Is The HR System Important For Small Business Needs?

When you’re putting so much of time, money and energy into your small business, it is only natural to think of HR as a line item or a fixed cost with few variables — once the HR box has been checked, it’s time to move on to more important things. However, as your small business transitions into a medium-sized business, great HR can have an enormously positive impact in your workspace.

When done right, HR leads to a host of long-term benefits, including faster communication between employees, improved employee engagement, and more successful recruiting as your business gains a reputation for professionalism and competence. These benefits far outweigh the cost of moving on from DIY spreadsheet HR.

There comes a point in the growth of every small business when it’s time to stop bootstrapping and invest in a ladder—and the right HR software can provide the boost you need to unlock the benefits of well-managed employees.

How do you know when your small business needs an HR software solution?

Your small business might not have 100 employees yet—it may not even have 50. But if your business grows beyond its current state, your employees will need structure and leadership, and you will need people who can support great managers, help define your company values, and maintain the effective, positive culture you value as a small business owner.

In short, you’ll need effective HR to grow—and great HR only happens when HR professionals have the time and the tools to make a difference for the people in your organization. Without assistance, HR can become so blinded by data management, compliance concerns, resumes, tax calculations, and mountains of paperwork that the work of keeping everyone together goes undone. In the end, HR software is not just about saving HR’s time and money by automating routine tasks—more importantly, it enables HR to extend those benefits to the rest of the business so your employees can spend their time and resources on progress instead of administrative tasks.

Choosing the right HR software for your small business

As you consider HR software from different providers, it can be overwhelming to match program features to every possibility that the future holds for your small business. It’s also unlikely that you’ve read up on the many intricate nuances of HR, so it may be difficult to understand which features make a difference and how.

Before you rush headlong into the HR software search, spend some time analyzing your current and future needs. Understanding how HR features align with key elements of your business (your budget not least among them) will help you select the right system for your needs, not just the best system a salesperson can sell you.

7 Reasons Why Your Small Business Needs An Hr System

Does a small business need an HR System? Yes, as it handles one of your company’s most important resources—your people—regardless of its size. Many small business owners think it’s unnecessary to have an HR tool because they’re “too small” or only have a few employees. However, this impacts their workflow and even growth. Here’s why your small business needs an HR system:

1. The recruitment process is crucial.

Hiring the right candidates who are qualified for their jobs means less time spent on training and supervision. These tasks are expensive for a company, especially a small business, in two aspects: financial and time. Of course, it goes to say that developing your team’s skills is essential. However, training an employee about the basics of their role incurs high initial costs for your business.

An HR software can carefully sift through and sort applications and resumes to pick qualified candidates. It also leverages the use of social media networking, tracks and manages candidates, and reaches multiple job boards, among others. With efficient recruitment and applicant management, you can attract the right talent for the right position at the right time.

2. An HR system helps you oversee your talent pool.

Since your team is small, you want to ensure each member is right for and skilled at their job. Employees who are equipped with the experience and expertise in their role can handle the responsibilities and challenges that come their way. That translates to a more efficient team with members that contribute the best practices to their role. Furthermore, consistently providing a high quality of service is crucial for earning your customer’s trust and loyalty.

An HR tool can help by elevating the quality of communication between your team members. It also lets you track performance reviews and appraisals to engage your employees, build relationships with them, and clearly outline transparency in expectations from both sides. After all, a healthy corporate culture is vital for meeting your goals, attracting and retaining talent, and enhancing your brand identity.

3. A small business still needs to comply with legislation.

HR regulatory requirements set by the government vary from one country to another. In most cases, small businesses are exempt from certain legal requirements. However, there is still employment legislation you must comply with regardless if you have one or 1,000 staff members. Labor laws, taxation, healthcare, and insurance are only some of the documents you needed in place. Companies with 20 employees and less also have up to 60% higher compliance costs.

4. Automation improves productivity and efficiency.

An HR tool automates tasks that are otherwise time-consuming and redundant, such as entering and copying data on spreadsheets, reconciling employee’s payroll, handling tax, remittances, ROEs, and manual T4s, and scheduling and approving employee time-off requests. Automation also replaces the error-prone method of manually accomplishing admin tasks through spreadsheets, files, and folders. For instance, self-service tools enable employees to be proactive in scheduling their shifts and updating their employee records with access permissions.

5. You can establish a good foundation from a clean slate.

As they always say, prevention is better than cure. Absence and leave management may not be a problem when you only have four people in your team. You may even think that implementing policies is not yet a requirement with a ‘this is just how we do it here’ mindset. But with the growth of your team, these small matters can bubble into the surface. Having an HR software for small business from the offset can help you establish and communicate policies and practices clearly to save you from conflicts in the future.

6. HR systems are now more affordable.

Years ago, the only HR software in town was HRIS (Human Resource Information System) that was jarringly expensive. Today’s systems, especially with cloud technology, no longer cost an arm and leg. HR vendors offer packages for small businesses with subscription-based payment models that are paid on a monthly or yearly basis. This means you don’t have to spend thousands of dollars upfront to set up the system or hire more consultants to explore, implement, and train for the product’s deployment.

7. Insights from HR tools improve decision-making.

When you work with spreadsheets, you have to extract and analyze data from it manually. Using this method leaves potential factors to be missed. With HR software, it generates data and identifies patterns and trends. Retrieving key content and information is quick using dashboards and reporting tools.