a more suitable choice for storing employee files. This distinct benefit of cloud HR systems has captured the attention of human resource professionals. The small business market is also catching on.

A study by PwC found that when it comes to cloud adoption, HR leaders are at the forefront. Further, Forbes magazine reported that 78 percent of U.S. small businesses will have fully implemented cloud technology by 2020.  

Well-designed cloud-based HR software delivers comprehensive human capital management solutions that encompass all things HR, including benefits administration and payroll processing. The application—which is Internet-based—stores and sustains a wide range of HR-based information, including the following employee data:

  • Resumes
  • Job applications
  • Job descriptions
  • I-9 forms
  • Offer letters
  • Employment agreements
  • Attendance and absence records
  • Time sheets
  • Vacation and sick leave records
  • Disciplinary memos
  • Performance evaluations
  • Transfer or promotion records
  • Termination or layoff notices
  • Direct deposit forms
  • Tax withholding forms
  • Benefit election records

By logging into the system only once, authorized HR staff can swiftly access all the information they need, reducing labor time and the need to set up and maintain physical storage spaces. Many cloud applications come with self-service options, which allow employees to self-manage tasks related to their lifecycle—from onboarding to development to off-boarding—which not only takes pressure off HR but also gives employees a sense of autonomy. Additionally, the system lowers the chances of data getting lost or misplaced and greatly decreases the risk of noncompliance with government agencies.

It bears noting that no efficient HR department is fully paperless, as there are certain documents that should be kept in hard copy format as well, such as employee performance documents that include notations made in ink. The goal is to keep paper documents to a minimum.


Data security remains an ongoing issue for employers who have yet to adopt cloud technology. This is understandable when you consider the many publicized data breaches that have occurred online. Therefore, employers who are considering cloud-based HR technology should ask potential vendors pertinent questions about their security measures, which should be designed to guard against security breaches. Also, employers making the transition must ensure they comply with any applicable laws relating to the use of electronic communication and recordkeeping.




October 11, 2018




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