How much is HR admin costing your business? | SME blog

Published on August 9, 2021 by Kate Marchant
    HR · HR systems
How much is HR admin costing your business

HR admin can be very costly, especially for small businesses. HR consultant Kate Marchant outlines the main hidden HR admin costs and how to reduce them in this guide.

Some people might be surprised to discover that Human Resources is not all about the administration. Sure, there is a high level of essential admin associated with the HR function; however, there is so much more to HR than the admin alone!

Unfortunately, HR admin can be time consuming and one of the costliest parts of HR for a small business. So, let's have a look at what HR admin includes, how it may be costing you, and how to improve it for your business.

What is HR admin?

What is HR admin

Well, HR admin can be described as the record keeping and processing of a business’ people activities for the duration of the employee lifecycle. If you are a business owner employing people, there will be a requirement for you to carry out HR admin tasks. The more employees you have, the bigger the HR admin burden.

Many SME businesses often assign an ‘Administrator’ or ‘Office Manager’ to carry out their HR Administration; however, this is not without risk, as often the individuals fulfilling these roles are not qualified in HR.

What’s the difference between HR admin and other types of HR work?

What’s the difference between HR admin and other types of HR work

Using a disciplinary hearing as an example, the actual HR work will usually involve advising the line manager of the process to follow (in line with employment law) and often attending the disciplinary hearing to support the line manager and advising on the potential options open to them in terms of appropriate sanctions.

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The HR admin work associated with a disciplinary hearing may involve writing and sending the invite to the employee, writing up any notes from the investigation, taking notes at the hearing, compiling the outcome letter, and updating any HR system as appropriate. In many cases, the same person will do both the HR advising and the HR admin. In larger companies, the admin tasks relating to a disciplinary hearing are often done by the HR admin team, under the direction of the HR Advisor or Business Partner, as it is a specialised skill.

The 4 hidden costs of HR admin

The 4 hidden costs of HR admin

HR admin is time consuming and the cost of getting it wrong can also be quite high, depending on the issue; for example, checking someone’s eligibility to work in the UK when they are about to join a company is often seen as an admin task – yet if you fail to do it correctly, you risk employing someone who is not legally entitled to work in the UK and exposure to hefty fines, bad publicity, and damage to your employer brand.

Much of this essential HR work is often overlooked in SME businesses or possibly passed over to someone lacking the professional qualifications and experience, who is left to navigate their way through clunky manual processes they don’t really understand.

So, without wishing to scaremonger, here are more hidden costs of clunky, manual HR admin…

1. Human error

We all make mistakes; however, if your HR admin processes consist of clunky manual ‘systems’ involving spreadsheets, duplication of work and hard copy records, the more likely it is that mistakes will occur. Mistakes can be costly, especially those that lead to compliance issues or perhaps a GDPR breach. Further, relying on manual HR processes to feed employee data to payroll can also lead to pay errors such as overpayments or underpayments, not to mention disgruntled employees!

Learn more: 5 reasons you shouldn't be using spreadsheets to manage your HR

2. Time

HR admin takes time

When HR admin involves a high volume of manual input and record keeping, it can really steal time and keep HR people and managers away from the activities that really add value. Plus, if you store information using a mix of spreadsheets, manual records, and hard copy files it can take an inordinate amount of time to produce useful information.

For example, if you want to look at turnover rates and reasons for leaving, it could be a mammoth effort just to collate all the data. On the other hand, if it’s stored in one HR system, the information you need could be available at the click of a button.

3. Fraud

Unfortunately, the more manual systems and processes you have, the higher the risk of fraud. For example, it is easier for an unscrupulous payroll manager to put a ‘ghost’ employee on the payroll, and for it to remain undetected, when the systems and regimes are mainly manual.

4. Employee turnover

Poor HR admin and employee turnover

Poor HR admin can result in employees leaving the business as they may not be inclined to tolerate continuing errors to their pay or employment records. Plus, it can also impact on the HR team itself as they struggle with laborious manual admin and often find themselves bearing the brunt of an employee’s wrath when errors are made.

High staff turnover? Learn more about high turnover rates with our guide

So, what’s the answer for better HR admin?

Well, we can’t escape the need for HR admin, as it is a necessary evil - very much an essential and important part of any business activities. However, you can make it easier and, importantly, much more secure.

HR systems such as myhrtoolkit offer HR software solutions specifically for SMEs by enabling them to have streamlined HR processes all in one place that doesn’t cost the earth. Such systems allow for the following:

  • The ability to plan, track and approve holiday requests online.
  • The ability to record and track absence with the functionality to report on absence levels, trigger points, and reasons.
  • The management of training, both company courses and personal training/individual progression.
  • The management of performance by logging appraisals and tracking/reviewing objectives.
  • Document management – keeping staff documents in one place, plus also the ability to send documents to staff and track when opened and read.
  • Secure storage of all types of employee data, configured in such a way to help ensure GDPR compliance.
  • Self-service, allowing for employees to update their own records under supervision.

The amount of time these systems can save mean SMEs can quickly realise a return on their investment, with the added benefit of all essential HR information in one place with streamlined and efficient HR admin processes. This all allows for happy employees, even happier HR team members, and less room for costly errors. A winner all round!

If you're looking to get your HR admin and related costs under control, you can get a free trial of myhrtoolkit.

Read more from our blog

The 7 best HR cost-cutting strategies for small businesses

How HR can support business growth

How to create a business-driven HR strategy

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Written by Kate Marchant

Kate Marchant is an experienced HR professional and CIPD Associate Member who offers straight talking HR solutions for SMEs with friendly and jargon free advice through her consultancy Running HR Ltd.

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