5 Ways to Use Document Management Software to Conquer HR Challenges in 2025

Interested in upgrading your HR workflow? 

The best HR document management software (DMS) may be the answer.

When you don’t have the right digital technologies, HR analytics and insights can become very poor, leading to flawed decision-making for your small business. 

A survey by PwC showed that 39% of HR teams struggle with poor HR analytics. This made it the biggest challenge they face overall. 

With a DMS solution, you can structure and centralize HR documents, including resumes, contracts, and performance reviews. This helps you to shatter data silos and improve data accuracy for better insights. 

You can also enjoy other document management benefits for HR departments, like faster data retrieval and advanced dashboards, which enable you to analyze employee turnover patterns and other important HR trends with ease.

If you’re keen to digitize your workflow and increase efficiency, check out this article I wrote about the best document scanners for small businesses. 

In this article, we’ll discuss some critical ways to use document management software to conquer HR challenges in 2025 and improve employee engagement & performances.

Let’s get started. 

What is a document management software for HR? 

Document management software is a game-changing tool.

It’s essentially a digital platform which enables your small business to track, organize, store and manage various HR documents, such as employment contracts, staff’s medical histories, and payroll documentation, more efficiently. 

By digitizing your HR workflow and centralizing files, it can help you shift to a paperless environment, and get around inefficiencies and growth inhibitors. 

A survey by BCG revealed that 38% of HR professionals said they struggle to create a significant growth path for their businesses. Some of the factors that stand in the way include document management challenges.  

With the right technologies, you can reap the many document management benefits for HR departments that come with an efficient and digital workflow. From improving labor law adherence to raising staff productivity, you can improve a variety of HR functions. 

If you’re ready to take HR to the next level, sign up for your free FileCenter trial today to streamline your HR processes and catalyze business success. 

Your trial of our HR document management software will give you access to important features like centralized cloud storage, automated workflows and even electronic signatures, among others, which can help you become more productive and efficient.

Ways to use document management software to solve HR challenges

1. Managing regulatory documentation 

What are your business’s regulatory obligations? 

Your HR department may be bound by various data protection and privacy laws, which require strict access control and the secure storage of employee files. Some of these include California’s CPPA, HIPAA and Europe’s GDPR.

When your small business fails to adhere to these data protection regulations, you may face CCPA fines, which can be as high as $7,500 for each violation. 

A survey by HR.com discovered that 30% of businesses are not fully prepared and ready for compliance with employment laws and data protection regulations. The key reasons for this are a mix of record-keeping challenges and fast changing regulations.

These are two aspects that a document management software can help you, with some solutions even offering automatic regulatory change notifications.  

That said, one of the key document management benefits for HR departments is that, with the right tool, you can massively reduce your non-compliance loopholes. 

Some DMS platforms, such as our very own FileCenter, give you powerful encryption capabilities to help you protect personally identifiable employee data. Moreover, you may also get document redaction software features for elevated data security.

But it’s not just about securely storing data. 

Your document management software may also allow you to set record retention and deletion features, which can automatically store employee files after a pre-set period. 

These capabilities enable you to hold onto records like payroll & wage, work authorization forms and staff contracts and agreements, among other important employment information, as per various labor law requirements in your jurisdiction.  

2. Increasing staff performances 

Improving employee output is a top HR goal. 

It’s one of your missions to ensure employees put their best foot forward, and that your business squeezes more value out of them in terms of direct labor time and productivity. In fact, your company’s success greatly depends on this.

However, an inefficient document workflow can negatively affect your employee’s productivity, increasing the risk of wasted time and resources for your business.

At least 47% of HR managers are stuck in an unsuccessful cycle of trying to manage employee performances and improve productivity, as per an Aconso study. This challenge is drawing huge resources away from other critical HR functions.

If you’d like to enhance performance management, I recommend using a proven HR document management solution. 

So how exactly does a DMS help you improve performances? 

For one, the best DynaFile alternatives for HR document management come with powerful full-text and metadata search capabilities. These allow your employees to quickly find the information they need within company networks without wasting time. 

