The Real Impact of HR Technology on Small and Medium-Sized Businesses

By PrismHR

In today’s competitive labor market and shifting trends in human capital management, the responsibilities resting on the shoulders of HR professionals in small and medium-sized businesses are no easy feat.

New practices in talent acquisition and retention, employee engagement, productivity tracking and management, and administrative tasks fulfillment make it a requisite for HR professionals to adopt new systems and solutions.

Cue HR technologies.

Digital transformation was just a buzzword a few years ago. Today, it’s a competitive advantage that is changing every aspect of how businesses operate. This includes human resources.

Before anything else, let’s address what could possibly be an elephant in the room.

“HR Technology? But We’re Only a Small Business?”

The use of HR technology is size-agnostic. According to human capital management expert George LaRocque: “Across industries, everyone has a talent problem. They are competing with each other for a limited talent pool, and they have to get creative in the way they source. HR is being pushed to find more innovative ways to address the talent issue. It is driving the adoption of more HR applications in small businesses.”

LaRocque’s research revealed that by the time a business reaches 20 employees, it begins to reap the benefits of core HR technologies. Even an extremely lean startup can easily reach this number. It comes as no surprise that the small business sector with 99 employees or less is the fastest growing market in HR technology adoption.

Another survey from Capterra reveals that 57% of SMBs are already using HR technology.

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When it comes to HR digital transformation, size doesn’t matter. Whether you’re a lean startup, a small business experiencing a growth boost, or an established medium-sized company, HR technology can have a real impact on the overall performance of small and medium-sized businesses.

This is why it’s quite surprising that according to the Capterra survey referenced above, 17% of small and medium-sized businesses have no plans of using HR technology at all, while 13% are on the fence about it.

If you’re still 50-50 on whether investing in HR technology is the right decision, take a couple of minutes and envision yourself enjoying the following benefits. 

When it comes to the real impact of HR technology on SMBs, just remember two words: 

S.U.R.E. W.I.N.

Save on Manual Data Entry Costs
Unlock the Power of Self-Service
Raise Compliance Level
Efficient Time Tracking
Worry-Free Remote Working
Increased Employee Development
New Role of HR as a Profit Center

Let’s go through these one-by-one.

Save on Manual Data Entry Costs

How can something so mundane such as data entry cost so much?

According to Ernst & Young, you’re spending $4.39 on an average per manual data entry depending on the document. For example, filling out an I-9 form costs $8.32. 

A little over 8 dollars? No big deal, right?

Wrong.

Remember, every time you bring new employees on board, you have to record their I-9 information. If you’re a medium-sized business that is on-boarding approximately 30 employees every year, that is more than $240 spent on just this form alone. Factor in the other required documents and you could be hemorrhaging thousands of dollars right under your nose. This doesn’t include the cost involved in rectifying incorrect entries which are not uncommon when it comes to manually filling out forms and other documents. 

Manual data entry is an invisible and unrecognized money pit among small and medium-sized businesses. The savings in this area alone already makes a strong business case for HR technology utilization.

A robust HR technology frees HR departments from manual data entry tasks. For example, you can send out a digital I-9 form to new hires days before their start date. The system can automatically verify information accuracy and flag potential errors for further review.

Unlock the Power of Self-Service

If you work in HR, how many times has your day been interrupted by colleagues asking you for something that they could have easily done themselves?

Guess what? The majority of workers actually agree. Seventy-three percent (73%) of full-time employees want the ability to perform HR-related tasks on their own. This is partly driven by the emergence of the Millennials as the largest generation in the workforce. These digital natives value the efficiency of doing things independently and the older generations are beginning to follow suit. 

Self-service HR technology does not only meet the expectations of the most dominant members of the workforce. It also saves HR professionals from having to do arduous tasks that employees can do themselves.

Raise Compliance Level

HR is the primary bastion of workplace-related laws compliance. These laws are increasing in number — HIPAA, FMLA, OSHA, EEO, the Fair Labor Standards Act, collective bargaining agreements, and the list goes on. Aside from the growing number of labor regulations, these laws are constantly changing, making it all the more challenging for human resources to track.

The penalties for non-compliance involves serious money. Last year, the University of Northern Iowa was handed a $60,000 fine “when it failed to designate an employee’s rights to FMLA leave properly when the employee requested such leave to care for an ill adult child.”

