Human resources tend to be an underappreciated department, especially in small businesses. While there may not necessarily be sales quotas that need to be met, market shares to capture or profit margins to consider, HR plays a momentous role behind the scenes.
As a small business grows, having reliable HR systems in place will become more and more of a necessity. The effects of poor HR cannot be underestimated. It can easily lead to bad hires, unmotivated employees, high turnover, noncompliance, and more. All of which funnels into the bottom line.
In regards to investing in HR software, many small business owners have the mindset “we’ll cross that bridge when we come to it.”
Truth be told, the sooner you cross that bridge, the better shape you will be in for the long run.
Here are four major benefits to keep in mind.
1. Improved productivity
Time is the one thing there never seems to be enough of, and something you will never get more of. In a small business, you wear many hats. In the early stages, chances are, HR duties are not a sole responsibility. As many will attest, HR is A LOT to keep track of. Although the cost is definitely a big roadblock when implementing a software solution, the time it takes to manually do things like sift through applications, input data, and handle company policies will add up fast.
For this reason, it’s imperative that small businesses leave the monotonous tasks to the machines to boost productivity. One of the most popular tools on the market that help you here is Zenefits, which makes HR processes extremely quick and easy. The smart system keeps all information like administration benefits, payroll, sick time, PTO, and more in order with an intuitive employee self-service function.
In terms of small business, the best part is that many of the essential features are free! As your company grows, there are options for paid upgrades based on your needs.
75% of American workers don’t believe they have access to the right technology to improve their efficiency. Don’t let your HR department fall into this category.
2. More precise hiring
Hiring will forever be one of the riskiest tasks of HR. Not only do bad hires impact company culture and teamwork, the cost of turnover can be devastating, especially for small businesses. Studies have found that the total cost of replacing an employee can add up to be more than half of that person’s salary. This includes the cost of recruiting, onboarding, training, etc.
Simply put, a successful company starts in the hiring process. Eliminating the guesswork in finding the right fit for certain tasks and work cultures is one of the best investments you can make for a small business.
Now, it’s nearly impossible to get rid of all the guesswork involved in hiring. However, there are plenty of machine-learning powered tools out there today that can reduce it by a large factor. For example, Harver is a “smart” AI-based system designed to pinpoint the perfect candidate for any given position. It relieves your HR department of the tedious task of sorting through a huge stack of applications to find job profiles that pertain to the opening.
The algorithm runs a number of assessments to get a better feel for the applicant’s problem-solving abilities, personality for cultural fit, situational judgment, and unique skill set in relation to the job responsibilities.
The result is a realistic preview of the job so applicants can get a much better idea of what they are in for, while the employer can identify their best skills for future use. Win-win, anyone?
Bringing a new employee onboard is a big investment. It’s all about confidence. The more research you can do beforehand, the better off both parties will be.
3. Better security
HR deals with a lot of important and confidential data. This includes social security numbers, pay scales, banking information, medical documents, employee reports, and more. Given the increasing threat of cyber attacks, businesses need to do everything they can to ensure all their information stays safe. If you have a subpar system to keep all of this in order, it’s only a matter of time before something terrible happens.
While many HR software systems are secure, you need to do a good amount of research before investing in one for your small business. Start by looking at the reviews of what other companies have to say about it. The software you want should be known for not only providing a secure system, but having a limited amount of effort required on your end for setting up security features.
Additionally, there are a number of practices you want to get in the habit of doing with your chosen system. For one, you should have restricted access based on needs. If employees have self-service options, they only need to have access to information that pertains to them. Before the system goes live, be sure to create some dummy profiles and test them to make sure no one can access the information they shouldn’t.
Secondly, the system you select should have timeout capabilities. Being as how most cloud-based HR solutions can be accessed from anywhere, this function is a must.
Lastly, always keep your network security measures and firewalls up to date. Hackers are working around the clock to find new ways to breach systems and protocols. Failing to update puts you at serious risk of a breach.
Although HR software is generally more secure than old-school filing systems, there are plenty of risks that need to be assessed and managed.
4. Data-backed employee development
Other than salary and benefits, one of the most important things companies can offer their employees is professional development. Studies have found that a heavy majority of younger workers leave their jobs because they are dissatisfied in this regard.
Employee development is a joint effort between both parties. There are many solutions out there designed to provide number-driven insights into how a worker is performing. If employee development is a high priority for your small business (which it should be), a tool such as Insala definitely needs to be on your radar.
This software enables you to create and implement career development initiations for the long term. This process involves all stakeholders with a structured plan for how their skills can be used to benefit the big picture within an organization.
Administrators and managers can then align this information with the overall business strategy and goals. From here, you can lay out expectations and pathways for both parties to reach their objectives.
As time goes on, HR can manage progress with employee data and output. Systems like this provide clear roadmaps for employee development with plenty of KPIs to funnel into career visions.
When running a business, you need to understand that people are your greatest resource, by far. No one wants to spend their life at a job with no clear idea of how they will grow.
The benefits of HR software cannot be ignored. Putting the right systems into practice is a huge piece of the puzzle in creating a cohesive workplace.
HR may not seem overly important in the early stages of a small business, especially when you only have a handful of employees. However, if you plan on blossoming into a big company someday, it’s best to do your trial and error in finding the ideal HR formula early on.
Barend is known internationally as a digital innovator in the recruitment and HR tech space. Previous to founding Harver, a leading AI pre-hiring platform, Barend was a partner at digital strategy, concept and development companies in Amsterdam. He and his team were responsible for large digital innovation and communication projects in the recruiting, banking and automotive space.