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Employee data refers to the personal information a company collects about its staff members during the employee life cycle. The data on employees can range from more general data such as performance results and engagement statistics to more sensitive personal data such as the social security number (SSN) and health records.

All human resources departments must have a strict employee data protection policy in their data management to ensure confidentiality and protect their employees from any potential breaches.

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The Benefits of Utilizing Personal Data

In general, there are 3 categories of personal data on employees:

  • Identification information
  • Workplace performance
  • Benefits information

All HR teams collect data about their employees at a certain level. For example, all companies must know their employees’ contact details and bank information when processing payroll. Other data, such as demographic data, can be used to run analyses on workplace performance, training program results, and more. 

Determine the Performance of Employees and Organization

The collection of employee data can reduce turnover and increase productivity. For example, a company can collect data on the job performance of its employees. By using the performance data collected, the HR department can disclose any trends of higher or lower performance, both at an individual and organizational level. If they find trends of lower performance for an individual, they can schedule a one-on-one meeting with the supervisor to talk about it and identify any potential reasons. 

In a different scenario, the human resources team might find a seasonal trend of lower organizational performance around Christmas. Using the organizational measures, the team can build an HR strategy to prevent this from happening and improve productivity around the year shift.

Decision Making

Employee data is crucial for data-driven decision-making in the organization. Data on employee performance and development can inform decisions about promotions, training programs, and more. The data is crucial when making decisions about employees’ careers and development as it will ensure that the decision is backed up by numbers and is not biased.

Give Employees a Voice

Collecting employee data is also a great way of giving your employees a voice at the company. This can be done through several surveys, such as employee experience surveys or questionnaires. By giving your employee a voice in the workplace, you can increase employee engagement and improve the employee experience.

4 Solutions to Store Employees’ Data

There are several different ways to store and process data. In this article, we have summarized it into the 4 most common ways: physical documentation, manual input, internal company system, and cloud-based human capital management (HCM).

Physical Documentation

Physical documentation refers to the storage of employee data on physical papers. Needless to say, this is the most inefficient way of storing employee data as it is associated with several drawbacks. For example, it is time-consuming for the human resources department to flick through paper files to find the necessary document for an employee when needed.

A file cabinet also takes up more storage in the office, requiring larger and more costly office spaces. Not to mention, important paperwork can easily be lost when it is stored as physical documentation. 

If you do store your employee data as physical documentation, make sure to take appropriate precautions, such as keeping the employee information in a secure location and having backups of each file in case of loss or damage. You also want to make sure that the paper files are strictly organized to minimize the time of searching for documents.

Manual Input

By manual input of employee data, we refer to Word documents or Excel spreadsheets containing the personal data of your employees. Manual input information is relatively easy to use and navigate, however, the large files can be hard to share among team members and the tracking of multiple files can be challenging. 

If you store the personal data of your employees in manual input documents, whether it be Word, Excel, or something similar, make sure to establish a process of tracking file updates and protect the documents with passwords to ensure data privacy.

Internal Company System

An internal company system is an HR data system customized based on your HR management needs. If you have an internal company system, it is essential to keep it maintained and up-to-date. This requires cooperation between the HR department and the IT team.

Cloud-Based Human Capital Management (HCM)

A cloud-based HCM system is a service-as-a-software (SaaS) that consolidates all your HR software on a single platform and provides data security for your employee data by complying with any privacy and security rules. The HCM allows you to run reports on specific employee data, such as recruiting, performance, and more. This HR system collects all your employee data in a single place, whether it is payroll information or demographic information, and allows you to pull a little bit of information from each category, if needed.

Comparing the Different Solutions

There are various benefits and drawbacks to each solution for storing employee data. To help you find the solution that is best suited for your company’s data processing and privacy policies, we will compare the different solutions based on pain points. 

Time Consumption

Physical Documentation

Physical documentation can be extremely time-consuming if not dealt with properly. It is essential to keep the stacks of paper organized, or the HR team can waste time archiving through stacks of paper.

Manual Input

If working with larger datasets, manually inputting information can also be extremely time-consuming as well as time spent on searching through the documentation. Time spent searching can be shortened by using formulas such as V-lookup in Excel. 

Internal Company System

Depending on how the system is structured, an internal company system should be less time-consuming than the previous alternatives. For example, personal data can be disclosed simply by searching in a search bar or clicking on a category. However, the HR or IT team will have to spend time updating the system, ensuring compliance with the terms and privacy policy.


The HCM is the least time-consuming alternative as the updates of the software will be handled by third parties. The data portability makes it easier to find and transport necessary data between management systems, streamlining the processing activity.

Unreliability from Multiple Data Entries

Physical Documentation

If you handle personal data in physical documentation, it makes it difficult to create reports and analyze data. 

Manual Input

Since manual inputting of employee information is done by hand, it makes it subject to human errors in the data registration process, such as multiple entries, inaccurate entries, or missing data entries.

Internal Company System

An internal company system is subject to unreliability from multiple data entries due to a lack of data portability. With multiple management systems containing different private information on employees, it becomes unreliable when trying to analyze the data.


The HCM consolidates all data on employees from the different management systems into a single HR platform, which leads to data reliability and consistency. If authorization has been delegated, all the personal information on employees, such as contact information, health information, identifiable information, and more, can be accessed in a single place.

Lost Data

Physical Documentation

Physical documentation of private information about employees is subject to lost data as paperwork can easily disappear, without anyone noticing. This also raises concerns regarding information privacy and security.  

Manual Input

Manual input of employee data is also subject to lost data, especially when dealing with big data and if there are no notifications regarding documentation updates. 

Internal Company System

An internal company system is less subject to lost data than the two previous alternatives. However, this system is especially subject to lost data and inaccuracies when transferring data between multiple systems. 


In relation to the other type of storage of employee data, the HCM is the least subject to lost data as it automatically gathers data from multiple systems. If there is sensitive data that has been deleted by mistake, there are practices in place to recover the deleted data.


Physical Documentation

With exemptions from costly office space and printing for physical documentation, this type of storage of employee data is associated with relatively low costs.

Manual Input

Manual input is also associated with lower operations costs as the systems used, such as Microsoft Word or Excel is typically already integrated into the company’s system.

Internal Company System

Internal management systems can be costly to install. They are typically more expensive than cloud-based solutions. When installing an internal company system, it is essential to ensure the right fit as getting it wrong could mean a costly investment got wasted. If you are going to install an internal company system, consider running a trial program first.


In general, a cloud-based HCM solution delivers a stronger return on investment (ROI) and can be developed under a shorter timeline than an internal company system.


Most commonly, employee data is stored in 4 different solutions: physical documentation, manual input, internal company system, and cloud-based human capital management (HCM). There are several benefits and drawbacks to each solution, but in general, a cloud based HCM will be the most cost effective and reliable system to use for storing your employee data.

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