An HR management system ensures that all applicable laws are recorded, tracked, and implemented. For instance, if you have employees who belong to unions, your HR department can simply input the terms of the collective bargaining agreements into the system as they pertain to overtime compensation and other benefits. The human resources software system will then automatically feed this information in the payroll calculation of all affected employees.

Efficient Time Tracking

The adoption of time tracking technology in the workplace is still lagging. As of the most recent survey, 35% of businesses still use outdated time tracking methods, namely spreadsheets and punch cards.

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This causes headaches among HR professionals when it comes to reviewing and auditing the accuracy of the employees’ time entries. 

Manual time tracking also doesn’t give SMBs a clear sightline on insights as to how employees are spending their time at work. As such, they are not able to identify potential optimization opportunities to reduce bottlenecks in their workflows and increase their productivity.

Automated time tracking has been around for years and it’s time for SMBs to take advantage. It’s benefits — reduced errors in time entries, minimized payroll preparation time, accurate tracking of accrued PTOs, elevated productivity — are well-documented. SMBs who are not yet ready to go all out on their HR digital transformation should at least start with automated time tracking at the minimum.

Worry-Free Remote Working

In 2013, an internal memo from Yahoo’s HR Head Jackie Reses retracting the company’s remote work benefit was leaked. Here’s the most striking line from the infamous memo: “We need to be one Yahoo!, and that starts with physically being together.”

A “no remote work” policy just wouldn’t fly today. If you want to hire the best of the best, you need to be ready to offer remote work as a benefit. For instance, 73% of IT professionals consider remote work an important benefit, but only 49% are getting it from their employers.

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Let’s face it. The main hurdle that’s preventing SMBs from offering remote work as a benefit to their employees is trust. How do you know your employees are working during the hours they’re supposed to and not just binging on Netflix in their pajamas? HR technology can track employee activities whether they’re at home or on a different continent. You’re assured that you’re getting the work you’re paying for. Plus, with self-service HR technology, employees can access core HR functions wherever they are from any device.

Increased Employee Development

For SMBs, it is more cost-effective to train current employees and arm them with new skills than hire new candidates, especially in this highly competitive labor market.

One of the greatest strengths of a comprehensive HR technology is data recording, tracking, and analysis. This includes employee performance, career pathing, and skills development. A digitally transformed HR can easily conduct a SWOT analysis of a company’s employees’ skills. This gives managers the power to pinpoint the best career path for each employee and isolate those with potential leadership potential. Ultimately, human resources can customize training programs that can also be delivered digitally.

New Role of HR as a Profit Center

Compared to sales, marketing, research, and product development, human resources isn’t necessarily seen as a profit center contributing to the company’s bottom line.

But it should.

HR manages the most important asset of any organization — it’s people.

However, most HR professionals are getting bogged down by administrative tasks instead of performing things that actually matter. A survey among the world’s top HR executives revealed that their time is mostly allocated to high-level tasks such as meeting with senior staff and business partners, devising employee engagement solutions, and face-to-face strategic meetings with employees.

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Effectively managing an SMB’s human capital impacts productivity, attrition rate, talent acquisition, internal capability enhancement, and service quality levels — all of which are significant contributors to a company’s profitability.

SMBs + HR Technology = A Sure Win for Businesses

Just to recap, strategically investing in HR technology is a S.U.R.E. W.I.N. for SMBs:

Save on Manual Data Entry Costs
Unlock the Power of Self-Service
Raise Compliance Level
Efficient Time Tracking
Worry-Free Remote Working
Increased Employee Development
New Role of HR as a Profit Center

While HR technology acquisition is a decision SMBs need to make, from where we stand, not investing in one is not really an option if SMBs want to keep their competitive advantage.

Author Bio

Dean Mathews is the founder and CEO of OnTheClock, an online employee time tracking app that helps over 8,000 companies all around the world track time.

Dean has over 20 years of experience designing and developing business apps. He views software development as a form of art. If the artist creates a masterpiece, many peoples lives are touched and changed for the better.

When he is not perfecting time tracking, Dean enjoys expanding his faith, spending time with family, friends and finding ways to make the world just a little better. You can find Dean on LinkedIn.