When a spreadsheet stops being enough
A spreadsheet runs HR adequately for longer than software vendors suggest. The thresholds that matter are specific and worth waiting for.
Most companies under about twenty people run HR on a spreadsheet and a shared drive, and most of them are told this is a problem. Usually it is not yet.
A spreadsheet is free, infinitely adaptable, and understood by everyone. What it lacks is access control, an audit trail, and the ability to let people see their own information. Those absences are what eventually force a change, and it is worth knowing which one is forcing yours. For a product-level comparison in this area, review stealth monitoring software.
Four thresholds
- Sensitive data mixed with general data. The moment sickness certificates, medical information or disciplinary notes are in the same place as the holiday tracker, access control stops being optional. This is the threshold that arrives first and gets noticed last.
- Self-service demand. When people cannot see their own leave balance without asking, every query becomes someone's task and disagreements surface at the worst time.
- Audit trail. When you need to establish who changed a figure and when — for payroll, for a dispute, for a leaver's final calculation — a spreadsheet cannot tell you.
- Reconciliation burden. When the same data is being typed into more than one place each month, the transcription cost and the divergence risk both start to matter.
Under most modern data protection regimes, holding health information on an open shared drive is difficult to justify. This threshold arrives at roughly the first long-term sickness absence, not at a headcount.
What a spreadsheet still does well
Headcount planning, pay modelling, one-off analysis, anything requiring a calculation nobody anticipated. Even companies with a full HR system keep spreadsheets for these, and there is no reason not to.
The distinction worth holding is between the system of record — one authoritative place for each fact — and working files, which can be anywhere and are disposable. Trouble comes from working files quietly becoming the record.
The intermediate step
Between a spreadsheet and a full HR platform there is a workable middle position that suits many small employers: a simple leave and absence tool, a separate secure location for sensitive documents, and a spreadsheet for everything else.
This addresses the two thresholds that arrive first — sensitive data and self-service — at a fraction of the cost of a platform, and without a migration project. It is frequently the right answer for a long time.
Do not buy for a headcount you do not have
Vendors sell against future growth, and it is a persuasive pitch. In practice, buying a system sized for fifty people when you have eighteen means paying for and administering capability you cannot use, and configuring it against a structure you have not yet decided.
Systems are easier to change than the pitch implies, and small companies change shape unpredictably. Buy for the problem you have now.
Migration is the real cost
The subscription is the visible price. The cost that surprises people is getting existing data into the system: records in three formats, historical leave balances that have to be reconciled, documents that need classifying before they can be uploaded. For broader independent guidance on this point, consult CISA cyber guidance for small businesses.
Budget properly for it, and use it as an opportunity rather than an obstacle. A migration is the only moment when someone will actually go through every personnel file, and it is the natural point to apply a retention schedule and delete what should have gone years ago.