Payroll and HR data managed via spreadsheet- Is it time for an alternative?

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Question: I have recently moved to a HR Role for a new company that uses spreadsheets to track employee data and pay the staff. I am struggling to keep up with all the files. What are your thoughts on using spreadsheets to manage the workforce?

Answer: When businesses first start, they often find spreadsheets to be a cost-effective way to manage employee data. As they grow and evolve, HR teams often get to a point where managing electronic and paper-based files can become time consuming and costly. When you are at the point where you have spreadsheets linking to other employee spreadsheets and files, it may be time to consider a specialist online alternative.

Managing employee data through spreadsheets and manual forms becomes costly and inefficient once you have more than 10 employees. There are many cost-effective online solutions that can remove the burden and provide HR and payroll with more time to perform value-add activities. 

Proceed with caution

While spreadsheets are a great business tool, it’s vital we use caution when utilizing them to manage a payroll, pay overtime or calculate commissions. An error with a simple cut-and-paste can have catastrophic consequences and expose the organization to an unnecessary risk of fines for underpayments. In addition, faulty formulas can produce inaccurate reporting that can be damaging to the credibility of HR within the enterprize.

Using an online solution will eliminate overpayments and underpayments. When award conditions are set up within a payroll system, all calculations are performed automatically. Compliance is also managed more effectively with an online system – the constant pressure to maintain knowledge of changing award conditions and legislation is eased.

An online system should also offer a single source of truth, where employee information is input once and accessed by many parts of the system. This approach minimizes errors and also promotes data accuracy and reliability across all areas of HR Management.

Managing skills frameworks

Using spreadsheets to manage your corporate skills frameworks and training can be cumbersome. Managing training through spreadsheets and updating employee records with associated skills and competencies can be time consuming and is often inaccurate. Online systems automate these processes and keep employee records updated.


When employee data is stored in a central HR system online, integration can more easily occur with CRM, ERP and Talent Management solutions.

Reduce the risk of fraud

Managing employee data and payroll by spreadsheets offers minimal security, it can be error prone and may expose a business to fraud. Creating and paying ghost employees in a spreadsheet is much easier than breaching the strict online security provided by an efficient online payroll system.

Organizations that implement online systems can still come undone when they manipulate payroll data by exporting live data to a spreadsheet then importing it once a complex calculation is performed. This approach is not considered best practice and should be avoided at all times due to the high exposure to risk. If your payroll system is unable to accommodate your needs, speak to your vendor and ask what workarounds are available within the system.


While spreadsheets offer enormous flexibility and ease of use, your employees are one of your most costly assets. Managing workforce data with a purpose built Payroll/HR tool will deliver efficiency and cost savings. Using spreadsheets to manipulate data or calculate overtime rates heavily relies on operator accuracy, which increases risk and the likelihood of errors. So it’s a good idea to use a specialist system to manage payroll, HR and Talent Management.


About the author

Nick Southcombe is General Manager of Frontier Software. Ph: (03) 9639 0777. Website:

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