Picture this: your business is located in Boston, and you are meeting with a big potential client in Los Angeles. It’s Friday afternoon, and you are discussing a project with said prospect, when you receive an email from an employee alerting you that the company is being audited! You try to call the office, but you realize that it’s 7 PM on the East Coast. You’ll have to wait until Monday morning to sort things out over the phone, and to make sure the files are ready, or ask someone from HR to head to the office on Saturday to help you with the request. You’re panicking about the audit, the client is bothered by the situation, and you might lose the deal.

This type of scenario happens all the time. In today’s fast-paced business environment, businesses that build their HR operations on outdated paper processes run the risk of being left behind.

Here are five ways that using paper as the primary method of maintaining employee files can affect your small business’ bottom line.

1. Lost or Misplaced Files

Employee files are not static; information is either going into or coming out of them on a regular basis. The most critical part of maintaining good employee files is filing the paperwork away. When putting the stacks of documents in filing cabinets, documents could be lost or mixed up with other employee files in the rush to finish.


Use a digital document management solution. Maintaining your employee files is a snap and you don’t have to worry about misfiling paper again. It can alert you when documents are missing or when a document’s retention schedule expires. A paper document system can’t do that!

2. False sense of Security

Due to the sensitive nature of the information contained within a Human Resource’s employee file, it’s necessary to limit access to them. Certain documents should be kept separately and maintained separately. However, there will also be certain members of the organization who need temporary access to information, documents and files. There is no easy way to do any of this in the physical world.


With a share-friendly digital document management solution, you can securely share documents with internal and external stakeholders, and all activities are fully auditable with secure data rooms to support bulk information reviews and audits.

3. Unattainable Regulatory Compliance

Federal regulations are constantly changing, forcing small businesses to adhere to their strict rules, and to store records for several years. To achieve information governance, documents need to be stored in a secure environment and disposed of in a timely manner. Often, the employee files default to the longest retention schedule, which means keeping other documents longer than is required. This is just another big risk. A small business that is not able to maintain its files according to the proper regulations, or to dispose of its documents at the right time, risks failing an audit, or worse. Think Enron.


The right technology has built-in monitors to keep you compliant with simple e-forms that allow you to send and receive documents for quick authorization, so you stay up-to-date. Documents get disposed of when their retention schedule is done and you never have to worry about an audit again!

4. Increased Document Management and Archiving Costs

Document management and archiving can be expensive. Maintaining and retrieving files becomes less of a burden as employees exit the organization, but the need to keep the information is critical. The need for physical storage space will increase as the number of employee files grow, which will impact your bottom line. Eventually, the terminated files will be boxed up and sent offsite to live out the remainder of the retention schedule, if they ever get destroyed. Keep in mind, you are already keeping physical documents longer than you need to because of the high cost associated with maintaining paper, but that cost increases if you don’t actually destroy it. Double whammy.


A digital document management solution automates cumbersome paper processes to improve business efficiency. It takes minutes, rather than days, to retrieve a file and the cost to store files in the cloud, instead of in a warehouse, is much, much less.

5. Wasted People-Hours

Efficiency is crucial for business growth and paper is the friction that will slow it down. According to one study, 60% of workers feel that inefficient document management distracts them from more important tasks; critical and strategic tasks. While being stuck in a paper world, employees waste precious time searching for files, transferring documents and completing mundane processes.


Your team is spending too much valuable time on administrative tasks that could, and should, be automated. Technology can keep you from wasting hours on mundane tasks and let you focus on the more strategic tasks that you should be.

In today’s competitive business environment, gaining an edge can be what you need to succeed. Refocus the energy, time and resources on mission-critical tasks, all while making your organization more efficient. Can the simple act of automating and digitizing your document management process make the difference? We believe it can.

Ready to make the move from paper to digital? Find out if CartaHR can help you.