by John Crowley
Updated: Oct 6, 2017 Published: Oct 6, 2017
Today, businesses use software to manage everything from inventory to finances, customer relationships, and any other area where they might be able to gain a competitive advantage.
In human resources (HR) management, software is a necessity: HR software ensures data about employees and workers is readily accessible and enables it to operate as if it were a much larger enterprise; with formal, consistent policies and procedures.
Managers often focus on revenue-driving activities over the opportunities for spend optimisation that HR software can offer.
It turns out this thinking misses the full picture… Here are five ways having HR software in place pays for itself:
1. Recruiting: Cutting down on time to fill
After searching for, placing, and training someone new – in addition to having someone fill in for the vacant position – the costs of hiring stack up; and as time to fill for a position goes up, so does the overall cost of the opening – so how can an enterprise limit this expense?
The most direct and measurable tool for quantifying time to fill is an affordable applicant tracking system (ATS).
Applicant tracking systems both measure and ultimately reduce time to fill by handling the recruiting process from start to finish; streamlining the process of posting a job externally, reviewing applicants, managing interviews, and ultimately onboarding a new hire. Some ATS solutions actually allow clients to store details about applicants that applied but were not ultimately hired – in case a similar position becomes available. People HR, for example, supplies an instant talent pool accessible without having to contact recruitment agencies or re-advertise vacancies.
2. Reporting: Saving time to derive insights
In a small enterprise, human resources responsibilities are usually clumped with other administrative tasks and given to someone who may not have the capacity or skillset to complete them. Offloading HR reporting and dashboarding to systems requires fewer staff – and staff are always more expensive than systems.
Any HR software solution with a high potential for return on investment (ROI) will offer native reporting and insight capabilities. It needs to be flexible enough where clients can design their own reports, without the person creating and running it needing a degree in computer programming. Having all HR data in one place, readily accessible and preferably in the cloud, presents tremendous cost saving potential.
3. Workflows: Automating essential business processes
From onboarding to performance appraisals to benefits enrolment, HR is primarily process-driven. Having consistent processes makes it easier to administer (which means less burden on those performing the administration) and it meets standards of fairness and consistency to satisfy both regulators and employees. A reliable software solution will deliver business processes for all essential HR activities that recur on an ad hoc or scheduled basis.
As well as reporting capabilities, a decent product should offer the ability to customise business processes – allowing the client to easily add, remove, and modify steps.
4. Performance management: Building for the future
Like capital equipment or financial investments, investments in human resources must be measured and tracked. In HR terms, this is done through ‘performance management’. A sophisticated performance management solution is much harder to create and administer without the help of an HR software solution because it will rely on a patchwork of paper documents, offline discussions, and informal feedback. It helps by centralising and consolidating performance data – allowing management to see the big picture much more clearly than they could if data is scattered everywhere.
According to Michael Ashworth, managing director at Nublue, HR software like PeopleHR “solves the problems you are having today, and prevents the problems you are likely to have tomorrow”. In order words, as a small business grows larger and scales up, we should want the people involved to be the absolute best they can be. If management fails to take steps to improve performance problems today, there is a strong likelihood those problems will be far costlier down the road as responsibilities grow broader.
5. Integrations: Pulling everything together
When it comes to information management, one thing is certain: when systems are not integrated, it becomes more difficult to save time or money when administering HR processes.
Having best-in-class systems does not add value if a business needs to hire a full-time person to manually take information from one system (say, HR software) and dump it into another (say, payroll software).
Resource optimisation is only possible with a vendor that is horizontally integrated (i.e. one that offers a suite of services, from payroll to HR to financials to calendar management) or one that has strong, reliable relationships with other vendors who provide complementary services. Without integration, a business is likely relying on arduous and costly manual processes, resulting in a messy process that cannot possibly keep up with the hiring demands of a rapidly growing enterprise.
Looking at all five of the areas in which HR software makes business operations more efficient, the common theme is that we are implementing a system rather than hiring a person to handle much of the administrative legwork associated with human resources management.
Of course, the business will still need someone to manage such a system, including producing reports and entering data; however, instead of hiring a full-time person to perform HR administration, hire a part-time person or even fold administration into a current workers’ daily duties. And if a small business is fortunate enough to have an HR manager on staff, outsourcing the administrative aspects of HR to a system can free up enough of his or her time to become a true strategic business partner.
Having the right kind of support from an HR function, including its people and systems, could make or break a business’s chances of long-term growth…