Is HR a Risky Business?

Are a lack of resources for and investment in compliance activities setting your organization and HR department up for failure? A new survey suggests that may very well be the case.

The study of HR and payroll professionals–conducted by The Workforce Institute at Kronos Inc. and Future Workplace, and titled The Risky Business Survey–revealed that many companies have cut corners when handling compliance activities in a way that could jeopardize the organization. It found that many of the shortcuts–which 66 percent of payroll professionals and 51 percent of HR leaders acknowledged–were largely caused by a lack of funding and manpower. Respondents reported there were too few people trying to handle too many responsibilities with too little support.

Risky practices were common (69 percent) among those whose HR systems were at least five years old, pointing to the need for companies to invest in technology to streamline HR processes and relieve the burdens that could put the company at risk.

Organizations maintain an average of five distinct records for every single employee, the survey found, which can create a web of duplicate records–and lead companies to invest significant manpower each week on duplicate data entry; nearly 47 percent of respondents said duplicate records can put a company at risk for taking compliance shortcuts. Companies that had invested in newer tech solutions to assist in compliance-related activities spent about 34 hours per week on compliance, compared with 43 hours at organizations with older systems.

Compliance shortcuts were also more common among larger companies: 68 percent of workers at companies with 2,500-9,999 employees reported such tactics. However, it’s an experience that crops up across companies of all sizes, such as at 58 percent of organizations with 1,000-2,499 employees, 56 percent of those with 500-999 employees and half of those with fewer than 500 employees.

The report emphasized the need for HR systems that facilitate such work, such as cloud-based operations, in order to reduce compliance risks.

“Organizations that ensure their HR and payroll teams have access to modern solutions will be able to strike a better balance between time-consuming compliance requirements and the strategic activities needed to build a highly engaged workforce,” says Joyce Maroney, executive director of The Workforce Institute at Kronos.

With compliance regulations rapidly changing, the need to embrace solutions that help HR keep up with those shifts becomes even more important.


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Jen Colletta
Jen Colletta is managing editor at HRE. She earned bachelor's and master's degrees in writing from La Salle University in Philadelphia and spent 10 years as a newspaper reporter and editor before joining HRE. She can be reached at [email protected]