‘When things are slow and full of error, I think that creates a distrust between an employee and an employer’
Many small and mid-sized businesses (SMBs) are still relying on manual HR and benefits administration, creating errors, frustration and turnover risk, according to one expert.
While large enterprises have long used systems such as Workday or ADP, SMBs “had to rely on things like spreadsheet pen and paper,” and many still do, says KJ Lee, CEO (Canada) of Employment Hero, in conversation with Canadian HR Reporter.
He says he regularly sees employers using “five separate tools or spreadsheets and pen and paper” to handle HR, payroll, time off, time tracking and benefits.
Because those tools are not integrated, HR teams face a risk of double entry during manual data entry and errors that are only discovered “much later,” he says.
Manual onboarding and employee experience
The employee experience can be just as disjointed. New hires at some SMBs still receive a PDF employment agreement that must be printed, signed by hand, scanned and emailed back, followed by a separate process to be added to benefits. Lee says that approach “causes a little bit of friction and confusion” and adds to “time burnout on managers as well.”
He warns that such manual onboarding sends the wrong signal from “day zero,” with some employees thinking “maybe this company is super slow” if “signing up as an employee is hard.”
“When things are slow and full of error, I think that creates a distrust between an employee and an employer, and that could result in a higher turnover,” Lee says.
Automated payroll tech solves cross-border troubles, according to a previous report.
‘Phantom coverage’
Small data errors in benefits administration are creating serious financial and compliance risks for employers, according to Lee.
He says many organisations “offer benefits to everybody,” but gaps in processes and communication can mean employees are not actually covered when they try to use their plans.
Lee describes a recurring problem he calls “phantom coverage,” where workers and employers both assume coverage is in place, only to discover later that an enrolment error has occurred. In some cases, he says, the issue comes down to “simple human mistakes.”
For example, one worker has not been enrolled into a benefits plan because they “forgot to enter their phone number in one of the application forms or they’re missing their last name. Silly things like that.”
“So that phantom coverage really is a big risk and one that seems to happen often,” Lee says.
The financial impact is not limited to employees discovering they are not covered. Lee says many employers are already under strain, noting that “a lot of people are struggling with working capital, employment and business operation expensive.”
Against that backdrop, he says audits frequently uncover cases where benefits costs are being incurred for people who have already left the company. In some cases, people who have been terminated or have been let go are under the benefits plan and “the employer is paying for it because someone forgot to tell the benefits provider that the employee is no longer with the company.”
Digitalisation and speed as a talent advantage
Lee says that, in battling against enterprises, SMBs can “win on speed and efficiency” by digitising and integrating HR and benefits. Comparing modern HR platforms to consumer apps such as Uber Eats, he notes that employees increasingly expect a “click of a button” experience instead of paper forms and phone calls.
When employers use an all-in-one system for offers and onboarding, candidates see that “onboarding, job offer, everything is all-in-one” rather than entering their information “three times in different systems” for HR, payroll and benefits, he says.
To employees, that signals that “this company is mature, it cares about operations, it’s not just an old mom-and-pop shop with a bunch of paperwork,” Lee says. It creates “a seamless experience,” “less friction,” and allows workers to focus on “what’s important… which is to get the job done.”
