Why is Automation So Important for Wage and Labor Law Compliance? Data Collection and Analysis

Positive news about job growth has been prevalent lately. Last week, the U.S. Bureau of Labor Statistics reported 242,000 new jobs, and the unemployment rate was reported at 4.9%, the lowest since 2008.

HR compliance

This economic strength is also reflected in the world of Human Capital Management. In a just-completed Brandon Hall Group survey, 86% of organizations expected their workforce management technology budget to increase or stay the same over the next year and a half.

However, in a separate, earlier survey, only 32% of companies surveyed planned on investing in new software to help them manage wage and labor law compliance, and 19% of organizations still use manual measurement and reporting of employee actions such as punching in, time-off requests, time-to-hire, etc. rather than using an automated system.

Why is automation so important in wage and labor law compliance? Generally speaking, automation is one of the easier HCM practices to quantify the value of because there is a direct line from hours saved by an automated process and the former spend on that process in terms of employee hours.

With legal/compliance automation, there’s another large factor justfying automation, and that is in the data collection and analysis. With much of the upcoming legislative changes (or proposed changes), the new rules are about what type of data is gathered, how it’s classified, stored, and what it can then be used for. All of those types of changing regulations hinge on an organization’s ability to comprehensively gather data in specific ways, and then to ensure that there are the fewest possible errors in that data.

The other strength of automation in terms of compliance has to do with the analysis. By using techniques such as cluster analysis in large sets of data, pay discrepancies can be found that might otherwise have escaped even a trained human practitioner, as sometimes these discrepancies are not noticeable except as a pattern over time, or as a slight difference that only affects a specific group.

Automation is one of the great features of modern HCM systems, and not just for its time-saving potential. It also allows for the type of data collection and analysis that is intrinsic to the legalities of modern HR.

Cliff Stevenson, Principal Analyst, Workforce Management, Brandon Hall Group