Many businesses underestimate the impact of human resources (HR) administration on business performance, profitability and, ultimately, growth. When done well, it’s fuel for growth. When done inefficiently, it’s a massive burden that holds you back.
In this blog, we’ll discuss how inefficient HR administration leads to bigger problems. We’ll also provide actionable strategies for how to overcome common obstacles and promote your company’s growth.
What is HR administration?
HR administration is the delivery of core HR services. It encompasses everything we typically think of as tactical HR – all the essential, day-to-day, employee-facing tasks. Without them, your HR department simply can’t function – even for a very short time.
Some examples:
- Filing employee paperwork
- Maintaining employee records and databases
- Processing payroll
- Handling taxes
- Enrolling employees in benefits plans and administering benefits
- Tracking time and attendance
- Tracking leaves
- Ensuring compliance with labor laws
When HR administration becomes a burden
Inefficient HR administration often boils down to a few major problems happening in tandem: a lot of HR responsibilities and insufficient people and systems to support it all.
As a result:
- Everything takes a long time.
- People are tied up in performing tedious, manual tasks.
- Efforts are duplicated.
- The risk for errors and omissions is heightened.
- Little to no attention to given to forward-looking, more strategic HR initiatives that would otherwise focus resources on growth. Instead, companies are stuck in a “survive day by day” mindset.
It’s impossible for businesses to scale efficiently in these conditions. They simply can’t move fast enough and aren’t in a position to make informed, long-term decisions. They’re not even thinking about the future – they’re mired in the present and distracted by all the problems they’re encountering.
The warning signs of inefficient HR administration
How might you know when inefficiencies with HR administrative are a problem for your business?
You may recognize some of these challenges:
- Lengthy recruiting timelines
- New hires aren’t the right fit for their role and/or the organizational culture
- Slow response times to queries from employees and other business units
- Greater volume of employee complaints
- Inconsistent HR data
- Increased incidence of errors – in particular, payroll and wage/hour issues
- Low employee morale or engagement
- Inability to keep up with changing employment laws and maintain compliance
- Uptick in employee claims or lawsuits
- Stressed or burned-out HR personnel
- High turnover across the workforce – as well as concentrated within the HR team
All these serve as a red flags that something could be amiss with your company’s HR administration.
The consequences of inefficient HR administration
When all these issues exist, you may find that your business:
- Diverts company resources toward administrative tasks and away from value-additive activities.
- Frequently experiences costly, time-consuming delays.
- Always has HR “playing catch up.”
- Has difficulties recruiting and keeping employees.
- Has gained a negative reputation.
- Loses customers.
- Allows the opportunity for legal issues to happen.
- Becomes a magnet for government audits and investigations.
- Lacks innovation and competitiveness.
How to improve HR administration and enable business growth
Here are some steps your company can take right now to right the ship of poor HR administration.
1. Build out a robust, scalable HR infrastructure
HR infrastructure refers to your HR-related tasks and activities and the personnel and tools you use to accomplish them. It incorporates:
- People with all the necessary areas of HR expertise.
- HR technology systems, such as a human resources information system (HRIS) or human capital management (HCM) software. This technology can integrate with other systems as well, such as an application tracking system or other legacy systems.
- HR processes, which should be standardized for efficiency and consistency.
- HR/company policies, which should be documented in writing within an employee handbook and communicated to employees.
Put simply, it’s all the things you do to manage people, oversee efficient HR processes and mitigate risks.
Your HR infrastructure must be able to scale up as your organization grows. This means that your HR infrastructure must be able to support:
- An increased number of employees and their daily needs.
- More complicated compliance requirements.
- The general heightened HR complexity associated with growth.
- Quick response times and efficient action.
2. Leverage technology
HR technology is one of the greatest tools in your arsenal for making HR administration more efficient and scalable. Where people may struggle with increased workload and complexity, technology does not.
HR technology can help by:
- Digitizing your HR function. With HR technology, you can store employee documentation/records and HR data in a secure, centralized, cloud-based location that can be easily accessed by relevant HR personnel and kept up to date.
