Are you a small to mid-sized business? Do you think document management software (DMS) for human resources is the kind of application that only large businesses can afford to implement? Is DMS truly the expensive, complicated large-enterprise product it seems? Not anymore.
The Evolution of Document Management for Human Resources
Document management applications were developed to eliminate the clutter of paper documents and space-eating file cabinets by storing personnel documents in electronic form. The first dedicated DMS systems were self-hosted solutions, priced for high-end companies managing millions of documents. These early systems required companies to host the software on high-capacity servers integrated within their network. There were up-front costs for software licensing and maintenance, potential additional IT resources, equipment, and security, as work teams in remote locations required access. While they did help businesses organize paper and digital files in one central location, the investment was usually out of reach for the SMB business community.
Early attempts at electronic document management in SMBs saw companies trying to control their paper document inventory by creating a hierarchical electronic filing structure in their network, with folder categories and specialized document naming conventions. It was certainly a step in the right direction. It reduced the paper clutter, which, in turn, reduced the cost of physical storage and maintenance. It freed staff from keeping track of paper files and, at least theoretically, made documents easier to find.
But manual document management didn’t stand up to the rigors of the real world. Documents were often misclassified or lost. Working collaboratively, from multiple locations, still required opening the network for remote users, which introduced security and connectivity concerns. Work team productivity suffered. Multiple document formats and unstructured digital data made classification and retrieval even more complicated. In the real world, the manual system broke down pretty quickly.
In the Human Resource department, unique requirements for security, integration and workflow made implementing these early solutions even more complex. HR managers, charged with keeping track of large volumes of paper documents, also had the added responsibility of manually securing confidential employee records with controlled and limited access. The need to allow people to see only what they should see further complicated the technology required. This added security requirement for documents “at rest” or in transit, made early solutions even more expensive and usually put HR last on the list to implement new technology.
Adding to complications for DMS in Human Resources was the need to comply with a myriad of government regulations and corporate policies. A recent study by the Gartner Group, Hype Cycle for Human Capital Management Software 2016, cites regulatory compliance as one of the top drivers for implementing a digital document management solution in HR. Not surprising, since an organization’s compliance landscape, whether it is a small business or large, can cover a range of business activities including recruiting, hiring, compensation and payroll, performance management, time and attendance tracking, and off-boarding and termination.
Finally, increasing mobility in the workforce and the wide-spread use of mobile devices have inhibited the adoption of DMS technology in HR. In fact, fewer than 20% of companies with a DMS solution have deployed DMS on mobile apps. Yet, HR employees on the move needed mobile access for time-critical document review and approvals. The good news is that the mobile technologies that are driving this demand are also making it possible for HR professionals in the SMB segment to take advantage of DMS features and functionality.
Cloud Computing – the Great Equalizer
The migration of DMS systems from self-hosted applications to a globally accessible “Software as a Service” (SaaS) model has substantially reduced the investment in DMS, eliminating the #1 SMB objection: that DMS is too expensive for a small firm. New cost-effective, cloud-based solutions, with features specifically designed to address HR concerns of security and compliance, are now helping HR leaders and employees make the shift to a digital method of managing, organizing, and leading changes in HR. Nearly 78% of small-to-medium sized businesses are embracing the value of managing business data digitally.
What’s in it for HR?
An Aberdeen Group survey, Handling Paper in a Digital Age: The Impact of Document Management, reported that the top three reasons why respondents adopted document management technology were the same, whether you were an SMB or a large, multi-national company. Of the companies surveyed:
- 29% cited the cost of manually managing and working with documents was too high
- 39% said that using and processing documents takes too long
- 29% reported that their document volume is growing too quickly
These issues are compounded in HR, which generates a staggering amount of documentation that starts before an employee is hired and continues even after he or she has left the company. The typical on-boarding process, for example, takes 20 documents and over 30 minutes of data entry per employee, according to a study by Provoke Research Partners. Multiply the productivity gains and savings of HR document automation across all HR processes, like annual re-enrollment in insurance plans or employee compensation claims, and the compounding return on process improvement becomes clear.
