Does my business need an HR system?
Improve workforce productivity with an HR system
The Human Resources (HR) department is one of the most important departments in a company because its focus is to ensure that you have the best workforce possible.
As a small business owner, it's important for you to have the right people, place them in the right positions, and make sure that they perform to the best of their ability. This can be done by making sure that you give them good working conditions, competitive pay, good employee benefits, training, and opportunities for advancement, among other things.
In addition to making good hiring decisions, it's up to you as a small business owner to make sure that your employees continue to feel engaged and motivated. It's in your best interest that your employees stay with your company for as long as possible. Two main reasons for this is that it's very difficult to run a business when there is a lot of turnover, and the cost to hire replacements and train them is very costly. In order to help avoid this, one thing you’ve got to have is a good company culture, and the HR department plays a significant role to ensure this happens.
The bottom line is that everyone wants to work for a good company with a healthy environment, and the HR department can help make this happen, especially if there's a human resources management (HRM) system in place.
Human resources management
How exactly does an HR department go about ensuring employee satisfaction? This can be done in many ways – by developing good communication skills, introducing new innovations to improve the company culture, creating a good physical environment in which to work, etc.
At the same time, it’s difficult for HR to do all the work that's expected of them unless they have some technical support. This is why your business needs an HRM system. HR software can help your HR team do what it does best – making sure that your employees are happy, productive, and feel that they have a “voice” in the company.
HRM and productivity
There are many HR duties that the HR department has to take care of. For one, everything your business does must be in compliance with regulatory guidelines. This means that your new hire and termination letters have to be worded in a certain way, your contracts need to have specific clauses, and your employee handbook should make it clear what you expect from your employees regarding workplace conduct.
An HRM system can help you ensure that your HR department does all of these things correctly. The information needed by your HR department will be provided by the HRM system which will help you to write your company handbook, create an HR policy library, an HR form library, etc. The HRM system will also give you the information needed about labor laws to ensure your business is in compliance.
This degree of support will make your HR department more productive, and once your employees know what is expected from them, they will work within the guidelines to the best of their abilities. That's exactly what you need as a small business owner.
When do you establish an HRM system?
If you only have a few employees in your company, you may not think it is necessary to purchase HR software, specifically for HRM. But as soon as you start hiring more employees and growing your business, you’ll most likely feel the need for it. It can be difficult to hire and manage over 15 employees without HR software dedicated specifically to helping your HR department run smoothly.
When you're running a small company with just a few employees, your HR needs are fewer, and you can keep things more informal. But once you reach the 15-employee mark, this informal way of running the department can become a bit complicated. It can lead to a lot of confusion about what exactly your company policies are. Plus, important announcements and updates that you want to communicate to your employees may not reach all of them. And you might even unknowingly be in violation of certain HR laws.
So, as a best practice, your business needs an HR system as soon as your business is up and running. This will enable your company to grow in a more controlled manner and avoid confusion or delays during the growth process.
What if you don't have an HR system?
It can be very easy to keep postponing purchasing an HR system. If things are going well on a day-to-day basis with just a few issues here and there, then you might think that it's not yet time to purchase an HR system.
But the fact is that not having an HR system can lead to duplication of work or work not getting done. It can lead to a lot of confusion and, eventually, there might be a breakdown in the company's HR processes.
Here are some of the things that you risk happening when you don't have an HR system:
Reliance on management team
Of course, an HR team can do all the things that HR software can do. Someone in your HR department can do all the necessary research about employment laws, write up an employee handbook, take care of onboarding new employees, and make sure that all important announcements are sent out to your employees. But not only is the manual process of these items prone to error, there’s a risk that updates will either be untimely or entirely missed altogether.
Furthermore, the tasks will most likely have to be distributed to several people which means there’s a chance for inconsistencies in data and formatting, which is not only unprofessional, but it can lead to confusion.
Along with HR software, you also have access to strategic human resources management (SHRM) professionals who can give you advice on a number of issues, including the hiring process, how to conduct effective performance reviews, and the steps for terminating employees. This type of professional advice is invaluable.
But, if you don't have someone dedicated to HR on your staff, and you don't have the benefit of a professional consultant's advice, this can lead to a "skills gap." In simple terms, this means that you may end up hiring someone who doesn't have the skills for the job.
