10 signs it’s time to stop using HR spreadsheets in your SME

Spreadsheets are the natural first step many small businesses take when organising their records and managing their responsibilities as an employer. They’re inexpensive to set up and second nature to most people who’ve grown up learning the basics of Microsoft Excel or Google Sheets.

But spreadsheets have a shelf life, especially for employers trying to keep up with changes to UK employment law. Although Excel spreadsheets can technically handle up to 1,048,576 rows in Excel and 10 million cells in Google Sheets, most SMEs will reach a tipping point, where those fiddly grids become too hard to manage and could even pose a risk to your business. The Fair Work Agency (FWA) can investigate employers over payroll and leave record accuracy, so it’s vital to keep your data current and easy to retrieve. For most businesses, that means looking beyond spreadsheets.

This guide explores 10 signs it’s time to stop using spreadsheets for HR, and how to move to an all-in-one HR solution for small businesses when you’re ready.

Skip to: 

 

• What do small businesses use HR spreadsheets for?

• 10 signs your SME has outgrown HR spreadsheets

• HR software vs. spreadsheets: Which is right for your small business?

• How to move from spreadsheets to the right HR software

• How to replace spreadsheets with Breathe

• Frequently asked questions about switching from spreadsheets to HR software

 

What do small businesses use HR spreadsheets for?  

 

Part of the reason spreadsheets are so popular in SMEs is they’re highly customisable and familiar to most users.

Here are some common ways that HR professionals, or anyone else in charge of people management might use spreadsheets as a jumping off point for their HR processes.

 

• Tracking time off: A shared spreadsheet lets managers log leave requests and keep a running total of each employee's remaining allowance.

• Completing onboarding checklists: Small businesses often build simple trackers to record that each new starter has completed key onboarding steps.

• Arranging performance review cycles: A spreadsheet can hold a schedule of upcoming reviews and record whether each performance management meeting has taken place.

• Running payroll preparation: Businesses without dedicated payroll software often use spreadsheets to collate hours and deductions before passing the information to an accountant or payroll provider.

• Planning headcount: A spreadsheet gives a quick overview of current roles and open vacancies, which is useful when planning for growth or managing a recruitment drive.

• Storing compliance documentation: Spreadsheets often act as a log of which employees have completed which compliance requirements, from right to work checks to signed policy acknowledgements.

• Managing recruitment: Candidate details, interview dates, and offer information end up in a spreadsheet when there's no dedicated applicant tracking system in place.

• Recording training completion: A simple spreadsheet tracks which employees have finished mandatory or role-specific training and flags when a refresher is due.

 

10 signs your SME has outgrown HR spreadsheets

 

Even if you’re coping well with spreadsheets and they’re a firm fixture of your workflows, there are some clear signs that it might be time to move on.

 

1. You’re storing HR information in too many places and can never find what you’re looking for

If you’re using spreadsheets for your human resource management, you probably have some sort of system to organise one type of data from the next. For example, you might use one spreadsheet for basic employee records, then set up separate files for holiday leave, performance reviews, absence management, and so on.

But the more spreadsheets you have, the greater the chance that you’re entering similar information in multiple places, which can increase the risk of miskeying.

Version control problems are another common challenge of using spreadsheets. Every time someone downloads a file, saves a copy, or renames a version, you end up with multiple files and it’s not always clear whether you should be looking at “Employee Records - use this one” or “Employee records - final version.” If you have several people viewing and updating separate versions, you’ll end up with conflicting records and no reliable way to check data accuracy.

 

How HR software solves this problem

As an alternative to spreadsheets, HR software gives you a joined-up solution, with a single record per employee and all changes reflected immediately across the entire software. For example, if an employee’s job title and line manager changes, everyone working in the system sees the updated information.

It also makes it easier if the Fair Work Agency (FWA) ever asks you to produce evidence of your employment records. Instead of pulling data from several different files, you can quickly generate a complete and accurate record in one place.

 

 

 

2. You’re spending too much time chasing routine HR admin

In a lot of small businesses, the person in charge of HR is doing it alone and sometimes managing several other areas of the business at the same time. With a busy workload, you can easily forget to access the spreadsheet in the first place to discover you need to chase an unsigned policy document or send a probation review form.

None of these tasks are hard, but a spreadsheet won’t automatically remind you about them. If you have the expertise, you can set up an automation with a third-party service like Zapier, that will send a reminder to your email or Slack that nudges you to access the spreadsheet. But the automation will only work if you’re committed to updating your spreadsheet correctly. In most cases, you’ll also need to pay for the automation tool, which is a wasted cost when all-in-one HR software gives you the same reminders, plus solutions to far more of your specific HR challenges, all in one place.

