5 Tips to Select HRMS for Small Business

Human Resource Management System (HRMS) is big business. The global market size was valued at USD 17.56 billion in 2020 and is expected to grow at a compound rate of 12.2% year on year. The growth is attributed to the HR digitisation drive taking to create efficient HR functions and keeping it a lean and agile function.

The recent events of 2020 have also elevated the importance of HR and people management as well as the benefits of technology throughout the employee life cycle and organisations are aggressively adopting HR technology to improve their employee experience.

The number of HRMS software available in the market is overwhelming. The last check on Capterra showed a count of more than 1400 products. So, how do you navigate through this as a small business without being taken down a rabbit hole to looking at brochures and free demos of products and ultimately getting lost in it all?

Here are 5 tips that may help manage the process of selecting an HRMS software for your small business. 

1. Understand your Requirements

Every software in some way is worthy and is proud about their product and its features. However, the selection of a software should not be on what it has as features, rather what your business needs as features.

The selection of a software should account for business as well user needs to ensure the investment of time and money yields a positive return. It’s the end user that will be the beneficiary of system that helps save time and effort though the introduction of software.

Before you venture into looking at HRMS products, currently and in the future, carefully evaluate each aspect of HR to understand what areas are efficient in the current process and those that aren’t. For instance, your recruitment requirements aren’t high volume activity and an external job portal seems to do the trick, then perhaps the HRMS required can place a low priority on recruitment module.

In addition to understanding your HR functional requirement, what is the end state you want to reach? Is it only to automate some HR tasks and create efficiency or offer line managers better tools to manage their teams effectively?

It’s also important to see if the HRMS can support the growth plans of the business. Are you looking to grow to multiple geographies or acquire a company? The system requirements study is critical to system adoption success.

Inviting an HR consulting firm to independently evaluate system needs would ensure that each aspect of needs gathering is done systematically and objectively to ensure you have a system blueprint for your business before inviting HRMS vendors to the table. 

2. Make Technology Work for You

There is a fine line between buying an off the shelf product or customising a software. The latter is most often cost prohibitive and not recommended as maintenance of customised software is equally costly. The area to play with is modifications and work arounds to make the technology work for you as best as it can.

While modifications are great, set some minimum data standards and determine functionalities that are a must have. For instance, the accuracy of payroll calculations, the way you have been doing through excel sheets follows through when you automate payroll. This may also be an opportunity too. Data integrity and processing are paramount when selecting HRMS to avoid duplication of efforts where HR still needs to download it to excel and calculate payroll manually.

3. Understand the Financial Costs

When selecting an HRMS, price also pays an important factor other than features. There are various pricing options that are used by HRMS industry from pay per employee per month, to tier-based models and perpetual pricing. Each of them have their pros and cons.

Earlier, HRMS used to be classified as a CAPEX expenditure but today’s pricing models have made it more of an OPEX expenditure. To ensure you are paying for what you need and use, you should conduct a financial study of the pricing on offer including what are the tertiary expenses related to this implementation and running the software.

4. Maximise the Demo Session

HR Vendors provide a scripted demo session that walks you through the system in the way that makes their product shine the brightest. This is great but you must also come equally prepared with your own assessment sheet. When you invite multiple vendors for demos, it may be hard to differentiate between them as they tend to morph into one another. Also, each software is different but to compare apples to apples, use a set evaluation scorecard based to understand the product as it related to your business and user needs.

Take the lead on the demo session and you will be in a better position to evaluate options presented. As a customer you should be able to experience the product in a demo session but at the same time it shouldn’t be mistaken for a training session. Perhaps invite other key stakeholders to the session to get different perspectives.

5. Do your Due Diligence 

Once you have selected you HR software vendor, you should take the time to carry out a thorough due diligence to vet them. This should go beyond just the reviews on software marketplace as they can be positively biased. An important tip is to ask for references wherein you can get a feel of their experiences of the software, the implementation process. Create a questionnaire to ask the same set of questions to multiple references. Also suggest if you can do onsite visits to see the software in action.

Given its importance in supporting your greatest asset “Your People” and protecting the data it contains, selection of right HRMS software should be a structured process where the outcome is finding an HRMS software that be fit for purpose, functional and user friendly. The right software can totally transform how you work and do business.

The tips shared in this blog should help your business avoid falling into the statistic of a failed software project delivery as statistically, only 1 in 3 software projects are truly successful (Standish Group’s Annual CHAOS Report). As your business aims to harness the potential of digital technology to streamline your HR function, the selection process plays a crucial role.

At S&K Consulting, we partner with you to define your requirements, support a robust and objective procurement process of selecting the right HR software and manage the implementation process of the selected software. Please reach out to us for you on any of your HR requirements.  We would love to hear from you.