If your small business’s “HR solution”
consists of a few spreadsheets and some paperwork stashed in a filing cabinet,
you may be missing a trick.
Although the informal approach may work in the very early days, it quickly becomes a nightmare as your business grows, eating up valuable time with low-value administrative tasks.
In fact, a 2013
OfficeMax survey found that small business owners as a whole were wasting more than four billion hours each year on admin, and 41% of them said that this sapped their
passion and energy for running their companies.
One way out of this chaos is to invest in a good HR software solution, which can help you stay organised and handle common HR tasks like recordkeeping, payroll, and employee performance management. With prices starting at just a few dollars a month and typically increasing based on the number of employees you have, this is an investment that can quickly pay off if, even if it just saves you a few hours of your valuable time.
In this article, we’ll cover the key features to look for in HR software for small businesses and how to choose the right solution for you, and then we’ll look at some of the most popular solutions available today, with a brief overview of their main features and benefits. By the end, you’ll have a clear idea of the options available to you and how to choose a package that helps you manage HR more efficiently.
Key Features to Look for in HR Software for Small Businesses
In this section, we’ll look at some of the options available to you when looking for HR software for small business.
Types of Business HR Software
There are two main types of Business HR software packages: Core HR and Strategic HR.
- Core HR refers to the traditional, “administrative” HR functions like benefits admin, attendance tracking, processing payroll, etc.
- Strategic HR packages, on the other hand, help you with more forward-looking strategic tasks like hiring and retaining the best staff and tracking their long-term development.
This diagram from HRdirect illustrates the difference:
Not all of the software suites focus on one area or another—there’s often a lot of crossover, and some packages cover everything, while others are more niche. But it’s a useful distinction to keep in mind as you decide what you’re looking for.
Here are some of the key features that business HR software can offer:
- Employee Record-Keeping. Keep copies of important records for your employees, as detailed in our tutorial on key small business HR requirements.
- Self-Service Options. Let employees log on and do things like update their details, request time off, etc.
- Benefits Administration. Help employees enroll for benefits and manage their options from within the software.
- Recruitment. Use the software to keep track of job applicants and manage the recruitment process.
- Onboarding. Help new employees get up to speed quickly by providing the training and resources they need.
- Succession Planning. Plan your future staffing needs and reduce your dependence on key staff members by having a succession plan in place for important roles.
- Training. Some packages let you plan your employees’ training and development needs, and sometimes you can even integrate training into the app itself.
- Performance Reviews. Keep track of employees’ performance year by year, set new goals and objectives, and have access to their whole development history within the software.
- Reporting. Analyze your employee data and create customized reports on things like attendance, turnover, employee satisfaction, etc.
- Time and Attendance. Manage employees’ vacation requests with a schedule to make sure you have adequate cover. Some software also offers more detailed time tracking for shift workers.
- Communication. Pass on important company news to your employees, and allow them to communicate with each other through blogs, forums, message boards, etc.
- Mobile Access. Let employees access the system through a smartphone app so that they can check in and upload information while on the move.
How to Choose the Right Small Business HR Software
As you've seen, there’s quite a wide range of features available to you. But the more comprehensive solutions, of course, often come with a higher price tag, so you’ll need to go through the list and decide which of them you really need.
The key question to ask yourself is: “How much time am I spending on this task right now?”
If you’re spending hours every month printing off résumés from prospective employees and then trying to find them and remember which people you’ve contacted and which you haven’t, then the recruitment module will probably save you a lot of time and help the software to pay for itself.
Other features, like the communication tools, may not have such a direct payoff, but they still could be valuable. See the following tutorial for more on the importance of good communication:
Also think about how you work and how your
employees work, and decide on the features you need and the ones you can do
without. For example, some packages offer a mobile app that employees can use
on their smartphones. If you have a very mobile workforce, this may be a useful
feature, but if your team is office-based, it may not be necessary.
Ultimately, the best way to make a final decision is to narrow your choices down to two or three, and take them for a test-drive. Most providers offer a free trial period, and even for those that don’t, the cost of a single month is not prohibitive.
So, it’s worth setting up a test account on two or three different systems. Poke around in the dashboards and settings, deciding which features you like, which interfaces are easiest to use, and so on. You’ll usually get a feel for one that you like more than the others, and you can then cancel the also-rans and focus on getting fully up to speed with your chosen provider.
HR Software Solutions for Your Small Business
So now that you know what to look for and how to choose, here’s a list of the top small business HR software solutions to consider.
BambooHR has a strong record-keeping component, including support for electronic signatures so that you can avoid the tedious task of getting paperwork signed and keeping paper copies.
It also lets you track job applicants, approve time-off requests, conduct performance reviews, and create “custom workflows” to manage approval processes within your company, among other things.
Although BambooHR is aimed squarely at small businesses, it boasts a roster of clients featuring companies you’ve probably heard of, like Disqus, Asana, Quora, Vimeo, SoundCloud, etc.
