Why HR Leaders Still Rely on Spreadsheets
Spreadsheets have been the backbone of HR compensation planning for decades. They appear flexible, inexpensive, and easy to share. Yet the risks of managing compensation in spreadsheets have grown too large to ignore. In fact, nearly 90% of spreadsheets contain errors that impact decision-making, according to Aeqium’s recent analysis of compensation planning practices (Aeqium, 2025).
The question is not whether spreadsheets will fail but when. For HR directors balancing compliance, fairness, and efficiency, the risks now outweigh the convenience.
Errors That Multiply Under Pressure
One of the most serious risks of managing compensation in spreadsheets comes from error rates. Nearly all organizations have faced an error hidden in a formula or a copied cell. As cycles intensify, those errors multiply. Research confirms that even small formula mistakes can cost millions—JP Morgan’s infamous “London Whale” trading loss ballooned to $6 billion due to a spreadsheet error (Microassist, 2024).
In HR, the same risk plays out at scale. A single decimal in the wrong place can lead to overpayments, misaligned merit pools, or frustrated employees. Unlike specialized tools, spreadsheets lack built-in guardrails to prevent these compounding errors.
Lack of Security and Confidentiality
Another critical issue is security. When HR shares spreadsheets by email or stores them on local drives, sensitive data becomes vulnerable. A 2024 study revealed that HR data appeared in 81.7% of breaches, making it one of the most compromised categories (HRM Magazine, 2024). Worse, 84% of breaches involve emailed spreadsheets (SpreadsheetWeb, 2025).
The consequence goes beyond compliance fines. A single leak can destroy trust, fuel internal conflict, and damage an employer brand. Confidential pay decisions demand systems built with secure access and role-based permissions, not files floating across inboxes.
No Audit Trail for Compliance
Auditors expect accountability. Yet spreadsheets cannot track who made a change, when it happened, or why. Without a reliable audit trail, HR teams scramble to reconstruct evidence from emails. This creates compliance gaps that regulators notice.
Hummingbird notes that spreadsheets are “not great for compliance” because they lack audit history and approval workflows (Hummingbird, 2025). Pandell echoes this, showing how spreadsheet reliance exposes organizations to both legal and operational risks (Pandell, 2024).
Therefore, every cycle run on spreadsheets risks failing an audit—something few boards or CEOs will tolerate in today’s regulatory climate.
Wasted HR Time and Resources
Even if spreadsheets remain “good enough,” the time wasted is enormous. HR leaders lose countless hours reconciling files, fixing formatting, and chasing down version control problems. TalentGuard’s recent report found that HR teams spend more than 50 hours per month just managing compensation spreadsheets (TalentGuard, 2025). That equates to more than a full workweek every month.
Instead of investing in strategic workforce planning, HR directors become spreadsheet administrators. This inefficiency is not sustainable.
Real-World Horror Stories That Prove the Point
History is full of spreadsheet disasters. From TransAlta’s $24 million error caused by a misaligned row to Kodak’s $11 million overpayment in severance (The Guardian, 2024), the lesson is clear: manual spreadsheets fail when the stakes are highest.
In HR, these disasters hit closer to home. A lost file before board review, a broken formula that inflates merit increases, or a manager accidentally seeing another department’s salaries—all are preventable with the right technology.
Why SimplyMerit Is the Safer Upgrade
Fortunately, HR directors do not need to implement a massive HRIS overhaul to leave spreadsheets behind. SimplyMerit provides a low-barrier upgrade that replaces spreadsheet risk with secure, centralized control.
With SimplyMerit, HR leaders can:
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Upload Clean Data: Import employee and pay information using templates designed for HR systems like Namely, ADP, or BambooHR.
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Enable Secure Manager Access: Managers log in via role-based invitations, keeping sensitive data controlled.
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Track Budgets in Real Time: Dashboards display allocations versus spend as managers enter recommendations.
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Log Every Action for Compliance: Approvals and changes are recorded in a system audit trail.
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Export Clean Reports: At cycle close, HR can export updates directly into payroll or HRIS without manual reconciliation.
Moreover, post-cycle Insights Reports give HR leaders a strategic lens into trends, outliers, and equity gaps, helping them move from firefighting to forward planning.
Spreadsheets vs. SimplyMerit
| Factor |
Spreadsheets |
SimplyMerit |
| Error Risk |
High—formulas break, hidden rows miscalculate |
Low—system-calculated fields ensure accuracy |
| Security |
Weak—files shared via email, desktops, cloud drives |
Strong—secure cloud access with role-based permissions |
| Audit Trail |
None—manual evidence collection |
Built-in—approvals and changes are logged |
| HR Time |
High—manual reconciliation and merging |
Low—automated data processing and clean exports |
| Insights |
Limited—basic totals only |
Advanced—trend and outlier analysis in Insights Reports |
Key Takeaways
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The risks of managing compensation in spreadsheets include errors, breaches, compliance failures, and wasted time.
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Real-world disasters show that even billion-dollar firms fall victim to spreadsheet failures.
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SimplyMerit provides the low-barrier alternative: upload data, control access, track budgets, and export clean results.
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HR leaders can replace firefighting with strategy by moving compensation cycles out of spreadsheets.
Quick Implementation Checklist
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Identify where spreadsheets create the most risk in your cycle.
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Collect employee data from HRIS, payroll, and performance systems.
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Export clean files and prepare them in SimplyMerit templates.
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Upload data and configure secure manager access.
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Train managers with CompAware to lead pay conversations with confidence.
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Launch your cycle and track budget spend live.
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Export updates to payroll and review Insights Reports post-cycle.
The risks of managing compensation in spreadsheets are not minor inconveniences. They are errors waiting to happen, breaches waiting to occur, and compliance failures waiting to be exposed. In contrast, SimplyMerit provides compensation cycle management that improves accuracy, compliance, and efficiency, serving organizations across North America with secure, manager-friendly tools.
SimplyMerit provides compensation cycle management that improves accuracy, compliance, and efficiency, serving organizations with secure, manager-friendly tools.
CTA: Ready to replace spreadsheets? Schedule a SimplyMerit demo today.