 

How HR software solves this problem

HR software builds alerts and notifications into the process itself, so you don’t need to worry about keeping important HR tasks and dates in your head or setting up a separate automation tool.

 

 

3. You don’t trust your holiday and absence records

Holiday leave and absence are tricky to manage in a spreadsheet, especially if multiple managers are in charge of approving time off or logging absences. But if you’re trying to plan a project, or need to understand your headcount during a busy season, you don’t want to scour rows and columns, wondering when they were last updated or if someone’s approved dates have been transferred across from an email chat yet.

 

Example: One manager might approve a week off in August without realising someone else has already approved the same week for another team member. Now your team is at risk of being understaffed, unless you arrange extra cover or disappoint one of the employees by asking them to rearrange their holiday.

Outside of holiday clashes, keeping accurate records is also one of your main responsibilities as an employer. Since 6th April, 2026, employers must keep records of annual leave and holiday pay for at least six years from the date they were made. These must include:

 

• holiday taken

• holiday carried over from previous years

• holiday pay, including how bonuses and commissions relate to pay

• any payments in lieu of holiday – for example, pay for unused holiday when someone leaves a job

 

Be aware that the Fair Work Agency can investigate whether employers are meeting these responsibilities. If your records live across multiple spreadsheets maintained by different people, pulling together a reliable record will be difficult.

 

 

 

How HR software solves this problem

Breathe includes an employee self-service feature that allows your team members to request their leave dates, which you (or your managers) can approve in a single click. Employees don’t need access to a desktop to book their leave. They can make their request from any device, including mobiles using the free Breathe mobile app.

Leave entitlements automatically update as soon as you’ve approved a request, and the visual staff holiday planner flags any clashes before a manager signs off on anything. Sickness records sit alongside annual leave in the same system, so you always have a complete picture of who's off and why.

 

 

4. Your recruitment process is slow and you lose quality candidates

Good candidates don’t wait around. If your hiring process is slow because you’re storing information across inboxes, Slack channels, and spreadsheets, you risk losing strong applicants to a competitor who can move faster.

Even in small businesses, recruitment involves a chain of processes that need to run like clockwork to move the right person from job application to signed contract in a way that’s fair and consistent.

Internally, your process might involve HR working with managers and business leaders across various documents to create job descriptions, shortlist candidates, and compare interview notes. Externally, if you’re using a third party recruitment agency, you’ll likely be communicating by email or direct messaging platforms like Slack.

Trying to pull information from your various inboxes and make sense of it all in a spreadsheet is near impossible. It’s also much harder to prove that you’re not discriminating against any candidate based on protected characteristics like their gender, religion, race, disability, and many others set out in the Equality Act 2010. If your process looks different for every hire, you have little to fall back on if a candidate ever challenges a decision.

 

How HR software solves this problem

Recruitment software keeps every stage of the hiring process in one place. When a candidate accepts an offer, their details move straight into the HR system without anyone having to re-enter them. And if you’re using Breathe's Recruitment module, you can create and share unlimited vacancies then track every applicant through each stage.

 

5. Your onboarding process is inconsistent

Once an offer is accepted and contracts are signed, a spreadsheet seems like the ideal place to hold your onboarding checklist. You have a column for each task and can mark them off as complete once you work through them.

The problem is that a spreadsheet is a passive document - while it’s great at displaying task lists, it can’t actively assign tasks to people. Unless your team is vigilant at checking the spreadsheet regularly, you’re probably familiar with waiting for a colleague to complete an onboarding activity before you can get started on a follow-up task. Everything that requires manual communication often falls by the wayside in busy SMEs.

As part of their people operations, employers have a legal responsibility to get onboarding right. Since April 2026, new employees are eligible to take paternity leave and unpaid parental leave from day one. And from October 2026, employers have a new duty to inform employees of their right to join a trade union. It’s hard for a spreadsheet to prove you communicated these rights.

For a more detailed look at how employment law has changed in 2026 and what you need to do, our on-demand webinar covers everything you need to know.

 

 

How HR software solves this problem

Onboarding software lets you build a standardised onboarding process that runs the same way for every new starter. You can assign tasks with deadlines and documents attached and send automated nudges to chase anything outstanding.

