Informed HR: The Ins and Outs of Employee Data Management

June 22, 2022

HR departments have long been associated with dusty file cabinets. It’s where companies keep all the confidential documents about their employees – their payroll cheques, complaint tickets, medical records, and much more. Most of the time, HR file cabinets are unlocked.

Employee data is company gold. It’s one massive part of business intelligence, crucial for making informed decisions, developing future strategies, and generating investment signals.

Yet, employee data is one aspect of the business that’s still vastly manual.

Digitizing confidential documents and developing employee data management practices have numerous benefits for organizations, both big and small. Before discussing why you need to start managing your employee data, let’s see what that means for your HR team.

What is employee data management, exactly?

Employee data management is a set of best practices for collecting, organizing, and storing employee data. These practices vary from one company to another – depending on the organizational size, the number of employees, and everyday processes. Larger organizations, for example, use mentoring software and other tools to streamline administration of their professional development programming.

Is employee data management too extensive for small businesses?

Of course not! That is an efficiency upgrade that can benefit everyone. Implementing HR software for small businesses streamlines employee data management, offering a tailored approach that caters to the unique needs of smaller enterprises. While managing employee data might seem overwhelming, especially for small businesses with limited resources, utilising dedicated HR software simplifies the process significantly. These software solutions are specifically designed to be user-friendly and adaptable, ensuring seamless data collection, organisation, and storage. By incorporating such systems, small businesses can efficiently handle employee information, enhancing productivity and compliance while fostering a more organised and secure workplace environment.

Let’s also note that employee data management relies on technology for help, but it doesn’t require you to digitize all your file cabinets if that’s not necessary. However, moving employee data to cloud storage unlocks efficiency perks such as 24/7 accessibility and easy automation.

The many benefits of managing employee data

At first glance, employee data management might seem like a process that takes too much time and resources for something so marginal. Employee data is more critical than ever in today’s economy and global workforce climate. It’s not unnecessary or marginal but crucial.

Companies must handle employee data with care for many reasons:

● It helps them meet legal requirements and stay compliant.

● Good management always saves time and boosts efficiency.

● Proper data management improves employee retention.

Here are the primary benefits of employing employee data management.

More time and improved productivity

Even though it takes a while to set up a new management structure, neatly organizing employee data by categories ensures long-term efficiency. When needed, information about employee performance and payroll is only a click away, available even remotely.

The most significant benefits come from digitizing HR documents.

Technology for collecting, managing, and analyzing data allows you to automate menial tasks such as data entry and paperwork. For example, some tools enable employee self-onboarding, which navigates new employees through entering the necessary information on their own.

That empowers HR to focus time and energy on creating a better work environment for everyone.

Increased security for confidential data

One of the most welcome benefits of employee data management is improved security measures for all HR-related documents, including confidential employee data. In this aspect, digital storage spaces trump physical record-keeping in file cabinets and modern vaults.

Strategizing with structured data

Workforce planning is an integral part of business strategizing. Even if your company doesn’t have a formal headcount planning framework, you certainly plan for the future with your employees in mind – considering both available skill sets and knowledge gaps.

The quality and quantity of people you hire and retain are crucial parameters for decision-making. Innovative companies consult data for all decisions. In the case of HR, data informs everything from talent sourcing and recruitment marketing to employee retention and succession strategies.

Without reliable data, every HR-related decision would be a shot in the dark.

How to start with employee data management

Employee data management is a facilitating process – in time, it should help your HR team handle their record-keeping responsibilities quickly and efficiently.

However, setting it up might require some time and restructuring. The following steps should speed things up.

1. Analyze your current HR process.

First, go back to the beginning and analyze how your HR team collects, organizes, and stores existing employee data. Outline the entire process, from talent sourcing to termination documents. That will help you discern what already works from what you should improve.

2. Start vetting the right technology.

In today’s digital world, you shouldn’t avoid digitizing your records. The right technology makes management easier, faster, and more accessible. There are many workforce planning and data collection tools, so start researching available options.

3. Define employee data categories.

Some of the categories for employee data management are:

● Personal information;

● Demographic data;

● Medical information;

● Employment history;

● Performance records;

● Payroll information.

Using these categories as examples, define the best-suited categories for your HR.

4. Set up new data collection systems.

We’ve already mentioned employee self-onboarding as one of the best new ways of collecting employee data, but there are many others. Whatever you come up with, test the routine for efficiency and automate every repetitive part of the process.

Collecting external data for recruiting new hires (such as CVs and background checks) can be incredibly challenging. If you don’t have the resources to manage this data by yourself, consider reaching out to third-party providers of employee-oriented data.

5. Ensure a secure storage protocol.

Your HR documents will be safer in a digital form, that’s for sure. You only have to choose whether to store your employee data in-house or buy cloud storage. Both on-premise and cloud storage have pros and cons – depending on archive size, accessibility, and security requirements.


Any kind of system, even if only partially digitized and automated, is better than having none at all. In terms of employee data, innovative solutions like employee self-onboarding contribute to the efficiency of HR, boost everyday productivity, and accelerate company-wide growth.

It’s high time you replaced your file cabinets with something more manageable.


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