Reduced Cost – the ROI potential in implementing a DMS begins with document handling costs but doesn’t end there. DMS saves a substantial amount of money by eliminating paper document clutter and its physical storage costs, such as on-site space usage, off-site expenses, manual archiving and destruction schedules, and filing supplies. Other costs affected by DMS include the costs of copying, the labor for document search, retrieval and filing, and the expense of document distribution (shipping, mailing, etc.).
These are the obvious costs. But what about the savings in reusing, instead of recreating information? Or the cost benefits of simplified collaboration within HR teams that result in higher productivity? What about the reduced cost (and risk) of lost documents? The value of a secure and accessible archive of business assets? DMS has a favorable impact on all of these costs – both tangible and intangible.
Easier and Faster Search and Retrieval – The most apparent advantage of automated DMS is the improved efficiency and time savings to find, use and access documents later. Time saved translates directly into increased productivity and DMS’s flexible indexing, better archiving, improved control over document retention and destruction, and remote access from any internet-enabled device, anywhere and anytime, boosts client responsiveness, personnel morale, and performance.
Added Document Security – Document security in HR is a central issue for companies of all sizes and SMBs are no exception. Sensitive documents managed through DMS are controlled far more securely than manual alternatives. Administrators can grant limited or open rights based on the individual user, work groups, or other categories. The DMS also maintains an auditable record of every user who views a document, accesses it, and modifies it.
Secure and Improved Regulatory Compliance – Small and mid-sized organizations face the same compliance and security issues as multi-billion dollar companies. Non-conformance to Federal and State regulations can result in fines, revoked licenses, and criminal liability. DMS helps establish and ensure compliance with government legislation (Civil Rights Act, the Fair Labor Standards Act, and the Age Discrimination in Employment Act) and industry regulations (e.g. Sarbanes-Oxley, OSHA, HIPAA, PIPEDA). DMS reduces the risk of non-compliance as well, with features to automate records retention schedules, and classify and store new documents.
Collaboration and Innovation – Document collaboration means that multiple users can work on a single document from different offices. Collaboration in the workplace creates an innovative culture that a robust DMS can enhance. Real-time collaboration also encourages innovation by eliminating unnecessary processes and clearing the way for collaborative discussion. At a minimum, a DMS’s collaboration features, such as being able to monitor the authoring, review and approval process, maintain version history, record changes, and capture comments, make it easier and more efficient to work within a team. When different teams work on the same project, DMS helps team members get past geographic and technical barriers to communicate more efficiently with each other. The result is the cohesion of thought, purpose, and quality within the team and within the organization.
Integration with HRIS – The obvious benefit of integrating your Human Resources Information system with the DMS is that it eliminates duplicate entry of data and the risk of entry errors between systems. But integration has other benefits, including easy but tightly secured access to important documents, more efficient HR management and compliance with regulations, and improving communications across all levels in the organization.
Better Backup and Disaster Recovery – Businesses that have all of their documents stored in physical filing cabinets are at risk of losing documentation because of the potential for fire, water damage, and other disasters. DMS gives business an instant disaster contingency plan, protecting their enterprise information in a secure, off-site hosted facility.
DMS – Not Just for Large Firms
Today’s DMS solutions for HR professionals have evolved into cost effective, secure alternatives to paper-intensive systems and are easing the shift to the paperless office of the future. HR departments can now leverage the same power and efficiency of document and data capture that other core enterprise functions have been leveraging for years.
Jeff Frankel, Principal of docSTAR, serves as Vice President of Marketing. With more than two decades’ experience in corporate business development, he has worked with industry-leading firms including Authentidate Holding Corp, Trac Medical Solutions, Health Focus of NY, EFS Healthcare Group and Ernst & Young and offers innovative perspectives on streamlining business for improved efficiency and productivity.