A Beginner's Guide to HR Document Management – The Motley Fool
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by Elizabeth Gonzalez | Updated Aug. 5, 2022 – First published on May 18, 2022
Image source: Getty Images
Managing people effectively is a critical function of any human resources (HR) department. But managing the mountain of paperwork that comes along with it is just as important to the success of your business.
A successful HR document management strategy protects sensitive data, enhances administrative efficiency, and protects your business from risk. It also empowers your leadership teams with data to drive better decision making.
With the following steps, your business can cut the HR paper mountain down to size and make your HR documents work for your teams.
HR document management involves managing the entire lifecycle of employee documents to ensure proper storage of required records, controlled access to documents and information, and timely disposal of obsolete files.
While it takes time to create file management strategies for your small business, your investment will pay off in the following benefits.
The most compelling reason to have a formal, effective document strategy in place for HR is the law. Numerous federal laws require employers to store certain employee records.
Some must be stored in a secure environment. Many have specific retention periods. Your document storing system helps ensure that you comply with all of the relevant requirements.
In addition to federal requirements, you need to be able to readily access employee documents to answer regulatory audits and inquiries, employee complaints, and lawsuits.
For example, if an employee lodges a discrimination complaint, you may need to access performance appraisals, compensation data, time and attendance records, hiring documents, and more.
If the complaint grows into an investigation by the Equal Employment Opportunity Commission (EEOC), you may need to provide similar documents covering an entire class of employees. Often these requests are time-sensitive.
A document management policy ensures that you can produce the full HR records you need promptly.
Employers are also legally required to secure sensitive employee data, including medical information, information on disabilities, Social Security numbers, and other personal information.
A document management system prescribes security protocols to meet those requirements. Examples include locking physical files, securing computers and other information technology (IT) equipment when not in use, and protecting electronic data with passwords and encryption.
The only thing worse than working through a mountain of administrative paperwork is climbing that mountain over and over again, hunting for documents and recreating lost data. A document management plan is critical for efficient, organized HR administration.
An effective document management policy streamlines document access and sharing for efficient workflows. When you have a clear location and path for every document, you can ensure that the right documents are available to the right people on demand.
HR electronic document management further enhances data flow and access.
Software such as DocSend makes document management easier. Image source: Author
No matter the size of your business, you can create a working document strategy that will save you time and headaches using the following steps:
Start by identifying all of the human resource documents your business collects. These are the typical documents needed to manage HR functions:
For every HR document you collect or create, ask yourself:
Next, you need to assign expiration dates and triggers for your documents. Triggers are events that would start the expiration clock ticking on a document. For example, many documents must be retained for a year following an employee’s departure, so termination would be a trigger for those documents.
When setting retention parameters, some questions to consider include:
Another aspect your document management plan needs to encompass is security. Some areas to evaluate include:
Now that you’ve gathered all of this information for each document type, you can begin to group it to create storage, access, workflow, and archiving plans. The following steps will help you convert your data into a working plan:
M-Files is another highly-rated document management software. Image source: Author
Many of your documents and records may already be managed via payroll or HR software. You may also want to consider dedicated HR document management software to automate document generation, access, and workflows.
Many document management systems provide automatic notifications of trigger events and other features to make it easier to manage your HR paperwork.
Digital document management also makes it easy to ensure data security with encryption, password protection, and periodic audits.
A comprehensive, organized data management system does more than save you administrative time and headaches; it gives you control.
When complaints or legal challenges arise, you have the evidence at your fingertips to respond promptly and defend your business. When your HR team is planning and strategizing, you have ready access to data to illuminate opportunities and inform decisions.
If you have questions about how you’re doing, you’ll have the tools to get quick answers. That’s an outcome worth planning for.
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Elizabeth Gonzalez is a legal and regulatory expert writing for The Ascent and The Motley Fool.
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