Some of these tools also offer advanced document automation features such as automated approval routing and automatic naming and sorting. So they can help reduce manual document management tasks that are often a huge productivity killer for staff. 

Aside from accelerating document access and automating workflows, you’ll also get important collaborative features like co-editing and version control. 

These enable your staff to easily collaborate on various team projects, leading to faster workflows and better team productivity, which often results in higher revenue & growth.

3. Automating staff onboarding

Want to onboard new hires more effectively? 

Employee onboarding is one of the most important processes for your small business. This is because it sets the tone and the foundation for staff success, while it also goes a long way to include employee retention as well. 

However, a paper-based HR workflow can really ruin your onboarding processes, increasing the risk of low employee engagement and high turnover rates.

A survey by Endboarder recently revealed that 1 out of 3 employees said their onboarding experiences were really poor. And because of this, many of these new hires become disengaged at work and had a very difficult time fitting in.

In fact, a good number eventually left the role, sharing their negative experiences with their networks and tarnishing the company’s reputation. 

One way a great document management software for HR improves onboarding is by enabling you to digitize and centralize various onboarding documents so they’re easy to find. These include background checks, resumes, health records and much more. 

You even get powerful document approval workflows, which you can implement to reduce manual onboarding tasks for your small business. 

So improve your onboarding and start your free FileCenter to reap the full document management benefits for HR departments that you deserve. 

With our software in your corner, you can make a great first impression with new hires by creating a digital and efficient onboarding workflow. The result is better employee engagement and a great reputation that makes your business appealing to new talents.

4. Supporting employee wellness 

Improving employee wellness is very important. 

This is because it directly affects the productivity of your staff, so you may not get the best performance out of them if this aspect of your business is poor. Productivity aside, it can also increase the risk of employee stress and burnout as well. 

If employee wellness is neglected, it can also lead to higher absenteeism rates, poor customer service and mistakes that may cause workplace accidents.

Unfortunately, 46% of UK employers admitted they struggle to support their staff’s mental health and well-being, according to a survey by Ciphr. It’s a challenge that causes these busiensses to experience high cases of burnout. 

If you’d like to enhance staff well-being, I recommend investing in document management software. 

So how does a DMS help you improve staff wellness? 

For one, it can help you reduce clutter and information retrieval difficulties, which can be a huge cause of stress for employees.

With workers not having to navigate piles of paperwork and disorganized digital files and finding the information they need faster, workplace frustrations reduce, creating a more positive work environment for your small business. 

Additionally, I’ve noticed that the best paperless office software also comes with other document management  benefits for HR like automated workflows. 

These help to free your staff from iterative administrative tasks that are also often a huge source of stress. Ultimately, your DMS can help your staff to increase efficiency and avoid unnecessary overtime, consequently contributing to better work-life balance. 

5. Bolstering payroll administration

Want to improve payroll management for your business? 

It may fall on your HR department, in coordination with your finance or accounting teams, to manage payrolls & other staff benefits. However, this can be a nightmare to manage if you don’t have an efficient way to centralize and digitize these files.

If your benefits administration processes aren’t effective, they can lead to incorrect and delayed compensation that decreases employee satisfaction.

A study by MHR brought to light that over 88% of businesses suffered massive payroll errors and mistakes in 2022 alone. It’s a situation that resulted in employees getting paid late or incorrectly. 

Just to add salt to injury, these businesses ended up spending at least 12 hours a month investigating and correcting these discrepancies. 

The first way a great accounting document management software can help you streamline benefits administration is by improving record-keeping and organization. 

You can store important payroll-related documents such as contracts, tax forms, paystubs and even timesheets, in one centralized and digital location. This reduces the risk of misplace payroll records while enabling the quick retrieval of payroll histories. 

In fact, some other document management benefits for HR departments  you may get with some of these tools include automated data entry, which results in fewer mistakes when it comes to benefits allocations, tax deductions and overtime calculations. 

These tools may also let you create automated document approval workflows, which streamline payroll changes for faster implementation of bonuses and salary increments. 

How to Choose HR document management software

a) Identify your specific HR needs

What aspects of HR are your biggest pain points? 

