8 reasons why your small business should implement human resources software

8 reasons why your small business should implement human resources software

As a small business, you’re no doubt very conscious about every penny that your company spends. You might think cloud-based human resources (HR) software ranks low on the priority list of things your business needs – that it’s a nice-to-have, rather than a must-have.

But HR software is a tremendous asset that can come at surprisingly affordable prices. And once you consider the time and energy you and your employees will save by not having to perform laborious administrative HR tasks involved with payroll, shift and leave scheduling, employee record-keeping, recruitment, onboarding and performance tracking, you’ll see that the investment will pay itself off in no time.

Not quite convinced? Here are 8 reasons why your small business should implement HR software.

1. It will make the HR department run like a well-oiled machine

HR software will automate many (if not all) of the tedious tasks that take up the majority of your HR employees’ time. Take payroll, as just one example: no more will they have to sort through time sheets, tally up hours, work out complicated penalty rates or verify the data is correct with managers. Doing such complex processes manually can also make them highly prone to human error, again costing the business time and money to rectify.

With HR software, all the information is stored, calculated and verified in the system, cutting the total process time dramatically. Automating such processes can create efficiencies and enable resources to invest valuable time back into improving the business.

2. It saves the business money

Improving the efficiency and productivity of the HR department can save the business money in several ways.  

It can, for example, drastically improve the HR worker to employee ratio. While the ratio is typically 1 HR worker to every 100 employees, implementing HR software can bring this ratio to 1 worker to every 150 or even 200 employees. This means you can potentially hire less personnel, or have existing personnel focus on tasks that will bring more value to the business.

It can also help to reduce employee turnover, which can be another huge cost to a business. A company can spend anywhere from 16 per cent (for lower-level employees) to 213 per cent (for executive positions) of employee’s annual salaries to hire someone new. HR software can help with employee engagement (more on that later), thereby reducing attrition. Recruitment features can also help to make sure you hire the right candidate in the first place, which again means less turnover.

3. It allows for employee self-service

HR typically spends a lot of time inputting data, filing paperwork and addressing employee queries, but with HR software, the power is put back into the hands of employees. Employees are able to easily view and update their personal data, check their leave balances and request leave, and download payslips and employment certificates, all without having to send a single email.

HR software also provides a centralised repository where essential information can be stored, meaning employees can quickly and easily look up things like HR policies. This saves HR employees time having to answer the same queries repeatedly.

4. It improves employee engagement and development

Happy and engaged employees are productive employees, and, believe it or not, HR software can help here too.

Regular performance reviews, for example, has been shown to improve employee engagement, with one survey reporting that 43% of highly engaged employees receive feedback at least once a week. HR software can help by tracking employees’ performance, scheduling regular reviews, and keeping set objectives and feedback all in a single place, so you can ensure employees remain on the right trajectory.

HR software also makes administration much easier and more transparent. By being able to easily see and access their benefits, employees are more likely to take advantage of them, making them more satisfied at work.

It can also often have an e-learning component, providing online courses so that employees have the training they need to reach their goals. This can also help with the onboarding process, as employees can access the training and resources they need immediately, allowing them to settle in their new roles quickly and seamlessly.

All of these benefits serve to help employees feel appreciated and motivated, and support organisational wide retention strategies.

5. It improves organisational communication

By providing a central repository where employees can view and share essential information, HR software can help streamline organisational communication. This can be particularly helpful for companies with a remote workforce, as employees are able to access the system from any location or device, allowing for fast and effective communication.

This makes things like finding a replacement for someone on sick leave or working out if and when employees can take holidays a breeze.

6. It improves business decision-making

For an HR department to be at its most effective, it needs accurate insights into what is happening within the organisation. This is made all the easier by HR software, which provides a superior ability to track and analyse data, ensuring the department can quickly identify problems and fill gaps.

It can show, for example, if a certain department has an unusually high absence or turnover rate, which may alert you to managerial issues, or if a department has particularly high performance level, which may help you to improve the performance in other departments. These types of trends would be difficult, if not impossible, to spot with a paper-based system.

In short, accurate, up-to-date and comprehensive data equals better business decision-making.

7. It helps small businesses with compliance and risk management

It can be difficult for small businesses in particular to ensure they are complying with ever-changing HR regulations. Australian businesses have to contend with federal and state legislation, award regulations and enterprise agreements, and any slip-ups can result in heavy fines. It’s essential, therefore, that businesses are diligent about keeping on top of record-keeping.

HR software can help to enforce record-keeping, by making it an automatic part of the workflow, and ensuring electronic records of items such as employee certificates and compensation claims are centrally stored and easily accessible. This ensures nothing accidentally falls through the cracks, minimising risk and potential liabilities.

8. It helps make documents more secure (not to mention reduces your carbon footprint)

Electronic record-keeping is not only better for compliance; it improves security too. No longer will you have to store sensitive information in filing cabinets that can be easily infiltrated, or lost in a catastrophe such as a fire or a flood. Instead, documents are filed securely in the cloud, where they can be retrieved with just a quick search.

Reducing the immense amount of physical paperwork is also much kinder to the environment, plus it’ll save you valuable office space previously taken up by bulky cabinets.

Which HR software is right for you?

As you can see, HR software is not only a boon to your HR department, but the entire organisation, resulting in more time, more money, and more engaged and productive employees.

As with any software-as-a-service (SaaS), though, there are a wide range of options, from ones with just the essential features to ones with all the bells and whistles. When deciding which HR software option is right for you, it’s important to consider your specific organisational needs. If, for example, you have a remote workforce, or your employees regularly travel, you may want a package that offers a mobile app. If, however, your workforce is office-based, this might not be necessary.

It is also recommended to trial at least 2 or 3 different options (by live demonstration if you are time bound), so you can see how they perform in a real setting.

Ultimately, investing in software that’s the wrong fit for your business can cause a range of issues down the track. To ensure your HR tools are future-proofed, check out our free ebook How to choose the right software for your business, where we give you all the information you need to ensure you make the right decision. Download it now.

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