You end up with a dated record of what you communicated and when, so if a question ever arises about what a new starter was told in their first few weeks, you have something concrete to refer back to.

 

6. Your performance review cycles are often delayed

Whether you run annual performance reviews, or opt for a more regular quarterly cycle, or even monthly check-ins, a structured approach to performance management keeps individual employees progressing and working toward individual and shared goals.

But effective performance management is based on many moving parts, including:

 

• Asking employees to fill in their self-evaluation forms

• Prompting managers to complete their review

• Checking if employees have completed training or any goal linked to their performance

• Collecting feedback from peers in a 360-degree performance review

 

All of these tasks should be completed in advance of a performance meeting, but they can easily be forgotten about if you try to run your review cycle from a spreadsheet. Without a shared system for storing performance notes, it’s common for some employees to have their performance review delayed by several weeks or months until there’s space in the calendar.

 

How HR software solves this problem

Performance management software, as part of an all-in-one HR solution like Breathe, keeps your review cycle on track without you having to manage it manually. The software auto-sends out reminders before a review is due, and everyone involved receives the necessary paperwork in their inbox well in advance of a meeting. Everything is stored in a single place, so you have a consistent record of what you discussed and agreed, along with a clear understanding of the next steps.

You can also use Breathe to set individual objectives and link them to wider company goals, so employees can see how their own progress fits into the bigger picture. And with Kudos, anyone in the business can give a colleague a shout-out for a job well done, giving employees a steady stream of positive feedback to draw on when review time comes around.

 

 

 

7. You’d find it hard to evidence training quickly

As a small business employer, you're probably already aware of your responsibility to deliver certain training to your employees. This includes courses aligned to UK legislation, like UK General Data Protection Regulations, the Equality Act 2010, the Modern Slavery Act 2015 and the Bribery Act 2010, as well as training covering sexual harassment prevention, discrimination and equal opportunities, and mental health awareness.

 

Along with delivering training, it’s important that you can also prove it happened. These are just a handful of situations illustrating where you might need to evidence your training records.

 

• An ICO investigation following a data breach, where they'll want to see that staff completed UK GDPR training

• An employment tribunal claim involving harassment or discrimination, where training evidence supports your defence

• A Fair Work Agency investigation, which requests relevant records showing your team has been trained on relevant employment rights and protections

• A client or tender process, where contracts require proof of compliance training

• A sector-specific regulatory inspection, for example from the CQC or Ofsted

• An insurance claim following a workplace incident, where incomplete records can affect your cover

 

From October 2026, the Employment Rights Act 2025 requires employers to commit even further to preventing sexual harassment at work. You must now prove you’ve taken "all reasonable steps" rather than just "reasonable steps” to protect your employees from harassment. While you could use a spreadsheet to detail each of these steps, including evidence of training dates and course names, this approach is much less reliable than using software geared towards learning and development.

 

 

 

How HR software solves this problem

HR software like Breathe Learn provides access to a library of 100+ UK-specific courses, including HR, compliance, and health and safety training, along with many other topics. With Breathe Learn, training records also update automatically when your staff complete a course. You can assign training content to individuals or your whole team, track progress in one place, and download completion reports when you need them. Built-in assessments and certificates are excellent evidence if you ever need to prove that training happened.

And to help you tackle the increased legal harassment prevention duties, Breathe Learn includes sexual harassment training and Breathe's Health & Safety module lets you create and store your sexual harassment risk assessment alongside your other safety records. You can even share it with your team to confirm they’ve read it with a digital acknowledgement.

 

 

8. You’re falling short of your health and safety responsibilities

Health and safety is never going to be the most exciting task on your to-do list, but it’s an area of your small business you can’t afford to get wrong.

As an employer, your health and safety responsibilities go beyond putting up a fire safety poster. Under the Health and Safety at Work Act 1974 and the Management of Health and Safety at Work Regulations 1999, your legal duties include:

 

• Carrying out written risk assessments for your workplace

• Maintaining a written health and safety policy if you employ five or more people

• Providing adequate health and safety training and keeping records of it

• Logging workplace accidents and incidents in an accident book

• Reporting certain injuries, diseases and dangerous occurrences to the HSE under RIDDOR

 

A bit like The Fair Work Agency, the HSE has the power to investigate employers and prosecute where they fall short, for example, failing to report an incident under RIDDOR is a criminal offence.

