HR technology solutions for small- and medium-sized businesses

Introducing an HRMS gives smaller enterprises an excuse to upgrade outdated equipment

It’s nearly an article of faith in the HR community that technology can help human resources departments transform themselves from the administrative gatekeepers of employee files and payroll (little more than the personnel departments of yore) into the strategic partners they want to be.

But too often discussion about HR management systems (HRMS) assume the organization is large with thousands of employees and therefore more likely to need, and able to afford, top-of-the-line systems and the latest upgrades. These discussions often overlook some of the unique issues faced by small- and medium-size enterprises (SMEs).

There are no hard and fast rules for this one, but let’s say small organizations have 100 or fewer employees and a medium-sized one is up to 500 employees. The research shows that there are many more small- and medium-sized organizations than there are large ones, and they employ the majority of the workforce.

The first rule in defining the HR system needs of SMEs is that there are no rules. There are very sophisticated small companies (in terms of HR and IT) and extremely unsophisticated medium ones. However, there are some general similarities that can be identified.

In many instances, smaller organizations have not upgraded their hardware or operating systems to current standards. A contemporary HRMS will not run under DOS or other older operating systems and needs more horsepower than a 10-year-old desktop computer can provide.

A chance to upgrade

Generally, most organizations that have outdated computers realize that and often use the introduction of the HRMS as the reason to upgrade. The cost of hardware, and its bundled software, has dropped considerably during the last few years, so acquiring new Pentium IIIs with a Windows ME or XP operating system isn’t a budget-breaking proposition.

Many smaller operations don’t have IT staff. This function is instead either outsourced to an independent on-call consultant or a computer supplier, often a hardware and software retail shop that provides some consulting. SMEs are often reluctant to include the outsourced consultant in the sales presentations and specification meetings because of the per diem costs involved.

This puts significantly more pressure, usually unwanted, on the vendor to define the overall computer requirements, communication needs and any other software needed to support the new system.

However, the vendor generally won’t provide new hardware or software but suggest third-party suppliers and meet with them to explain the technical requirements of the new system. The per diem cost of these meetings will be passed on to the SME. When not broken out specifically as a line item on a price quote, the time will be added into implementation, training or some other cost not related to products.

One of the major benefits provided by a new HRMS, regardless of size of the organization, is that it satisfies a need to have a single-source of employee-related data that replaces manual files, small home-grown databases and spreadsheets.

Where these latter exist, getting information to management is a time-consuming exercise and often there are differences in the data stored in the various files. When the client organization operates in a network environment, the HRMS can thus be distributed to supervisors and managers.

Keep it simple

Successful HRMS vendors have learned that the keep-it-simple principle is important when selling to SMEs, that is don’t try to dazzle the prospect with technological bells and whistles that are beyond needs and capabilities to maintain.

Small organizations also often have a single manager responsible for both HR and payroll and there is little or no time available to get involved in anything other than the key areas previously mentioned. Even where there are two or three payroll and HR people in an organization of several hundred employees, invariably they are equally pressed for time.

Some of the less practical applications include: Internet and intranet applications, add-on graphics applications, 360-degree feedback performance review systems and internal spreadsheets.

The control of time and attendance and related entitlements is, of course, essential. Many of these organizations are ISO-certified, so control of employee education and training is important.

Health and safety tracking, especially in industries that have a high injury incidence (for example, construction, some manufacturing and mining) is vital, and every company needs to track compensation, job history and performance history and manage benefits. The need for and justification of an HRMS is a function of all of these: the more they need it the more they are willing to spend to get a system to deliver it.

However, the newest and more sophisticate features should not always be dismissed out of hand; there are cases where the new technology may be more cost effective for a small organization.

For example, a multi-location SME can provide access to a centrally located HRMS much more cheaply by using the Internet and a self-serve application than by acquiring a high-speed communications network.

Some large firms made up of several small ones

It should also be noted that there are many large companies of several thousand employees that present a monolithic image in their sales and marketing materials, but are really a collection of medium-sized, geographically dispersed facilities controlled by plant managers.

These organizations often operate in a bottom-up fashion, making the acquisition of an HRMS a multi-stage process as each unit seeks a system that will address their unique practices, policies and procedures. These organizations too face unique acquisition and implementation challenges.

A corporate group (finance, IT, HR) approves the HRMS, but it still must be “sold” to each of the individual plant managers and their HR staff since the cost of the system will be borne by each facility. In addition, the details of system specification and training plans occur at plant level, in other words, each individual plant can have a unique HRMS.

A case in point

Take the example of a company of about 4,000 employees with operations in 20 locations across North America (an average of 200 employees per location) with significant organizational differences between the locations. The HR terminology in use was developed at the facility level: a lead hand in one location was called a senior operator in another, a full-time employee in one was called a regular employee in another and satisfactory performance in one was called level B in another.

To develop a corporate-level database which would allow head office to track individual plant and overall activities, it was critical to standardize terminology across the organization. Areas of standardization included job classes, health and safety codes and codes for absenteeism, employee status, performance, compensation changes and organization structure. Standardization is a requirement regardless of organization size. (Many two and three location SMEs face similar standardization challenges.)

Prior to the introduction of the HRMS, each plant operated in a fairly independent way and mangers did not want to give up many of the reports they had become accustomed to receiving. The new system, therefore, had to replicate many of the “old” outputs until, and if, replacement reports could be introduced and accepted. Changes would be evolutionary rather than revolutionary.

To stimulate evolution, a company-wide user group of all plant and head-office HR managers was initiated. This group meets regularly via conference calls and e-mail to exchange information, discuss new approaches, uses of the system and requirements. A head-office management committee meets quarterly to review requests, define corporate requirements and set budgets for changes to the HRMS.

The vendor participates in both of these group meetings. This approach — meeting regularly with HR and general management to identify needs, future system enhancements and costs — applies to both large organizations and SMEs.

Small, medium and large are designators of size rather than descriptions that define the needs of HR information and control requirements.

Other than some very corporate-specific needs, the critical HRMS features and functions required by most large organizations are very similar to those requested by SMEs. Regardless of the size of the organization, HR is HR. The objectives are the same and the tools with which to meet those objectives are also remarkably similar. It is just that in some small- and mid-size organizations the tools have to be used a little differently.

Gerson Safran provides marketing and sales support for the INFO:HR Human Resources Management System an organization that has implemented HR systems for many small-, mid- and large-size enterprises. He can be reached at (519) 672-5984 or [email protected]

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