How Spreadsheets Are Holding Small Businesses Back and Preventing Them From Reaching Their Hiring Goals


Small business owners with spreadsheets that are holding their business back

Spreadsheets are a simple and popular way for businesses to consolidate and manage large amounts of employee and candidate data. However, they also have shortcomings in their efficiency, security, and operations. This post explains how spreadsheets prevent small business teams from meeting their goals effectively and discuss the alternative: recruitment software.

Why Do Small Businesses Depend on Spreadsheets?

HR personnel rely heavily on spreadsheets to store and manage candidates’ information. For small organizations, spreadsheet programs such as Microsoft Excel are a simple, affordable option and a logical upgrade to paper records. They don’t require complex technical skills—anyone with basic computer knowledge can manage spreadsheets.

woman on computer using spreadsheets showcasing how spreadsheets are holding small businesses back

Why Do HR Managers of Small Businesses Love Spreadsheets?

Small businesses and startups can benefit (for a while) from using spreadsheets. Some of the main advantages and reasons why small businesses use spreadsheets include:

  • They have helpful built-in formulas

HR personnel use the built-in formulas to compute employees’ salaries and paid time off as well as to filter and organize employee information. Popular functions include SUMIF, VLOOKUP, TODAY, COUNTIF, formatting, and pivot tables.

  • They’re cost-effective

Because spreadsheets come built-in to the standard Microsoft Office package, they are a relatively inexpensive way to manage employee information. Small businesses often start by using spreadsheet templates and customizing them further.

  • They’re accessible

As we said above, since Excel comes with Office, it’s easily accessible and people tend to be more familiar with it than they would be with recruitment software. Also, employees can acquire more advanced skills by watching free tutorials, saving time and expense on training.

  • They integrate easily into the workflow

Small businesses that rely on Office or Google Sheets can easily integrate their spreadsheets into the rest of the workflow.

  • They make it easy to manipulate and analyze data

Even beginners can use spreadsheets with little supervision, so they’re popular with HR managers. It’s easy to create a spreadsheet to track and assess almost any kind of information.

Why Spreadsheets Are Not Enough for Businesses to Manage Employee Data

While spreadsheets can be helpful, they have definite limitations too. As an organization grows and introduces new complexities, spreadsheets become less effective—and more tiring and time-consuming. Here are ten disadvantages of using spreadsheets for recruiting:

  1. Spreadsheets Are Time-Consuming – Maintaining a spreadsheet can take an enormous amount of time. HR people often need to input the same data multiple times manually or go through filters to find a piece of information. It takes a lot of time to input every record, and then you must check carefully to ensure it is correct.
  2. Formulas and Data Can Be Corrupted – Spreadsheets are typically updated by several different employees and are constantly being reviewed and revised. With so many people managing each file, it’s too easy for an employee to—intentionally or accidentally—corrupt the data, change figures, add misleading information, or modify a formula. Sometimes corrupted data is the product of inexperienced staff, who can easily delete a row, change macros, or input information in the wrong cell.
  3. Slow Insights Impair Decision Making – Because of the tedious nature of analyzing data in a spreadsheet, which involves data extraction and processing, creating reports takes a lot of work. This is incompatible with the fast-paced nature of any business these days. Management needs to make timely decisions and cannot always wait until a report is produced.
  4. Data in Spreadsheets Is Hard to Protect – While spreadsheets can be password protected, this does little good when everybody on the team needs access. Additionally, they are typically hosted on PCs and laptops and shared via email with very limited protection measures.
  5. Spreadsheets Are Difficult to Update – Any business today, regardless of size, manages data that changes often. If inputting new data into a spreadsheet is time-consuming, updating it is doubly so. There are new hires, remote workers, changes to employees’ information, dependents, bank details, sick leave, and paid time off requests—it’s practically impossible to keep up with manual spreadsheets. Therefore, HR teams are often behind with the latest records.
  6. Spreadsheets Are Not Flex-Work Friendly – Because they are stored on the company system and designed to be used by only a few people at a time, spreadsheets can be a nightmare for remote and flex workers. Accessing the spreadsheets they need for each HR process or department is one challenge; connecting the information in all of them to get meaningful insights is another. Trying to manage separate files and make sense of them can be even more difficult for hybrid and remote teams.
  7. They Don’t Reduce Paperwork – Despite promising otherwise, spreadsheets don’t reduce the paper trail. HR employees still need to manually update the employee contact information and look at documents like expense reports and sick notes. A spreadsheet doesn’t automate processes or allow information to be entered on the go.
  8. Data Is too Spread Out – Typically, an organization will have a spreadsheet for holidays, another for absences, another for hiring, and so on. This leads to data duplication and inconsistency with no central point of information.
  9. Spreadsheets Are Vulnerable to Human Error – As mentioned above, a typical spreadsheet is accessed and managed by several people, increasing the risk of mistakes. And with critical information on those sheets, even a minimal error can be disastrous.
  10. Spreadsheets Don’t Produce Real-Time Information – Because of the difficulty of updating information in spreadsheets, there is no access to information in real time. It can be difficult for employees to find updated information.

Why Small and Medium Businesses Need Recruitment Software

Human resources management systems help with employee management from recruitment to payroll, up until the ultimate ending of the relationship with the organization. The software keeps employees’ information updated and automates time-consuming tasks like managing payroll, time off, and leaves of absence.

The best HR software also allows employers to forecast the demand for personnel in different seasons. For small businesses, an automated solution allows them to save on overhead and eliminate costly errors.

Infographic showing reasons spreadsheets are holding businesses back and why businesses need HR software instead

Image Source

How Modern Software Helps Small Businesses Cope Without a Formal Recruitment Team

One of the HR processes most affected by the spreadsheet’s shortcomings is recruitment and hiring—but recruitment software solves most of these challenges. It eliminates human error, produces real-time information, is secure, and cannot easily be corrupted. Accessing and updating information about potential candidates and new hires is now a wholly automated process, leaving HR managers and employees free to focus on finding the right new candidate for the organization.

Small businesses without a formal recruitment team can rely on automated recruitment and HR software to do the work for them.