- Streamlining and automating core processes and repetitive tasks that would otherwise take people too much time to complete and, in doing so, can eliminate the potential for human error. Examples of administrative responsibilities that benefit from automation include payroll, benefits administration, records management, leaves management and time and attendance tracking.
- Better monitoring compliance.
- Using chatbots for common HR requests or fielding basic questions from employees.
- Providing a self-service portal for employees to handle routine, non-complex tasks independently.
- Rooting out redundancies and inefficiencies proactively.
- Supporting expanded analytics functions to make raw data more useful.
3. Upskill and cross-train HR personnel
Although it’s common for HR personnel to specialize in a certain area of focus, your HR team should incorporate flexibility and agility into its structure. This means that everyone needs to be aware of what their HR colleagues who handle other processes or tasks are doing and everyone should be trained to carry out these tasks as well.
Upskilling and cross-training HR personnel helps your organization:
- Close gaps in knowledge, skills and general awareness of issues.
- Eliminate points of failure in processes and workflows.
- Balance workload and shift people resources efficiently, when needed.
- Remain at the forefront of HR trends and remain competitive in the larger market and industry.
- Reduce the risks for mistakes, errors and instances of non-compliance associated with outdated methods of service delivery.
4. Delegate and collaborate
Encourage delegation and collaboration within your HR team to maintain efficiency and agility. This helps to:
- Reduce silos by sharing information and ideas.
- Prevent redundancies and duplicated work.
- Identify errors proactively.
- Leverage lessons learned.
- Uncover innovative new ways for HR to refine its delivery of administrative services.
5. Conduct internal audits
How do you know the extent of your vulnerability to an external audit – much less how you’d perform in a hypothetical audit? The answer is to conduct internal HR audits routinely to assess:
- How well employee data is structured and organized, and how easily accessible these files are
- How thorough your documentation is
- How rigorously your HR personnel adhere to processes and workflows
- Whether you find errors or inconsistencies
- How you perform for key HR metrics
6. Track HR KPIs
How do you know how well your company executes its administrative HR responsibilities?
Track key performance indicators (KPIs) and HR metrics as an objective way to measure performance, assess effectiveness, identify opportunities for improvement and set realistic and achievable short- and long-term goals.
Examples of HR metrics to track include:
- Response times
- Errors
- Incidents of non-compliance
- Turnover
7. Outsource core HR functions
When it comes HR administration or even bigger-picture, more strategic HR responsibilities, you don’t have to go it alone. A professional employer organization (PEO) can handle it all.
The easiest and most efficient way to improve HR administration and put your company on an accelerated path to growth is to can be to outsource the tasks that take too much time, consume too many resources and hold you back.
As the most comprehensive, all-inclusive HR outsourcing option, PEOs offer a wide range of benefits.
- PEOs save time and effort by providing an instant, plug-and-play HR infrastructure customized to a business’s needs and stage of maturity.
- Your dedicated HR team at a PEO may encompass expertise in diverse and even niche areas of HR. You gain access to wide-ranging expertise without adding to your headcount or payroll.
- PEOs serve as the co-employer with companies. This means that companies can offload many key employer responsibilities, along with the associated liability, to PEOs. Notably, this includes payroll, taxes and related government filings.
- Your PEO can provide a comprehensive, high-quality benefits package, and handles everything from plan research to price negotiation, enrollment and administration.
- PEOs offer proven HR policies and processes.
- PEOs often provide their own HR technology that digitizes and automates much of your HR function.
- PEOs can deliver best-practice guidance around legal issues when problems arise.
- Some PEOs are national in scope and can assist with maintaining compliance regardless of where the company operates.
- PEOs encourage companies to consider HR needs and potential risks proactively so the company is well prepared and can prevent common issues.
Summing it all up
HR administration may seem like a series of small, menial tasks, but it is absolutely critical for your business. HR administration either keeps your business running like a well-oiled machine and prevents issues with employees, or it creates huge inefficiencies that stifle growth and prevent you from achieving success. Here, we’ve outlined a series of steps you can take to enhance the efficiency of HR administration and promote growth – including collaborating with a PEO to handle HR administration on your company’s behalf.
For more information on how a PEO can help your business overcome HR administrative burdens and turbocharge growth, download our free e-book: HR outsourcing: An essential guide to fast-growing businesses.