Working with a professional can help you figure out what to look for in an employee's background and administer job-related tests to ensure that you hire the right person.
A number of compliance-related issues can arise when you're running a business. What if you extend a job offer to someone before thoroughly checking their background, and then realize that there's something in their background which appears suspect, thus leading you to withdraw the job offer? Is that against employment laws and would you be leaving yourself open to being sued? What about the way in which you deal with harassment cases or the way that you terminate employees?
There are precise ways of doing these things which will ensure that you stay compliant with labor laws, and an HRM system can help you with that.
Decreases in efficiency
HR tasks are important, but they don’t need to take up all of your time as the business owner. As a leader, you can't always be caught up in the day-to-day operations of a business.
If you have to take time out of your day to look at every employee complaint and fill out forms after the hiring process is completed, then you're not going to be able to pave the way for growth at your company. You won't have the opportunity to introduce innovations, rebrand yourself, or strike new, exciting deals with other companies.
However, all of this is possible when you opt for an HR system.
Advantages of establishing an HR system at your company
Your HR system can prove invaluable to you. The utilization of Human Resources Information Systems (HRIS) to help automate HR tasks and responsibilities can help you with every aspect of HR, from hiring new people to training them to terminating them. You can find an answer to practically any HR question that you have. And in addition to the HR software, you'll have access to an SHRM which gives the system a final human touch. Now, let’s look at some advantages of having an HR system at your business.
Yes, HR functions involve maintaining a good workforce, increasing productivity, and increasing employee satisfaction. But, unfortunately, this can't be done without a lot of documentation. You'll need a company handbook, job descriptions, forms, written policies, templates, and checklists. You'll also need to post announcements and make sure they are read by your employees. You'll have to keep a file on all your current employees and maintain certain records of past employees for the time period stated in state and federal law. Furthermore, HR personnel must be careful not to include sensitive information in the general employee files, such as medical, financial, criminal, or security clearance records. These types of information must be stored in a secured location, according to state and federal law.
So, as you can see, there's a lot of documentation involved in employee hiring, retention, and termination, and an HR system can help you with that.
It’s imperative for you as a small business owner to monitor the performance of your employees. This can be done with performance management metric tracking. Think about it this way: different jobs require you to be proficient at different things, depending on the specific duties of that job. These things are referred to as "metrics."
For any particular job duty, there are at the very least a few metrics that are important. For example, an office manager needs to be organized, must communicate well, and be a good problem solver. So the effectiveness of the office manager depends on how well they can do these things; and an HR system can help you track their performance over any time period you desire.
Sometimes, it's more hazardous to keep paper employee files. If these files are found lying around, anyone might be able to look at them. But with an HR system, only authorized personnel will have access to the files. And only the employees will be able to access sensitive information which is only meant for them.
When you have a new employee, they will need to fill out certain forms as part of the onboarding process. This can easily be done with an HR system. And as time goes on, the employee can also make changes to their information via the HR system.
Plus, they'll be able to access the electronic employee handbook and learn about company policies by logging into the system. They'll have company announcements delivered right to their desktop. If they're confused about how they should handle a particular situation they are having at work, the handbook will either clarify this, or list the appropriate personnel who can.
Ease of communication
An HR system makes it easy for the HR department to communicate with all the employees in the company. Not only can you send out notices through your HR system, but you can also make sure that they are read by your employees because the system will send you an acknowledgment. This also helps you make sure that there's an electronic trail of all employee communications which can become useful later.
So, if there are any new or updated procedures, policies, or forms, your HR system will help you make sure that your employees receive them.
The bottom line is that it's possible to work without an HR system when your business is very small. But the minute you get to the 15-employee mark (and even earlier) an HR system becomes necessary. It will help you to perform many HR functions in a systematic, organized and convenient manner, thus freeing up your time for other things. Whether you're dealing with employee hiring, employee retention, or employee termination, an HR system can help you through the process.
Ready to utilize an HR system at your business?
Heartland helps nearly 1,000,000 entrepreneurs make and move money, manage employees and engage customers with human-centered technology solutions that allow them to rise above the daily grind and lead their businesses into a brighter future. Learn more at heartland.us.