The Real Cost of Manual Human Resources (HR) Processes During a Pandemic

Jul 24, 2020 | Blog Post | 74 comments

Target Funding — Finding much needed time (and money) savings by making the smart investment in Human Resources applications to support your team.

After only a handful of months the Covid-19 pandemic has forced small businesses across a myriad of industries to find new ways of doing business and managing employees with a focus on preserving essential funds. As a result, managing employees effectively and efficiently through the ongoing uncertainty has become one of the single most important functions for any
small business in these unprecedented times.

While businesses continue to make tough decisions to stay open and minimize workforce reductions, the pandemic has forced many companies to focus on minimizing overhead and designing their processes to run as lean as possible without sacrificing quality and output.

In fact, many of the business I have coached have decided to forgo entering into long-term office leases, and restructured some job roles to allow employees to work from home. Many have also taken the steps to radically restructure the foundational nature of their enterprises, but shifting production to entirely dissimilar productions lines to support shortages (think GM building ventilators) or moving from brick and mortar to completely online sales and support models.

During times with such potential for change, it’s ever more critical that the foundational aspects of managing your business, specifically as relates to workforce management and support, is a solid bedrock underlying your organizations goals. As with a majority of business, payroll generally accounts for a significant portion of operating expenses – managing this critical cost lever during times of unprecedented change is of singular importance. With the right software solution to manage human capital
concerns, companies can both reduce employee hours, and increase productivity resulting in substantial cost savings.

Having worked with more than 10,000 small business over the last two decades, I’ve observed that most companies focus a lot of their time and funding towards building out strong business development and sales organizations early, and implement bare minimum systems to support Human Resource operations. Aside from the cultural and organizational challenges this can create for a nascent enterprise, it can also introduce a lot of potential for legal and compliance risk over time.

Recently I was coaching a company owner that was required to provide all records on a particular employee to the Department of Labor. Unfortunately, before this need, the importance of proper record keeping for personnel had never been considered – it became a significant unplanned task for a number of individuals, with them spending 100’s of hours collectively to gather the
required documents. Had a proper HR software system been put in place earlier, the time involved to comply with the request could have been negligible, and the company could have been focused on more productive business-building efforts.

A survey done by ComplyRight indicated that more than 70% of small business employers are using traditional paper (ie. sticky notes) and manual methods (like a paper calendar or Excel) to support their HR processes. Not only can these processes be extremely brittle and likely to fail in moments of critical need, but they can also set the wrong working mindset. An organization I worked with years ago was subjected to an unannounced security compliance audit, revealing that more than 20% of the HR team had their passwords to sensitive employee details on a sticky note on their desktop monitors. This created a tremendous opportunity for identity theft, public censure, or lawsuits. The final action of sanctions from the governing authority was light in comparison.

How do you evaluate the true cost of completing HR tasks manually without any proper automation? One of the assignments I suggest to home services business owners that are being coached through Conquer is to log the amount of time spent in managing any HR-related task without automation. A usual estimate of the time spent on such actions is usually around 30 – 60 minutes per week. After tracking the time more closely, it is often ten times the amount originally estimated, mostly because they didn’t account for ancillary but associated activities, including reviewing timesheets, handling payroll, and general workforce management.

According to the Work Market 2020 In(Sight) Report, 78% of business leaders communicated that automation could free up to 60 hours a month — a significant cost savings for any business. This timesaving allows employees to work on critical assignment such as recruiting new hires and let the automation replace the burden of repetitive manual processes.

Many business owners will argue that the cost of replacing the HR manual process is far too costly. However, there are high costs that are associated with the use of manual procedures that you have to consider as a company.

  1. What is the impact of human error? When things are performed manually it increase the chances for human error and the cost of inputting bad data.
  2. What is the cost to your company for a time delay? Generally, manual processes take a lot longer than proper automation and may cost your company thousands of dollars each year in time delay. If you are able to automate standard HR procedures, it can reduce operational bottleneck and increase the overall productivity of each employee.
  3. What is the cost of increased compliance risk? With new regulations impacting businesses related to the pandemic, employers have to ensure that they are meeting compliance especially in industries that have essential services, or where compliance mandates may be changing as a result of external factors (such as a pandemic).
  4. What is the cost of not investing into proper automation? The cost of automation is at a fraction of hiring a full-time HR manager. For example, HRdirect Smart Apps offers business owners 12 different a-la-cart HR applications with each application costing only ninety dollars annually. If a business, just purchased the Time Off Request App they would be able to automate, track and document every time off request by every employee of the company for a total cost of $ 90 per year. Compare ninety dollars per year to the amount of hours an HR team members would need to track all the time off request for an average 50 person company annually.

One of the biggest challenges I coach on in the home services industry is how to manage employee scheduling for technicians. Scheduling employees, including finding replacement technicians when someone is unavailable to work their scheduled shift, is the area that offers the most substantial amount of time and effort saved by moving off of manual processes.

For many home services companies, if a technician cannot make a shift it is extremely time-consuming to find a replacement. The territory manager would have to call around to ask other technicians if they would take the shift.

With an integrated, online scheduling tool organizations can modernize their scheduling process to maximize operational productivity and meet all regulatory requirements while avoiding scheduling and payroll conflicts.

Quite honestly, there is not one company I have worked with yet that cannot benefit from the right HR process automation technology. With the availability of robust software applications like HRdirect Smart Apps costing less than $ 100 a year per application to manage employee scheduling, safety training, job application tracking and more, every small business owner is in a position to radically reduce manual processes and repurpose towards the most productive aspects of evolving their business.

Kedma OughKedma Ough is a nationally recognized small business funding expert and author of Target Funding, a book that helps you discover a proven system to get the money & resources you need now in order to grow your business.

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Michael L. Monen

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