5 Mistakes Companies Make When Handling Employee Records

For businesses, handling employee records efficiently is necessary. Efficient handling helps them protect and manage employee-related information easily. When things are managed, decision-making also becomes easier. 

However, handling employee records is not an ordinary task. It requires proper attention and strategy. We have seen many companies making mistakes while handling employee records. 

This post will discuss five common mistakes companies make when handling employee records and how they can fix them. 

Mistake # 1 – Not Going Digital

We are living in 2025, and most businesses have already adopted digitization—those who have not had it in their plans. A survey conducted a few years back mentions that around 53% of the businesses have transformed their paper-based records into digital formats. 

However, there are still many businesses that are relying on paper-based records and are not going digital. The key reasons behind not going digital include:

• Lack of digital knowledge
• Perceived high costs
• Resistance to change

Impact of Not Going Digital On Companies

Avoiding digitization for handling employee records in today’s competitive market negatively impacts performance, compliance, and growth. Below are the challenges a business faces when managing records as physical documents. 

• Paper-based documents are prone to errors, i.e., distortion, misplacement, etc. 
• Storage spaces, cabinets, and boxes are necessary to manage paper-based records, which puts an extra expense on the company. 
• Managing physical documents requires both labor and time. 
• Paper-based documents are prone to risks and can be stolen.
• Retrieval of information from physical documents is a hectic thing to do. We have seen HR professionals spend hours searching for an employee’s record. 

Solution – Go Digital

The solution to this mistake lies in going digital; the good thing is that it does not involve high costs. Companies can digitize their physical documents using image-to-text converter tools for free. 

Some popular and reliable ones include Imagetotext.me and Imagetotextconverter.net. 

These are all powered by the latest technology, allowing users to convert physical documents into digital ones and also allowing users to download them in digital formats, i.e., DOCX, PDF, and TXT. 

No technical expertise or skills are involved. To digitize documents, all that is needed is:

1. Take images of the documents. 
2. Upload these images to the tool. 
3. Hit the convert button. 
4. Download as a digital file (format can vary with the tool). 

Doing this will help companies cope with the challenges related to the mistake we discussed earlier. 

Mistake # 2 –  Allowing Broad Access

Whether records are in the physical or digital format, companies often allow broad access to them. Providing wide access to employee records can lead to severe consequences, i.e., data leak, information theft, etc. Good companies consistently implement RBAC (role-based access control) for documents and records.

Consequences of Providing Broad Access

Allowing broad access to documents, especially employee records, has many negative consequences. Here are the most common challenges that we have seen companies face. 

• Board access leads to data breaches and intellectual property theft.
• It raises legal and compliance issues, especially when the employee’s personal information is involved. 
• Sometimes records are misinterpreted without context, causing workflow disruptions. 
• Leads to disputes between management and other employees. 

Solution – RBAC

The solution lies in implementing role-based access control (RBAC). Only the relevant person, such as those in human resources or other higher management, should have access to employee records, as they are among the sensitive documents of a company. 

Companies can implement RBAC using HR software and online tools, which allow them to define roles and control who can view, edit, add, or delete employee records.

Mistake # 3 – Avoiding Backups

The next mistake that many companies make is avoiding backups for employee records. We have seen many assume that their data is safe. Know whether the records are physical or digital, and that natural disasters can happen. 

Files can be corrupted or deleted accidentally, and earthquakes or fire incidents can destroy all documents and records. In such cases, recovering will become nearly impossible without backups. 

Where does it lead to?

Here’s what can go wrong when companies ignore backup procedures:

• Permanent loss of critical employee information, such as contracts, tax forms, or performance records.
• Delays during audits or compliance checks due to missing documents.
• Operational disruptions, especially when records are needed for urgent HR decisions.
• Legal troubles, if lost data is required for disputes or investigations.

Solution – Backup Automation

To avoid employee data loss, companies should consider implementing backup automation. Automatic backups can be done often, but we recommend using cloud-based solutions. Various cloud-based HR systems, i.e., BambooHR and Zoho People, feature automatic backup functionality once set up. 

The benefit of using these systems is that they create multiple layers of backups on the local drive and cloud servers. If a disaster happens, companies can easily access employee information without worries. 

Mistake # 4 – Incorrect Disposal of Records

The fourth common mistake companies make is incorrect disposal of employee records. Such documents often contain personally identifiable information. If not handled properly, it can be misused and have severe consequences.

Impact of Improper Disposal

Improper disposal of documents related to employee records brings a negative impact. Here’s how:

• Information can fall into the wrong hands and be used by fraudsters for scamming. 
• Failure to protect employee information can result in legal penalties for the company. 
• Compromising employees’ identity can erode clients’ trust and the company’s reputation. 

Solution – Secure Shredding

To avoid this mistake, companies should opt for secure shredding. Unnecessary documents should be eradicated using electronic shredders. The shredded material should be transferred to secure bins unless the final disposal is made. 

Mistake # 5 – Inconsistent Recordkeeping

The last mistake on our list that companies made regarding employee records is inconsistent recordkeeping. This mistake further becomes the cause of various issues such as inaccurate payroll, compliance problems, and legal liabilities. 

What Consequences Can Be?

Inconsistent recordkeeping of employee records causes various issues, especially for HR professionals. A few among them are as follows:

• Inconsistency in recordkeeping leads to false calculations and wrong employee payments. 
• It can create problems while conducting an audit of employee records. 
• In some countries, it is considered a legal dispute and can lead to penalties from the authorities. 

Solution – Systematic Filing System

Companies should consider implementing a systematic filing system to tackle the issue of inconsistency. This system should standardize the policy on:

• How will the employee records be stored?
• Who can create and organize them, and how?
• Who will edit the existing records, and what will be the editing parameters?

Once implemented, assign a person to double-check every change or addition to employee records (consistently). 

Bottom Line

The five common mistakes companies make while handling employee records are mentioned above. Each mentioned has consequences and can disrupt work operations or sometimes lead to legal penalties. By implementing the solutions we shared in this post, companies can easily tackle these problems.