Excel can be a helpful tool, but it quickly reaches its limits when managing human resources. As your company grows, so does the complexity of your HR tasks. In this article, we’ll explore the key warning signs that it’s time to move to a modern HR system – for better efficiency, improved data security, and smarter workflows.
The digitalization of company processes is increasingly becoming a topic we encounter more often today. It doesn’t matter whether it involves our colleagues or business partners – everyone agrees on its importance.
Most companies rely on what is readily available when addressing personnel issues — often, that is MS Excel. It is inexpensive, versatile, and very well known.
However, as the company grows, so does its personnel agenda and the complexity of business processes, and Excel naturally hits its limits.
HR Management in Excel: A Solution as well as a Barrier
Managing HR data offers many advantages, especially for smaller companies:
- Minimal costs: Excel is part of the affordable and globally used MS Office suite.
- Flexibility: Users can customize templates according to their needs.
- Quick deployment: Using Excel requires no complicated installation or initial setup.
In practice, however, companies that use Excel as their primary HR tool quickly encounter its limitations. These boundaries cause various problems not only for the HR department but for the entire organization, with the most typical being:
- Leave records: Managing a spreadsheet where employees record their leave can lead to duplications or data loss. Manual calculation of entitlements takes time and increases the risk of errors.
- Notifications: In Excel, you need to set up your own alerts or calendars. Without doing so, important dates such as contract anniversaries, probation end dates, or training deadlines can be forgotten.
- Attendance management: Manually processing attendance and linking it to payroll is time-consuming, requires high accuracy, and often necessitates a dedicated payroll staff member.
- Reporting: Management often requests reports on turnover, average salaries, or employee costs. When data is scattered across multiple files, collecting and processing it takes a lot of time and is prone to errors.
When Does Excel No Longer Suffice?
The most common critical point is company growth. When the number of employees exceeds 20–30, managing their data solely through spreadsheets becomes increasingly difficult. Additional challenges include:
- Data security: Excel files can be freely accessible, often sent via email or shared through the cloud without sufficient security.
- Lack of change history: If data in the spreadsheet is modified, it’s often time-consuming or even impossible to determine who changed what and when.
- Complicated permission management: Setting access rights only to specific parts of the data for particular individuals is complex or impossible.
- Dependency on individuals: The structure and logic of files are often known only to the creator. After their departure or reassignment, data management becomes unsustainable.
How Do Modern HR Systems Address These Issues?
HRIS (Human Resources Information System) is software designed to manage all aspects of human resources. Compared to Excel, it offers:
- Data centralization: All data is stored in one place and accessible based on permissions, with secure storage.
- Process automation: Attendance, leave approvals, document generation, and reminders are automated.
- History and auditability: Every change is recorded, increasing transparency and reducing error risk.
- Clear reports and analyses: HR systems provide managerial insights without manual intervention.
- Better collaboration: Employees can input leave requests, update personal data, or download necessary documents themselves — without contacting HR. The workflow for approving requests is handled directly within the system, eliminating the need for email exchanges.
Transitioning to HRIS: A Step Towards Efficiency
Implementing an HR system may seem like a complex step, but in most cases, it significantly simplifies work. The investment pays off through time savings, error reduction, improved overview, and data security.
Most common scenarios prompting companies to switch from Excel to HRIS:
- The company is expanding at a pace where Excel can no longer meet its needs.
- The HR department spends more time on bureaucracy than on employee engagement.
- Management perceives a need for more effective reporting for strategic decision-making.
- The company recognizes the importance of data security and personal data protection.
- HR processes are outdated and cannot keep up with the company’s actual needs.
A Few Facts to Conclude
Excel has been and remains a useful tool, but its capabilities for comprehensive HR data management are limited. At a certain stage of company development, transitioning to an HR
system becomes essential. Not because Excel fails, but because there are tools better suited for this task.
Find out if your company is ready for HRIS: Contact us for more information!