A good number of smaller businesses (say less than 150 employees) cannot justify the cost of having a dedicated HR person, and so that function is frequently bolted on to an administrative or secretarial job; employee information is kept in paper files, with extracts of payroll reports and a few spreadsheets to try to keep a grip on the basic facts. It’s not ideal, and small businesses can suddenly become just large enough to present upscaling problems.
If this seems far-fetched… it isn’t. Trust me: it’s all too real. I’ve seen it many times.
In line with this, there are emerging numbers of statutory demands on businesses of all types and sizes to supply information, such as Diversity, Gender Pay Gap or Employee statistics. Many smaller businesses are wary about spending money on an HR system, not only because the perception is that they are expensive, but because the way to make a business case for it has not been clear to them. It hasn’t helped that some software houses fail to present their products in language that business people can understand!
So what benefits can there be?
Of course, it is good to keep detailed employee information in one place, being able to refer to it quickly or run a report on a variety of reasons (absence, training spend and career progression) but where these applications really score is with notifications.
Notifications are a series of events that the user sets up to react to particular changes in the data. A new starter entered on the system when a job offer is accepted (even before they actually start) can generate an emailed message to the Switchboard / Reception, IT people and Facilities to ensure that everything is in place when the new employee arrives (anyone who has ever turned up on day one not having a desk or access to the IT system will know exactly what I’m talking about).
These notifications can also remind you or your managers of important events like probation period ending, appraisals, work permits, impending retirements, long service awards – even employee birthdays if you want!
All at once, those paper reminders that got lost in the chaos are a thing of the past.
Not only are they time-savers, but they also mean that things don’t fall “between the cracks,” so in terms of reduction of errors and employee goodwill they are a worthwhile investment in themselves.
A question I am often asked is if it is best to have an HR system integrated with the Payroll. The straightforward answer is, ideally, yes. Having two disparate applications of HR and Payroll can work if you can balance the cost of either “double posting” or building and maintaining interfaces against that of buying integrated software. Of course, if you are using a Payroll Bureau or other third-party supplier, you have a more interesting calculation to make.
Your main options would summarise as follows:
Integrated HR & Payroll application
Pros: labour-saving, less prone to posting errors, extra features.
Cons: relatively more costly to acquire.
Separate HR & Payroll software
Pros: Initially relatively less costly.
Cons: Everything posted twice, potentially expensive to develop interfaces, higher possibility of discrepancies between records.
HR software & Third-Party Payroll
Pros: Less costly than a) but more expensive than c)
Cons: same as b)
Like everything in business it comes down to the figures: costs versus effectiveness. You want a piece of software that is an enhancement to your business, not another headache to keep you awake at night If you’re not sure about the way this might work for you, get an expert; it won’t take them long to tell you if it’s a worthwhile exercise.
In general, Human Resources software has come a long way over the last decade, becoming more and more affordable as larger vendors and niche software houses take notice of small and medium-sized businesses with less than 500 employees. After all, there are more of them, and they tend to remain loyal.
The advent of cloud- and web-enabled systems has brought the peripheral costs of operating them down dramatically. Setting up has becoming easier, and the software is much more intuitive. ‘Plug and Play’ gets ever nearer – with the vision of HR software that you can download at lunchtime and have it running by mid-afternoon close to being a reality – providing your needs are not too complex!
Due to the simplified delivery methods of these systems you can download a demo version from the internet and trial it at your own pace using samples of your own records.
So, as part of your business review, look again at an HR system; it might well be less costly that you thought!