Different document management software bring different things to the table in terms of capabilities. Some are ideal for accounting and tax management, while others are more suitable for employee records management and payroll administration. 

By identifying your biggest HR needs, you can avoid getting a document management tool that doesn’t address your document handling requirements. 

In fact, at least 26% of HR technology projects end up unsuccessful on average, according to a recent survey by Gartner. This is because most of these businesses don’t achieve the business outcomes they thought they would get. 

One of the top reasons behind this is choosing a document management platform that doesn’t perfectly align with your HR department’s specific needs or goals. 

It’s therefore crucial to zero-in on a specific aspect of your HR workflow that you want to improve, and look for a DMS with features geared toward solving this problem. 

For instance, if protecting sensitive employee records is your most pressing objective at the moment, I recommend a platform with powerful document storage and robust access control and data encryption, all of which you can find in our proven solution. 

So why not click here to try our FileCenter software for free today? It can help you to securely store and protect confidential employee data.

With this no-obligation trial, you can road test key HR document management features at no charge, enabling you to fully understand how it can help your HR department. 

b) Assess integration capabilities 

Your HR department may have existing tools in place.

One of those may include your human resources information system or HRIS, which you can use for attendance tracking, benefits administration and so on. In fact, you may even still rely on conventional Microsoft Office solutions like Spreadsheets for this. 

If your document management software doesn’t integrate easily with your HR tools, this can create duplicate work, alienate data and lead to inconsistencies. 

A survey by BambooHR revealed that 1 out of 3 HR experts said that managing data in different systems like benefits, time-tracking and payroll tools is so time-consuming. In addition, they confessed that these issues cause lots of errors & duplicate work as well.

In order to reap the full benefits of document management for HR, you therefore need to carefully evaluate the integration capabilities of your potential DMS software solution against your small business’s existing technologies. 

Do you use QuickBooks as a payroll management tool? 

In this case, I recommend document management software for QuickBooks, which pair seamlessly with the platform. These help you to get around its manual data entry challenge to streamline payroll processing and accuracy.

Overall, you should first make a list of all your HRIS, payroll software, and performance management systems to see if your DMS offers pre-built integrations to support them.

If it doesn’t, it should at the very least provide open and configurable APIs, which allow you to create custom integrations to accommodate all your existing systems. 

c) Prioritize automated document workflows

Is administrative HR work holding you back? 

The situation may not get any better if you go for a document management software that still requires you to perform a lot of tasks manually. This is why I recommend that you give priority to tools that offer simple yet powerful automation features. 

In addition to creating huge inefficiencies for your small business, manual HR document workflows also massively increase the risk of human errors. 

A recent study by Jittenit showed that 50% of businesses view their HR departments as a key area for automation. This made the second leading priority area for businesses, after information technology. 

The primary motivating factors for embracing these technologies included increasing productivity for HR professionals as well decreasing HR management burdens. 

So when choosing a document management software for your HR, be sure to first assess and advisably even test-drive its document automation features. 

One of the most vital document management benefits for HR departments that you can get with such a tool is automated bulk digitization. This enables you to quickly centralize new employee files, contracts and agreements to increase efficiency and cost savings. 

And that’s just the tip of the ice berg. 

You should also prioritize automated document naming, which allows you to create and file HR documents as per standard conventions for uniformity and better version control. 

Moreover, consider automated document routing which can help your small business to reduce turnaround time for performance reviews, compliance tracking and onboarding. 

Conclusion

HR is one of the cornerstones of your business. 

It’s a critical function that influences talent retention, productivity and revenue.

So if an ineffective document management workflow stands in the way, it can derail growth and other business goals you may have as a HR team. 

In 2024, only 41% of HR professionals met the business’s objectives in terms of growth, going by a Lattice study. So the majority of HR departments are falling short. 

By tapping into the document management benefits for HR departments  that arise from using effective digital technologies, you can surpass your HR goals. Consider our software if you need a growth catalyzer built to scale.

So be sure to start your free FileCenter trial to maximize value even from a limited HR workforce using our software. 

You’ll get key document organization, collaborative and automation features, enabling you to create a scalable HR workflow to support your small business’s growth plans.