Small and mid-size businesses share many challenges when it comes to HR technology. This includes everything from disparate systems that don’t communicate seamlessly with each other (e.g., one system for payroll, another system for time tracking and another for employee benefits management), to disruptive software upgrades and limited reporting capabilities. In some cases, there may even be a complete lack of automation.
While piecemeal, manual or paper-based systems may seem cost-effective, the truth is inefficient or inadequate HR technology wastes valuable staff time and energy. It can also lead to costly errors and even fines when wage and hour regulations aren’t followed.
If you’re still dragging your feet about spending money on HR technology, consider this: Bersin by Deloitte found that HR technology tends to improve significantly every five to seven years. If you haven’t invested in a new system or platform lately, your company stands to gain significant advantages by upgrading now.
So, what common challenges can new HR technology help your business overcome?
1. Expensive, time-consuming IT support and add-ons
Off-the-shelf software packages that handle one aspect of HR rarely “talk” to your other systems without significant intervention by an IT specialist.
For example, the time-keeping system that seemed inexpensive and easy to use becomes expensive once you add the staffing costs of hiring an IT guru to make the system interact with your benefits administration software. It takes great technical sophistication to get disparate systems to bridge one another.
What’s more, piecemeal systems are notoriously buggy because more manual data entry is required, resulting in inconsistent or incomplete data and errors. Over time, the true cost of individual solutions can exceed the cost of comprehensive platforms. When you factor in maintenance, software upgrades, manual transfer of data between individual software systems and add-on services that cost extra, the total price tag increases quickly.
A single, integrated HR system can eliminate the need for costly IT interventions and streamline HR operations. It can also provide more detailed, useful data you can use for strategic planning and day-to-day management and free HR personnel for other work.
2. Disparate, clunky platforms that aren’t scalable
When you first started your business, you may have had such a small staff that back-of-the-napkin estimates and paper forms for hiring worked fine. If you only have a handful of employees, it may not be too time-consuming right now to manually track and approve their PTO, schedule and move their shifts or update a W-4 form.
But as your company grows, you want to spend as much time as possible on running the business, not managing HR tasks. Implementing a comprehensive HR technology solution that scales with your business can allow you to transition from a tactical approach to a more strategic one.
Consider this: A paper-based or traditional HR setup that relies heavily on manual processes requires three to five employees to handle benefits, payroll, taxes, and hiring and onboarding paperwork. In comparison, cloud-based, fully integrated, all-inclusive HR technology with automated processes needs only about two people per 100 employees to perform the same functions.
In fact, Bersin by Deloitte found that companies with newly upgraded human resources management systems (HRMS) spend 22 percent less on HR per employee.
That means your HR team will be able to dedicate more time to recruitment and retention efforts, or other revenue-generating activities. When your business transforms from reactive to proactive, you’ll empower your staff to take on new initiatives that support your company’s vision and mission, rather than spending all day “putting out fires.”
If your company expands across state lines, a comprehensive HR system may allow you to grow without hiring additional HR staff members who specialize in the laws for that particular state. This may be even more the case if the integrated system offers you access to a team of professionals for personalized guidance.
Another reason scalability is so important when it comes to HR technology: Separate HR platforms may not have the data storage capabilities to handle the growing amount of data inherent in a larger organization. A comprehensive, fully automated HR platform will support your growing company by scaling up as your staff numbers increase, both in functionality and data storage.
3. Regulatory compliance issues
Businesses today face a dense forest of federal, state and local regulations related to employment. Staying abreast of regulatory changes can be a full-time job, even for HR specialists, which makes it even more daunting for a business leader focused on client needs, supply chain issues and managing a team.
Outdated, non-integrated HR systems generally cannot offer timely resources or real-time guidance on topics like paid sick leave or disability rules.
A robust HR technology platform can help you keep your company compliant and avoid costly, time-consuming fines and lawsuits.
4. Inadequate data (or data that isn’t readily available)
If your business still relies on disparate HR systems, gathering and interpreting business data is probably manual, clunky and time-consuming. The standard reports available from old, non-integrated HR software may no longer be sophisticated enough to meet your business needs. This can make it difficult to manipulate data so that it provides you with the information and analytics you need to be agile in your decision-making.
If your company requires highly specific functionality in a particular area, such as scheduling capabilities or enterprise resource planning (ERP), integrating these processes with your other HR systems may be a complex endeavor.
An investment in a fully automated HR management tool should enable your business to greatly expand its reporting capabilities, allowing management to better correlate employee performance with business metrics and adjust processes to meet strategic goals. Rather than viewing HR as a back-end administrative burden, think of HR technology as a way to strengthen your business by producing better, more useful data.
5. Multiple vendors to manage
Again, if your organization is extremely small, you may be able to get by using individual systems from multiple vendors. Dealing with paper-based systems or manually transferring data between disparate platforms may not be an issue for you – not yet anyway. But once your business takes off, it quickly becomes tiresome to manage multiple HR suppliers.
Another problem with multiple HR vendors: When software developers deploy upgrades, hiccups and delays may result as your business loses valuable data or spends time reintegrating and synching your various systems.
6. Cumbersome recruiting and onboarding
After reviewing the job announcement and description, a potential employee’s first experience with your company is usually filling out an application and standard HR forms. If the process is paper-based and cumbersome, when all your competitors offer the convenience of online applications, your company may not measure up in comparison.
Even worse, if your HR technology makes recruiting time-consuming and slow, you could lose significant amounts of revenue because positions are open longer than absolutely necessary. Or, you might miss out on the best candidates, who’ve become frustrated with your process and moved on to greener pastures. What’s more, neglecting to gather and keep all the required documentation when hiring or terminating an employee may open your company to legal liability.
Today’s fully unified HR management tools allow your company to track a candidate throughout the lifecycle of their recruitment and then into their employment. A reputable platform will likely provide online functionality for your onboarding process as well.
With an integrated, automated system, you can:
- Stay organized and eliminate the hassle of keeping up with paper forms (or the fear of misplacing them)
- Access the tools and information to help you remain compliant
- Gauge issues such as turnover and hiring costs
7. Insecure data storage or transfer
We’ve all seen the new stories about a company’s personnel data being exposed when a laptop is accidently left in an airport, or paper-based forms are lost in a hurricane. Storing employee information in a spreadsheet or a file cabinet can spell disaster.
A cloud-based, automated HR technology platform can store all your data safely, where it can’t be flooded, burned or stolen.
Don’t let antiquated HR processes hurt your business. Learn more about the benefits of updating your HR technology, and how to go about it, by downloading our free e-book, HR technology: How to choose the best platform for your business.