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Is Small Business HR Software Worth The Money?

August 23, 2012 at 11:49 AM

If you own a small business, HR software may seem like a luxury you can live without. After all, employers successfully managed employees back in the days when a fax machine was considered state-of-the art and electronic HR records were the exception rather than the norm. It’s true that a small business can still squeak by using paper forms supplemented by the occasional Excel or Word application. However, the idea that this approach is conserving money is incorrect.

Manually managing personnel records is a very inefficient process. And, it’s not a job you can trust to just anyone. Because of the sensitive nature of personnel files, you or a trusted manager has to be the one taking time out from running the business to handle employee data and paperwork. This is time you could spend improving your business processes and your profitability instead.

What If You Have Some Software, But It Isn’t Really Tailored to Human Resources?

In some ways, this can actually be worse than having no software at all. The calculations for things like PTO (paid time off) accumulation are very complex. Manually calculating paid leave for each employee and entering it in a spreadsheet or trying to set up the formulas on your own takes a great deal of time. Plus, there’s a significant risk of errors. This can lead to employees reporting you to the DOL for unfair practices – even though you just made a mistake.

The other problem with not having dedicated small business HR software is that it becomes way too easy to skip critical steps. For example, do you have a simple way to add disciplinary action memos to a worker’s file? If not, you might fail to have all the documentation in place to support a termination decision. Courts tend to side with employees in wrongful termination suits when employers fail to keep accurate records.

Without the ability to pull reports from every area of your personnel files, it’s not uncommon to miss important deadlines. These include benefits eligibility dates, performance reviews, renewal of I-9 documents for workers who have a visa, or renewal of certifications and licenses for particular jobs.

Save Time and Decrease Risk Using HR Software

Consider the ways HR software cuts down on the hours spent on administration. Then add on the ways it decreases your risk as a business owner. It’s easy to see how fast you’ll recoup the money you spend on this type of program. 

Tags: HR software small business
Category: HR Software Solutions

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