Small and midsize businesses have many challenges in common when it comes to HR technology. In most cases, these challenges can be overcome by using a single human resource management system – sometimes called human capital management (HCM) system – that can:
- Incorporate all HR functions, from employee onboarding to separation from the company
- Capture all HR data in one central and secure (cloud-based) location
- Digitize and automate as many HR tasks and processes as possible
- Balance the use of self-service tools on the employee side (letting them input and manage their own information) with managers’ ability to lighten their HR workload on the employer side
- Grow and scale with an organization, evolving to meet changing requirements
- Support expanded, extensive reporting and analytics to make raw data more actionable and insightful
- Embed artificial-intelligence capabilities that can offer recommendations on future HR tasks
- Shift perceptions of HR from a back-end administrative burden to a means of achieving goals and strengthening a business
So, what are the eight common challenges with HR technology that a more robust, advanced system can help your business overcome?
1. Disparate, clunky platforms leading to inadequate data and lackluster reporting
Do you have several, separate systems that each handles just one aspect of your HR functions? For example, do you have one system for payroll, another system for time tracking, and another for employee benefits management?
Certainly, it’s inefficient for your HR team to keep up with multiple systems.
Furthermore, these piecemeal systems often require manual HR data entry, which takes up a lot of time and can result in errors and inconsistent or incomplete HR data.
And, chances are, some of these systems don’t communicate with each other and therefore don’t transfer data back and forth seamlessly. Data may even be calculated differently between systems and may not sync well.
When information is separated into silos and gathering, manipulating, and interpreting data is a clunky and time-consuming process, this can lead to HR data gaps and inadequate reporting – meaning you’re not getting the full picture of what’s going on with your organization. Consequently, you’re unable to make the most informed decisions in an agile, timely manner.
A comprehensive, fully automated HR management system can:
- Streamline HR operations
- Free HR personnel from administrative tasks so they can focus on revenue-generating activities
- Reduce the potential for blind spots or inaccuracies with your HR data
- Make HR data complete and more accessible so you can leverage it for strategic planning and day-to-day management
2. Expensive, time-consuming IT support and add-ons
Piecemeal HR systems may seem cost-effective – at first. Especially when you’re a small business or an emerging start-up.
But, as we’ve mentioned, off-the-shelf software packages that handle only one aspect of HR rarely communicate with your other systems. It takes great technical sophistication to get disparate systems to interface and work together in the way you need them to so your business benefits. This usually involves the significant intervention of an IT specialist – which isn’t cheap.
For example, the timekeeping system that seemed budget-friendly and easy to use becomes expensive once you factor in the fees for hiring an IT guru to make the system interact with your benefits-administration software.
The total price tag further skyrockets when you consider:
- Regular maintenance
- Manual transfer of data between individual software systems
- Other add-on services that cost extra
Additionally, inefficient or inadequate HR technology can waste valuable staff time and energy. It also can lead to errors that impact your company’s bottom line. When laws aren’t followed because of problems with HR technology, your business can even incur fines.
Over time, the true, long-term cost of individual HR systems can easily exceed the initial cost of a more comprehensive HR management system.
3. Multiple vendors to manage
If your HR team finds it tiresome to use several different HR systems, that is likely exacerbated by them having to deal with several vendors. It’s simply more third parties to contact and coordinate with every time there’s a technical question or a problem to fix.
Ideally, support for your HR technology would be easily accessible via one contact.
Furthermore, when software developers deploy upgrades, your business could lose valuable data and time as you reintegrate and sync your various systems.
4. Lack of scalability
What worked when yours was a new or smaller business – say, paper forms and more manual effort – will become increasingly difficult and time-consuming to manage as you expand.
As your company increases in headcount and complexity, you’ll want to spend as much time as possible on running your business, better serving customers, and boosting the bottom line. Examples of what you probably won’t want to spend the bulk of your time doing manually:
- Tracking and approving PTO and other leaves
- Scheduling and moving shifts
- Administering benefits
- Handling payroll
- Updating employee forms
These things will start to feel like unnecessary distractions that hold you back and slow your productivity.
Unlike an expansive HR management system, piecemeal HR systems are by nature limited in scope and functionality. That’s not helpful as your company grows and needs to evolve – especially as your company enters the middle market over the course of its life cycle.
As your company grows, you may find yourself encountering new questions. For instance, will a higher employee headcount subject your company to new laws? Will your company open new locations in other states or municipalities? A comprehensive HR management system can help you successfully accomplish this without hiring additional HR specialists. Such a system may:
- Notify you of relevant HR laws and prompt you to comply
- Automatically make any changes or updates within the system to bring the system into compliance, without your input or effort
- Provide you with access to a team of professionals or on-demand resources for guidance and best practices
Having a larger organization results in a greater volume of HR data to manage. Unlike a comprehensive HR management system, piecemeal HR systems may not have the data-storage capabilities to keep up with your company’s needs. If your HR system crashes, that can lead to devastating data loss and business interruptions. If you store data outside of your organization in a cloud environment and decide to upsize your storage limits, that’s an additional, significant cost.
