HR Software: Is the investment worth it for start-ups?

Make smart investments at the start of your business venture and you could save yourself thousands of pounds. Deciding what to invest in at the start-up phase is a test sent to every new business. Get these decisions wrong and you could be hurting your business before you are out of the starting blocks.

There are so many things to think about when you are setting out in business that it’s hard to know what to prioritise at a time when money matters most. HR software is a relatively new addition to the list of tools start-ups may want to consider. But, is the investment in HR software so early in the game really worth it?

We’ve put together some of the facts and busted a few myths to help you decide if HR software is an investment worth making right from the off.

HR systems and software: an overview

HR systems cover a myriad of functions relating to the people and issues related to people in any organisation. HR software is a form of technology used to streamline and simplify HR activities and processes.

Names you’ll hear banded about are HR management software (HRMS), hosted HR software, online HR systems, HR administrations software, Human Capital Management (HCM) software, and Human Resource Information Systems (HRIS).

HRIS and HRMS systems are essentially data collection and tracking systems for everything HR related. HRMS systems incorporate strategic HR management capabilities. HCM software is synonymous with HRMS systems, but views staff as assets (human capital) and measures input and output in order to help the business make decisions.

It’s amazing how many small businesses ask the question ‘what is HR software?’ long after they have their venture up and running.

HR is only for big corporates: busting the myth

Human resources is something some see as the domain of big business. Looking after hundreds of staff takes a designated HR department. But is HR only useful to larger enterprises? Definitely not.

HR is something that happens as soon as you set up your business and take on your first employee. HR focuses on developing and retaining talent, driving the culture of the business, and supporting organisational leadership. It deals with all of the day-to-day functions of staff management, including pay, benefits, training, health and safety, and staff strategy. HR happens whether you have a formal system or not, across all businesses from start-ups through to global companies.

HR isn’t what it used to be. With the event of sophisticated HR software solutions, HR plays a much more strategic role in any business. People analytics are now a fundamental part of business decision-making.

Employment law and regulations

One of the challenges for start-ups and small businesses is to ensure they develop systems and processes that align with employment law and regulations. With Brexit looming the extent of change to employment law in the coming years is an unknown. Few areas of the law are as influenced by EU regulations as employment law.

While it is unlikely there will be huge changes to employment law immediately following Brexit, there will inevitably be some. With uncertainty afoot, there’s never been a more pressing time to have efficient and effective HR processes in place, especially around recruitment.

According to the Chartered Institute of Personnel and Development, (CIPD), new research suggests that seventy-two per cent of HR professionals expect the competition for well-qualified talent to increase over the next 3 years, suggesting smarter recruitment is required.

HR software has been proven to save time and money in the recruitment process. Automated applicant tracking, easy upload of CVs by candidates and a streamlined on-boarding process for the successful applicant are just some of the benefits.

Successful employees equal a successful business: how HR software helps

HR software not only helps businesses stay ahead of the game in the management of day-to-day employee data and processes, it improves communication and empowers staff. Self-serve HR systems are remarkably good at creating a strategic framework for employee empowerment.

Task management and a system for staff appraisals helps employees to feel more in control over their work-life and routine. Access to information also helps staff to feel more autonomous. This all adds up to support happy and successful employees.

HR software efficiency savings

When you have one or a handful of employees it’s easy to keep tabs on employee-related data, but even then small businesses can waste time and resources on relatively simple tasks. Managing and updating employee documents, expenses forms, absence, and holiday requests, to name but a few of the HR-related tasks, takes up valuable time.

HR software keeps employee data secure and all in one place. Processes such as managing expenses and employee absence are much quicker and easier.

Making the right software choice

Choosing the right type of software for your business is one way you will make sure your investment is worth it. The key is to purchase a HR software solution that sticks to your current requirements, but allows you to add on modules as your business grows.

It’s likely you’ll start with a quite basic HR system as you only have a few people to manage. One of the biggest expenses to hit medium sized businesses is the consolidation of a number of processes and systems that have developed organically, but in isolation of each other. When selecting your HR system think ahead. HR software that allows integration with existing systems will save a lot of headaches in the long term.

Is the investment worth it?

The biggest point worth making to start-ups is that HR mistakes can prove costly. Small businesses in particular are less likely to be able to absorb the costs of a mistake so easily. Uber paid the price of ignoring the importance of the HR function earlier this year. The Entrepreneur reported that a stronger HR function could have helped Uber avoid the sexual harassment scandal. As the article goes on to point out, this was as much about company culture as the processes of HR.

HR software is an effective tool for evolving a company culture. In any case, small businesses will need to invest in HR software at some point. The argument to place prevention ahead of cure is a compelling one. If start-ups choose HR software solutions wisely, it is definitely an investment worth making.


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