Beware of the Costs of a Bad Human Capital Management System


Human capital management (HCM) solutions are intended to make life easier for people leaders, human resources (HR), and employees. But there is such a thing as a bad HCM — and it can do the very opposite of making things easier. 

Using an HCM that’s prone to errors or still requires manual effort to complete business operational processes can have a significant impact on your company’s profitability, productivity, and overall efficiency. Coming out of the pandemic, it’s more important than ever to control business costs and increase revenue, so it no longer makes sense to stick with an ineffective or obsolete system that’s a drag on your resources. 

Here’s a breakdown of some of the costs of a bad HCM system — in money, time, and focus — and what a system upgrade can do for you.

Talent acquisition and employee retention

The cost of hiring and retaining good employees is already considerable for many businesses. The average United States (U.S.) employer spends around $4,000 and takes 52 days to hire a new employee. If an employee leaves, it costs as much as 33% of that worker’s annual salary to replace them. 

A bad HCM can add to these time and hiring costs, either by what it can’t do or what it does poorly. For example, if your system doesn’t have position-based hiring capabilities, when re-filling a position, you may spend more time having to re-enter all the position details like pay rate, org structure, or qualifications because the outdated system cannot retain all that data even when an employee leaves, making succession planning more difficult. You also may not have the benefit of capturing and storing applicants’ information in your system so that it can be easily transferred to the onboarding process. Instead, you may be left spending yet more time and resources re-gathering and re-keying that data when onboarding a new employee.

A subpar onboarding experience can also affect employees. Instead of focusing the majority of their time on learning and getting comfortable in their new position, you may be sticking them with a mountain of paperwork and a lot of tedious back-and-forth with HR. And since a smooth employee onboarding process contributes to employee retention, your HCM could indirectly be hurting that as well. 


Payroll is a complex process with a lot of moving parts that require significant time and high attention to detail. According to a recent survey, payroll taxes alone can take up to five hours per pay period to process. That’s five hours that could be better spent on something else. 

An HCM that can’t handle end-to-end payroll processes can keep you locked in a series of manual tasks and siloed information. Without the ability to connect payroll with employee information, onboarding, taxes and compliance, and reporting, each of these has to be handled as separate workflows or in separate systems that don’t share data, requiring you to hunt down information from other departments, update information in multiple places in multiple systems, and take time to find and fix the errors that inevitably occur with manual work.

Time and attendance

Time theft in some form, whether it’s an employee recording time they didn’t actually work or spending time on personal tasks during the workday, is a real problem that leads to lost productivity. It’s noted that 43% of employees commit time theft. Add to it the fact that having to manually track time and attendance in an outdated system is itself a time-consuming task. 

Even honest employees can inadvertently make timekeeping mistakes that cost the business. If employees can’t accurately track time and attendance in your HCM, or if you don’t have a good way to reconcile timesheets and track PTO accruals, there’s no way to rein in those costs. And if your system has a cumbersome time and attendance process, everyone that has to engage with it is wasting valuable hours on the task. 


For businesses these days, the cost of non-compliance with various laws and regulations is now 2.71 times the cost of compliance. That means whatever you’re spending on a combination of legal expertise and technology systems to help you maintain compliance is a smarter investment than taking your chances without it — and risking major fines, lawsuits, and other costly damage from violations.

Though rare, a non-compliant HCM can saddle you with undue risk — and can be more expensive in the long run if you run into compliance trouble. There are a plethora of forms and reporting requirements associated with the Affordable Care Act (ACA), Consolidated Omnibus Budget Reconciliation Act (COBRA), unemployment claims, and many others that have to be handled accurately and within correct timeframes. When it comes to business compliance, any mistakes or competency gaps in your HCM can leave you vulnerable.

Upgrade your HCM to get the most for your money

Upgrading your HCM system if it’s too old, prone to errors, or limited in its functionality is key if you want to save costs and spend less time on back-office processes. Using the latest cloud-based HCM technology helps you control costs and manage your workforce with much greater efficiency by integrating payroll, time tracking and attendance, and talent acquisition — plus benefits administration, performance management, employee onboarding, and other critical HR processes — in a single, business-compliant system. 

Workflow automation, integrated data, and an intuitive user experience can significantly reduce the time HR, people leaders, and employees have to spend on common processes — earning time and money back to put toward the higher-value tasks and initiatives that help your business grow and increase revenue.  

Ready to upgrade your underperforming HCM and switch to a new provider today?

We are here to support you with efficient, accurate, and cost-effective workforce management solutions. To learn more about SyncHR, click here.


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