This is a huge amount of documentation to keep on top of, so if you’re struggling in your small business, you’re not alone. According to Breathe's own research, half of SME managers and leaders manage health and safety using a collection of spreadsheets, emails and paper documentation, while 45% have one or more health and safety documents missing or out of date. You might be in the same boat if any of the following examples sound familiar:

 

• Your risk assessments were completed once and haven't been reviewed since

• You're not sure who your current first aider or fire warden is, or when their certification expires

• An incident happened and you’re not sure if you should have reported it to the HSE

• Your health and safety policy exists but nobody can find it without blowing the dust off a filing cabinet or hunting through desktop drawers for a document that hasn’t been touched since you wrote it

• You have no record of whether employees have read and acknowledged your safety policies

• You verbally agreed follow-up actions after an incident but never formally assigned or tracked them

 

How HR software solves this problem

HR software with a health and safety module is one of the most important steps to protect your people and your small business. A system like Breathe brings your safety records into the same system as your people data, where you can manage essential health and safety tasks like creating risk assessments, logging incidents and near misses, and sharing safety policies.

If you ever need to produce evidence for the HSE, an insurer, or an auditor, everything is in one place and ready to retrieve. Check out our detailed guide to learn more about the benefits of joined-up HR and health and safety software.

 

 

9. Your payroll run depends on manual checks

Your employees trust you to pay them accurately and on time. And there’s a lot of pressure involved in getting the details right so your employees’ pay isn’t late or missed and you don’t end up receiving a penalty as a result.

If you’re trying to run payroll manually from a spreadsheet, you’ll be familiar with:

 

• Checking timesheets meticulously and cross-checking them against leave records

• Worrying you’ve made the correct deductions for benefits administration

• Chasing managers for hours they haven’t logged

• Trying to work out whether an expense claim has already been approved

• Hoping nothing has been updated in a different version of a file you haven’t seen

 

How HR software solves this problem

The best types of HR software cover all your HR needs, connecting time and attendance, leave records and expenses in one place, which removes any manual reconciliation on your part. Breathe integrates directly with Xero Payroll so your payroll data feeds through automatically rather than you rekeying it from a spreadsheet. Breathe also brings expense management into the same system, so claims, approvals, and receipts sit alongside your other people data, rather than in a separate file.This approach results in fewer errors and less time checking everything.

 

10. Your HR insights take hours of manual reporting

When your people data lives across multiple spreadsheets, getting a meaningful view of your business means someone has to build that view from scratch.

 

• If you want to know which department has the highest absence rate this quarter, someone has to pull the data, clean it, and calculate it manually.

• If you need to understand who has a probation review coming up in the next 30 days, or which employees haven't completed mandatory training, these are also manual tasks.

 

By the time you have the answers, the situation may have already changed, or worsened.

For example, if you don’t notice a trend swinging towards rising sickness, it might be too late to tackle the burnout that may be causing it.

This is where spreadsheets are more than just an inconvenience and start having a negative impact on your business. Of course, any admin burden is always frustrating, but not being able to see what's happening with your people is a more serious problem.

 

How HR software solves this problem

Joined-up HR software keeps your people data visible and current. Breathe's reporting and analytics tools give you a live view of absence trends, upcoming probation dates, training completion, overtime patterns and burnout risk. With all this information at your fingertips, you’ll spot problems earlier and make faster, smarter decisions about your business.

 

 “Breathe has allowed me to eliminate many spreadsheets and streamline processes/policies towards employee self-service. Breathe has also helped me to demonstrate to investors that we have the ability to track important people metrics.”

– Catriona C., a mid-market user 

 

 

 

HR software vs. spreadsheets: Which is right for your small business?

 

If your SME has been working with spreadsheets and you haven’t had a reason to change yet, you might still be weighing up whether you need to switch to HR software at all. Here’s a quick decision guide to help you understand when spreadsheets might still be a good fit for you, and when it’s probably time to move on.

 

Spreadsheets usually still work if all the following points are true:

 

• You have fewer than five employees

• One person handles all your HR admin, including holiday approvals, sickness absence, training and performance management

• Your team structure rarely changes and you’re not hiring regularly

• Everyone can access the documents and information they need quickly and easily, wherever they’re working

 

You've probably already outgrown spreadsheets if:

 

• You’re bogged down by admin and don’t have enough time to spend on strategic initiatives

• You have more than one manager approving things like leave or training

• You're onboarding new starters regularly

• You've already made a payroll error caused by inaccurate records

• You spend hours each month on manual reporting

• You need to open multiple files to answer a basic HR question

• Your team is growing and your HR processes need to keep up

 

Watch this on-demand webinar to learn more about the hidden cost of spreadsheet-based HR. 