Implementing an HR management system that scales with your business can not only save you time and hassles but also may enable you to transition from a tactical to a more strategic mindset. When your business shifts 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.
And, as your company scales up or down, consider this: A paper-based or piecemeal HR software setup that relies heavily on manual effort requires multiple people to handle benefits, payroll, taxes, and hiring and onboarding paperwork. In comparison, a cloud-based, fully integrated, all-inclusive HR system with automated processes needs fewer staff members to perform the same functions. It’s very likely that your company could even spend less on HR per employee.
5. Compliance issues
Businesses face a dense forest of federal, state, and local laws and regulations related to employment. Complicating matters, these rules frequently change.
Staying informed and updated on regulatory changes, especially across multiple locations, is a full-time job on its own, even for a dedicated HR specialist – which makes it an even more daunting task for a business leader focused on many other critical responsibilities.
Outdated, nonintegrated HR systems generally don’t offer timely on-demand resources or real-time guidance from HR professionals on changes in employment laws per location. Nor do they automatically fix compliance issues – say, a change in payroll percentages for certain deductions – before you’re even aware of them, in the manner that can be done with a cloud-based, all-inclusive HR system.
However, a robust HR management system can do these things and can help your company avoid:
- Lengthy investigations
6. Cumbersome management of the employee lifecycle
Think about all the HR documentation and processes associated with employees throughout their tenure with your company.
From navigating the application process to separating from the company, you want each employee’s experience to be smooth, seamless, and easy.
To start with, if your employment application and onboarding processes are paper-based, cumbersome, and slow, you definitely won’t make a good impression on potential job candidates right out of the gate. This means you could lose out on significant amounts of revenue because positions are open for longer than necessary. You may also miss out on desirable talent, who may become frustrated with your process and move on.
Many employees expect to be treated as internal customers. Leveraging HR technology to improve employees’ experience is part of good customer service and can reduce inconveniences and annoyances.
When it comes to day-to-day tactical HR tasks, such as recording time, requesting PTO, and selecting benefits, many employees want to be able to manage these tasks independently and access their information at any time. The more they do, the less your managers have to wade into HR responsibilities. It’s a win-win for everyone.
What’s more, neglecting to gather and keep all the required documentation when hiring or terminating an employee may expose your company to liability.
Today’s robust HR management systems let your company track a candidate throughout the life cycle of their recruitment, onboarding, and employment. These systems can help you to:
- Stay organized and eliminate the hassle of keeping up with paper forms (or the fear of misplacing them)
- Access the tools and information to remain compliant
- Enhance the efficiency of completing day-to-day HR tasks
- Gauge issues such as turnover and hiring costs
- Grant employees more autonomy to manage their own information
7. Insecure data storage or transfer
We’ve all heard stories about employees’ personal data being exposed when a company laptop is accidentally left in public. Or perhaps paper-based data is lost in a natural disaster. Storing employee information in an individual PC or in a file cabinet can spell disaster.
A robust, cloud-based HR management system can store all your data safely in the cloud to lessen the risk of theft or destruction.
But what about cybersecurity? With this issue, you may be tempted to agree that divvying up data among various HR systems might be a smart move. After all, it’s more systems for a hacker to have to break into. Doesn’t consolidating data into one place make your company more vulnerable?
Comprehensive HR management systems may be held to industry standards and required by cybersecurity and privacy laws to maintain certain levels of security to help protect sensitive information. Industry-standard certifications can:
- Demonstrate that a company follows generally accepted security principles and processes
- Indicate that an external entity has affirmed a company’s adherence to the certification principles
- Ensure not only that a company complies with the certification requirements but also that your HR data is in safe hands
8. Inability to see information on any device
Few people are tethered to PCs at desks anymore. This is especially true as more employees work remotely – a trend that’s likely here to stay. As a result, part of making HR data more accessible is allowing necessary company stakeholders to view it anywhere, at any time.
To that end, make sure you choose software with mobile capabilities that also keeps critical HR information safe, no matter where employees are located. You can be sure that any advanced, consolidated, cloud-based HR management system offers this mobile accessibility.
Summing it all up
Many businesses make the same mistakes when it comes to implementing HR technology. These mistakes:
- Hold companies back from achieving goals
- Consume too much time and money
- Frustrate users
- Slow company growth and productivity
- Put the organization at risk
Fortunately, there’s a clear solution that, in the long run, is more cost-effective and beneficial to a dynamic business: implementing a single, comprehensive, cloud-based HR management system.
To learn more about the benefits of upgrading your HR technology and selecting a software system, download our free e-book: HR technology: How to choose the best platform for your business.
Insperity is an Educational Partner to NAIFA as well as a supporter of NAIFA's Business Performance Center. For members, you can learn more about Insperity and how to partner within the Member Portal.