Despite the widespread availability of digital tools and HR software, many businesses continue to rely on manual methods for managing data. This choice, while familiar, carries hidden costs that extend beyond time and money.
Manual data entry and processing may appear cost-effective initially, but its compounding negative effects become significant on the entire organization over time. These processes are prone to errors and inaccuracy, resulting in less time spent on core business tasks and higher costs in the long term.
Hidden Costs of Manual
The tedious tasks in HR and payroll management; Data entry, employee onboarding and off-boarding, employee engagement, and payroll processing, impedes HR leaders’ role as strategic partners for the company’s growth and expansion. Time, an invaluable resource in business, is being consumed in these areas, where it could otherwise be used to support business growth.
Many companies often overlook the potential increases in efficiency that can be achieved by examining and reducing unseen expenses. This oversight can be attributed to the fact that payroll procedures usually encompass various departments like HR, finance, and IT. The processes encompass:
- Overseeing system upkeep, ensuring its reliability, and the expenses associated with interfacing (such as integrating APIs with HR and other business tools)
- Bringing on, educating, and substituting payroll experts
- Managing the impact of changing currency values and the costs associated with currency conversion
- Gathering payroll information by hand (on-premise) or manually incorporating preliminary calculations required for payroll processing
Taking this idea further, companies annually face a substantial revenue loss of 20-30% due to inefficiencies.
Manual methods of data handling also hinder HR’s agility. For instance, the average worker types 41 words per minute, manually entering data from a 400-word registration form would take about 8 to 10 minutes. This means registering just 12 people alone could consume up to two hours.
In contrast, according to a report by the Society for Human Resource Management (SHRM), 69% of HR professionals who embraced automation saw a significant reduction in time spent on hiring.
Today's jobseekers are tech-savvy and expect potential employers to use modern HR systems. Filling out paper forms and waiting for slow, manual processes can be frustrating for candidates accustomed to convenient digital interactions.
Data inaccuracies are also quantifiable costs in staying manual, as it impacts decision-making and exposes the company to non-compliance with regulations and legal risks.
The Simple Solution To Save Your Company Millions Annually
So what are the true costs of manual HR processes? A study by Ernst & Young sheds light on this critical question.
The expense of manual data entry alone amounts to ₱266.64 per entry. This can quickly accumulate into significant annual costs, with even basic responsibilities like comparing plan options or calculating paid time off (PTO) balances incur expenses of ₱1,153.58 and ₱1,134.83 per employee.
Using this ROI calculator, we created a simulation of the potential savings an automated system like Sprout delivers in managing a company’s HR and Payroll.
Here's a breakdown of the potential savings for a company with 1,300 employees, each earning an average salary of ₱20,000, and HR and payroll administrators earning ₱30,000 each:
Payroll Costs: Traditional payroll processes would incur ₱1,836,500 annually.
HR Costs: Manual HR management would cost ₱8,390,145.83 annually.
Payroll Management: Automation with Sprout reduces payroll costs to ₱74,318.75, resulting in annual savings of ₱1,762,181.
HR Management: Sprout's HR automation reduces costs to ₱1,682,579.17, leading to annual savings of ₱6,707,566.67.
Annual Savings: The combined savings amount to ₱8,469,747.67 annually.
ROI: The return on investment with Sprout is 182% in the first year, growing to 246% in subsequent years.
Achieving Operational Efficiency and More
The switch to automated HR platforms can usher in remarkable savings and operational efficiency. With optimism, it is inevitable in this age that more companies are looking to deploy systems to support their teams.
See how this company Digitalized Payroll and Cut Processing Time by 71%
In an interview about what he has to say on their company’s use of an automated system, Michael Suprick, CEO of Johnsonville, LLC, shares his thoughts: “One of the things that we’re continuing to look at is how to optimize the current facilities and equipment that we have. If you automate some of these processes, you can take talented individuals, great company members, and redeploy them into new innovations you were coming up with. Growth becomes part of this equation; we need all the good people we can get, so let’s get rid of the mundane jobs and get them into things that are really value adding.”
It's worth noting that the integration of automation isn't merely about saving costs. It's about reshaping the way we view and approach HR and payroll, transforming these sectors from mere administrative functions into strategic pillars of growth.
Businesses must be agile, adaptable, and forward-thinking. As manual methods fade into obsolescence, companies are called to embrace digital transformation not just as a cost-saving measure but as a strategic move to stay competitive, relevant, and ready for the future.
Curious about what this could mean for your bottom line? Tools such as Sprout's ROI Calculator are available to provide insights into potential cost savings tailored to your company's unique situation.