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HR departments handle quite a number of contracts. From employment agreements and non-disclosure pacts to vendor and service contracts, HR is contract intensive. But, in truth, these agreements are not the easiest thing to handle and manage.
Effective contract management has become an essential ingredient in organizational success in a modern HR environment that's constantly changing.
Where organizations also try to be operationally more effective and, at the same time, bring down risk factors, the concept of CLM has come to the fore.
It will be pivotal for organizations to maintain operations at their most efficient state while considering the growing volume of contracts and rising compliance requirements in the HR sector.
This is why integration between CLM solutions and Microsoft 365 is going to be very critical in the times to come.
In this blog, we take a closer look at the importance of CLM for human resources, the salient features offered by Dock 365, and how it is going to change the way contract management is being practiced thus far in your organization.
The Role of Contracts in Human Resources
Contracts lie at the heart of HR, while forming the basis of employee-employer relationships, including partnerships with third-party vendors.
These agreements outline responsibilities from job descriptions to compensation and compliance with labor laws to third-party services. Major types of HR-related contracts include:
Employment Contracts: These are full-time, part-time, and freelance agreements. Employment contracts outline everything from one's salary to their job responsibilities.
Non-Disclosure Agreements (NDAs): NDAs are those kinds of contracts that protect sensitive information for maintaining confidentiality.
Vendor Contracts: The HR department also issues contracts to third-party vendors for recruitment platforms, employee training, and benefits providers.
Complying with laws on employment, regulations on privacy, and even internal policies within a company has just made this task daunting.
Key Challenges in Managing HR Contracts
Before the advent of CLM systems, spreadsheet tracking was the usual recourse, followed by emailing and/ or storing hard copies of paperwork in filing cabinets. The general inefficiency of this method creates several challenges:
High Volume Management
The average human resources team juggles several hundreds or thousands of contracts across the employee lifecycle. Without a centralized platform to track the status of each contract, the process is very likely to consume much time and be riddled with errors.
Compliance Risks
Non-compliance with regulatory requirements results in serious sanctions. For example, contracts that are at variance with either labor legislation or the guidelines concerning GDPR can place an enterprise in the eye of the hurricane.
Security and Access of Documents
Contracts contain sensitive information-both employee-related and corporate in nature-and hence need to be stored in a very secure manner. Conversely, HR teams have a valid requirement for having it stored securely, yet confidentially.
How CLM Solves the Problems of HR Contract Management
Contract Life Cycle Management software automates and streamlines the whole process of managing contracts.
A CLM system optimizes the workflow related to a contract from drafting and reviewing to executing and renewing with the least risks.
Centralized Contract Repository
A CLM system has one place where all HR contracts can be kept.
This means no longer managing a variety of different systems for a variety of different contracts and, in turn, keeping them organized, secure, and easily accessible.
For larger organizations, it will also make auditing easier as there is a single central repository, and this strengthens internal transparency and accountability.
Automated Contract Workflows
CLM systems let HR teams automate workflows, ranging from creation to approval setup for employment contracts.
For example, it would automatically create an employment contract from a predefined template when a new employee is hired, route it for approvals, and send it to the new hire for e-signature.
Compliance Tracking
CLM helps HR departments to set up automated reminders regarding their responsibilities about compliance.
The reminders in turn ensure that all contracts are in compliance with the law about labor and regulations.
In such a proactive approach, the risk of penalties due to non-compliance becomes minimum.
Automated Notifications
Instead of having key dates, such as contract renewal, termination, or performance review dates tracked manually, for instance, the system automatically sends reminders to the respective stakeholders.
That way, no contractual obligations are overlooked, which may further reduce the risk of missed deadlines and disputes.
What's in it for Human Resources?
Establishing an HR-dedicated CLM system will transform the way any organization deals with human capital management. Here's how:
More Efficiency
The writing, tracking, and approval of contracts are automated, making the HR teams available for higher-value work.
In a study by Forrester Research, organizations that utilize CLM software can cut up to 80% of time off the processing of contracts.
Improved Compliance
Automated tracking of compliance and the integration of CLM systems with databases of labor law will help HR departments keep each employment contract up to date with the latest legislation.
It minimizes not just the risk of penalties but also helps in building better trust between employees and management.
Improved Employee Experience
A CLM system can enable frictionless onboarding in which the new recruits receive the contracts in time and are able to execute them digitally, hence avoiding delays and bottlenecks of paper-based work.
In a job market that is getting increasingly competitive, this efficiency can facilitate the improvement of their employee experience right from day one.
Reduced Risk
By maintaining a clear audit trail, and because all contracts are routed and tracked within the system, CLM software reduces the risk of any kind of errors, disputes, or missed obligations.
Contract Management in HR Using Microsoft 365
The inability to manage contracts manually can be highly inefficient and prone to errors, leading to compliance risks and other resulting delays.
This is where the capability of Microsoft 365 comes in robust.
In other words, Microsoft 365 provides a suite of tools such as SharePoint, Teams, Word, and Power Automate that can be leveraged to realize efficient contract management.
Familiar tools can work together in order to streamline the creation, collaboration, storage, and tracking of compliance of contracts. Here's how Microsoft 365 enhances HR contract management:
Creating and Storing Documents: Word and SharePoint
With Microsoft Word, users can create standardized templates of contracts.
After contracts are created, they can be safely stored in SharePoint. SharePoint enables the human resource teams to manage and access their contracts from one location.
There will no longer be a need for multiple systems, and the possibility of losing critical documents is less likely to happen.
Collaboration and Approvals: Teams and Power Automate
With Microsoft Teams, collaboration on contracts is flawless.
HR professionals can share draft contracts with the relevant stakeholders, such as legal teams or department heads, for real-time feedback.
On top of that, workflows can be automated using Power Automate in order to route contracts for approval or send reminders of renewals to minimize missed deadlines.
Compliance and Auditing in SharePoint and OneDrive
This is quite important since contracts usually have to be set to legal and regulatory standards.
SharePoint does have versioning and audit logs that help HR keep a very clear track record of changes in the contracts.
Moreover, OneDrive offers a simple yet secure way of access to the contracts, having advanced encryption and permission controls that guarantee sensitive information will remain available only to those whom it may concern.
How Dock 365 CLM Integrates Seamlessly with Microsoft 365
Dock 365 provides a strong Contract Lifecycle Management system integrated into Microsoft 365, extending the HR contract management processes.
This allows the HR teams to switch seamlessly from traditional, manual contract management into an automated one.
Dock 365 uses SharePoint for contract storage in a secure and centralized way; this will utilize advanced searches and version control to easily access and track compliance.
With native integration with Microsoft Teams, this would allow HR professionals to create contracts, collaborate on and approve them within the comfort of a familiar ecosystem.
The system will handle the entire lifecycle of every contract, from negotiation to signing, without having to change applications.
With added security for sensitive HR contracts, such as Data Loss Prevention and Multi-Factor Authentication through Microsoft 365, Dock 365 ensures sensitive HR contracts are managed with a high degree of security.
Final Thoughts
The management of HR contracts is very complex and labor-intensive.
With Dock 365 in combination with Microsoft 365, the HR team is better equipped to ensure increased contract compliance while minimizing risk and enhancing overall efficiency.
With organizations continuing to see more and more volume with contracts and compliance, CLM solutions integrated with Microsoft 365 will be key in maintaining operational efficiencies and reducing risk around contracts in Human Resources.
If you would like to learn more about how Dock 365 CLM can change the way in which your organization handles HR contracts, contact us today for your free demo.
