Regulatory compliance requires organisations to maintain employee records. Failing to do so can result in non-compliance and the business risks and hefty costs arising thereof. However, the implications of accurately maintaining employee records reach far beyond compliance requirements. These records can help organisations with data analysis, simplify recruitment procedures, and save the time required to manage human resources.

Organisations that invest in building and maintaining comprehensive employee records can invite high returns in terms of employee retention, compliance, and planning business growth strategies for the future. Here are some of the other top reasons for organisations to keep employee records.

Why It’s Indispensable to Maintain Accurate Employee Records

1. Build a talent profile

Employee records are a way to create a talent profile that includes employee skills, availability for positions, preferences, performance, etc. All this information can be accessed at the click of a button and helps decision-makers decide on the job roles to be assigned to an employee. This is beneficial for employees as they can inform HR personnel about updating their new skills in the HRMS, which reflects throughout the whole organisation and gain the opportunity to work on projects that resonate with their interests and newly acquired skills. Building and maintaining a talent profile is a way to ensure the skills and talents of your workforce are paid attention to, the employees are given opportunities to learn and grow, and work productivity is increased.

2. Enhance employee experience

In the earlier manual HR management systems, HR personnel were the ones who maintained every bit of information about employees on paper. It often gave rise to errors leading to employee frustration. HR personnel also had to spend invaluable time maintaining those records. Modern HRMS software allows businesses to implement self-service employee record management. This way, the process of employee record maintenance has become personalised and more convenient for both the employees and the HR personnel.

This helps save a lot of time and induces a sense of belongingness in the employees. Also, there is less risk of errors such as spelling mistakes in an employee’s name or updating a career move or a skill, etc. Authorised HR and business managers can verify these records from their systems at any time. This system enhances employee experience throughout an organisation.

3. Avoid litigation

The first line of defence against litigations is maintaining proper employee records that follow labour laws. Activities that might increase the risk of litigation also include simple instances such as termination. Having accurate employee records at your disposal can help you provide the documentation and justification for the termination as an employer. These records must be kept even after at least one year of the termination. If updated regularly, these employee records can help record the reasons that led to the termination of the employee.

4. Competency reference

Many industries specifically focus more on employee competency. Its importance cannot be denied in every business. When employees are trained and educated about new skills, there must be a parameter to measure the effectiveness of this training and development facility. A competency report or productivity analysis helps provide just that. Maintaining employee records in HRMS can help business and HR managers gain insights into resource allocation and their successful utilisation by employees. This can also be a tool for gauging employee productivity at individual, functional and organisational levels and building strategies to enhance that productivity.

5. Stay connected

Just because an employee has left their place in your organisation does not mean they need not contact you again. Your organisation may get in touch with them again during subsequent job hunts or other business activities. They might return to be a part of your organisation in a new role, such as a new sales representative or new applicant for a job. Other businesses might also contact you for a reference check about this employee. Having accurate and well-maintained employee records can help you provide the required information about the work ethics of that employee or identify the ones who will probably return in future.

6. Meet legal requirements

Lastly, as we already know, maintaining employee records is a legal requirement, irrespective of the industry. Details such as wage information, tax information, employee demographics, and other required documents are mandatory by governing laws. Having this information handy during an audit is essential to receiving a compliance certificate. Non-compliance does not get rewarded favourably and may have dire consequences for businesses ranging from high financial penalties, and reputational damage to business closure.

Final thoughts:

Human resource administration is incomplete without maintaining accurate employee records. Human resource management systems introducing the concept of self-service records also help make employees feel a sense of ownership. It helps organisations retain the skilled workforce and grow. Sentrient HR system can help lead the way to your organisation’s growth. Contact us today to know more.