2. Zoho People
If you only have a few employees, one thing you’ll love about Zoho People is that it’s free to use for up to five employees. After that, the monthly prices scale up with the number of employees like most of the others.
As you can see from the image above, there are plenty of features to choose from. The self-service feature is quite impressive—it lets your employees:
- modify personal information
- view attendance reports
- add jobs and log time
- claim medical reimbursements
- view benefits
- collaborate through feeds
- export personal data
- view leave reports and balances
- raise travel requests
- view all approvals and permissions
- access announcements
Namely targets mid-sized companies, which it defines as anything from 15 employees to a few thousand. So, it may not be ideal for a true micro-business, but it’s a great option if you have ambitious growth plans and want a solution that is very scalable.
According to Namely, 75% of its clients say the software has increased employee engagement, and 72% say it’s made employees more productive. That’s partly because it’s designed to look and feel like the social networks people already use, so it’s easy for employees to start using the system and collaborating with colleagues.
Another powerful feature is the ability to integrate the software with a large number of other companies and solutions you may be using for anything from timesheets to employee recognition.
With Gusto, you can convert your whole recruitment process into a more efficient, paperless process. You can send out offer letters to new employees, get them onboarded, have them sign up for benefits and payroll, and more—all online.
Then you can do things like manage time off requests, conduct employee surveys, create org charts and so on. And Gusto also offers payroll and benefits admin modules, as well as integrating with popular accounting software, time tracking apps, and more.
The HR module of the Zenefits platform covers things like hiring and onboarding, employee record-keeping, reporting, etc. Those features are quite powerful, but it’s just one part of a wider offering that includes things like time tracking, regulatory compliance, payroll processing, and benefits admin.
The company proclaims a “mobile-first mindset” and offers iOS and Android apps for everything from checking insurance details to clocking in and out, so it’s a good option if you have employees who spend a lot of time on the road.
Cake began as a small Latvian startup in 2011 and has expanded to serve clients in more than 1,000 cities, including well-known names such as e-commerce firm Paperless Post.
It’s a simple online solution offering a range of services such as vacation tracking, a shared company calendar, reporting, mobile apps, and integration with popular apps like Slack and Google Apps. A performance review module based on 360-degree feedback is coming soon.
If you want something more complex and full-featured, try Cezanne. It’s aimed more at mid-sized companies than small businesses, so it may be too complex for very small businesses. But for growing companies, it gives access to a powerful software suite that can handle most HR tasks you can think of.
With the People module, for example, you can do everything from managing work shifts to logging health and safety incidents, recording and tracking disciplinary processes, and much more. Meanwhile, the Career & Succession module lets you put together strategic plans for your future staffing needs, map key roles and potential successors, etc.
Those are just a few examples—this really is a comprehensive solution for any business with the size and budget to justify it.
Like Zoho, WebHR offers a free plan for up to five employees, with monthly rates based on the number of employees you have after that.
The slogan “From Hire to Retire” is quite apt—the WebHR offering is pretty comprehensive, covering every stage of the employee’s life at your company, from hiring onwards. There’s a nice social-media-style feature to boost employee communication through messaging, forums, status updates, etc. And employees can do a lot of things through the system, such as applying for leave or travel authorization, submitting a reimbursement request, and even tendering their resignation online.
UK-based BreatheHR lets you bring a lot of disparate data together into easy-to-use dashboards for both you and your employees.
For example, an employee could view a dashboard showing the number of days off they’ve booked and the number they have left, their sickness record, any training they’ve completed or requested, their key objectives and deliverables, and any one-to-one meetings they have scheduled with their manager. And on the same page, they can click a button to take action in each of these areas: request training, request a one-to-one meeting, etc.
It also has many of the other common features like record-keeping and reporting, and offers a 14-day free trial.
Most of the solutions we’ve looked at have been quite wide-ranging. But sometimes you don’t need everything—you just need a specialized product for one particular area.
JazzHR is an example of a more specialized offering. It focuses squarely on the recruitment aspect of HR, providing a real depth of features in that niche area. You can create job postings and automatically post them to multiple job boards, for example, and then track the applications and choose which ones to advance or reject. Then you can use the software to record the interviews and compare candidates in a systematic way, before researching compensation, making offers, and much more, all from within the software.
If you need a wide range of HR solutions then one of the other solutions will be better for you, but if you just need to get your recruitment right, then JazzHR is ideal.
In this tutorial, you’ve got an overview of the best HR software for small businesses, and you’ve seen what features to look for and how to choose the right one for your company.
Take your time and explore a few different options, and come up with a shortlist of two or three contenders. Then test them out, see which one works best for you, and get up and running with your final choice. You’ll start seeing the benefits in no time.
If you decide you need more hands-on assistance, you could investigate HR outsourcing. Instead of relying on software, you can get access to actual HR staff at an external company who will manage things for you. It’s typically more expensive than the software solutions we’ve looked at, but it can give you access to some valuable HR expertise. To learn more about how outsourcing works, see the following tutorial:
And if you found this article useful, why not check out some of the other articles in our series on HR for small business?