 

 

How to move from spreadsheets to the right HR software

 

Making the switch from spreadsheets to software doesn't have to mean starting from scratch with your HR record-keeping. The right HR software should feel like a natural extension of what you're already doing, but with far less manual effort. Here's what to look for.

 

Choose software with a central place for your employee data

Instead of spreading HR data across multiple files, look for a system that keeps employee records, documents and HR history together in one place, so you're not cross-referencing tabs or wondering which version of a file is current.

Your HR software will become your single source of truth for every aspect of the employee lifecycle, from onboarding to offboarding and everything in between.

 

Look for workflows that take routine admin off your plate

An effective HR system stores information but also prompts you on the next steps you need to take.

Make life easier by choosing software with automation baked in, so you receive real-time reminders of what’s on your plate and how you can keep the process moving.

 

Prioritise self-service tools your team will use

Employee self-service is an important feature of HR software that’s missing entirely from spreadsheets. Choose tools that give your employees access to the information or forms they need from any device (including their mobile phone), which reduces the number of inquiries to your human resources department.

 

Make sure reporting supports real decisions

Look for a system that gives you a live overview of the most important details, such as:

 

• absence trends

• upcoming probation dates or review deadlines

• training completion

• overtime, burnout risk or other people trends

 

Pick a platform that complements your HR processes

Before you commit to any software, think carefully about what you need it to do. Even core HR software will give you a significant step up from spreadsheets. But if you also need to manage recruitment, health and safety, expenses, or any other specialist HR area, look for a platform that covers those areas too rather than just piecing separate tools together. And if you have any existing software you need to keep using, such as payroll software, make sure your new HR system can connect to it.

 

Consider your budget and headcount

HR software pricing varies widely, and the pricing model is important to understand before you commit. Some platforms charge per employee, which means your costs rise every time you hire. Before you sign up to anything, check what's included in the base price and what requires an add-on fee.

Breathe charges by headcount bracket rather than per person, so your monthly bill stays predictable as your team grows. Whether you have one person or up to 250, there’s a plan to suit your business at a low monthly cost, with optional add-ons for recruitment, expenses, rota and time and attendance, learning, and health and safety. And if your circumstances change, you can cancel any time as we don’t lock you into a contract.

 

 “Breathe has dispensed of so many spreadsheets and so much paper.”

– David F., a deputy practice manager  

Replace spreadsheets with Breathe’s joined-up HR software

 

If several of the signs in this guide sound familiar, you're not alone. Most small businesses start with spreadsheets, but most also outgrow them at roughly the same point, when the manual effort starts to outweigh the flexibility, and your outdated data becomes harder to trust.

Breathe is built specifically for UK SMEs with under 250 people. It brings every aspect of the employee lifecycle into one place, so your people data is always current and accessible, and never depends on someone remembering to update a file.

Over 17,000 UK small businesses already use Breathe to simplify their HR. If you're ready to see it in action,  you can watch a short demo focused on staying compliant without spreadsheets, or get started straight away with a free 14-day trial using your own data. 

 

 

And if you'd like to read more before deciding, our guide to choosing HR software and our guide to joined-up HR and health and safety software are good places to start.

 

 

Frequently asked questions about switching from spreadsheets to HR software

 

What's the difference between HR software and a spreadsheet?

Spreadsheets are flexible and familiar, but they were never designed for HR. Instead, HR software keeps employee records, leave, documents and reporting connected in one place, with built-in access controls that limit who can view sensitive information.

 

When should a small business invest in HR software?

A small business should consider investing in HR software when spreadsheets start creating more work than they save. If you find yourself spending hours each month on admin that a system could handle automatically, it’s probably time to explore your options.

 

Is HR software affordable for small businesses?

Yes, HR software can be very affordable for small businesses, particularly when it’s priced by headcount bracket rather than per employee. Breathe starts at a low monthly cost for businesses up to 10 people, all the way up to 250. Optional add-ons are available so your monthly cost only reflects what you use, and you can cancel any time.

 

What happens to our data if we switch from spreadsheets to software?

Switching from spreadsheets to HR software doesn’t mean losing your existing data. With Breathe, for example, you can use our import template to populate your current employee records and upload during setup, so you’re not starting from scratch. Data security is also taken care of as Breathe is backed by ISO 27001 and ISO 42001 accreditation.