Small to medium Enterprises (SMEs) may often lack the proper resources or finances to efficiently manage their Human Resources in-house. We have talked extensively about the importance of efficient human resource management and how this can affect employee satisfaction, productivity and turnover rates. As such, many recommend the implementation of a Human Resource Management System (HRMS) for small businesses. While this is often overlooked by SMEs in order to cut costs, implementing a HRMS can give them a competitive edge over their competitors. In this blog post, we will be exploring the perks and necessities provided by HRMS, and how this can benefit SMEs.
What is a HRMS?
HRMS stands for Human Resource Management System. It does exactly as its name suggests, which is to manage a company’s human resources. This includes automating, integrating and of course managing all HR necessities. Some examples include payroll processing, tax processing, claim and leave management as well as calculating work hours and schedules. Cloud-based HRMS are gaining popularity amongst SMEs, as these are much more flexible and easily integrated. They are often more user-friendly and cost-effective as well. This makes managing the workforce so much more easy and efficient.
- Reduced Costs: Cloud-based HRMS are affordable as they are customisable based on your needs. Look at it as a menu where you can pick and choose the functions you need. This is much cheaper than implementing a HR System with unnecessary functions, or paying for various different systems to carry out different tasks. Furthermore, it absorbs the soft cost of consistently having to replace employees, should the company have a high turnover rate, as a solid HR System often increases employee satisfaction, which in turn reduces the turnover rate of a company.
- Heightened Employee Independence: Cloud-based systems are often automated, and only require the click of a few buttons. Not only does this save plenty of time, it gives employees the independence and autonomy they need. Especially with the younger generation entering the workforce, SMEs need to adhere to their tech-saviness and desire for independence. With the workforce changing, SMEs need to adapt in order to stay appealing to jobseekers in order to have a larger pool of talent to choose from.
- Adherence to Laws and Compliance Necessities: Every country has its own regulations in terms of employee work hours, off days and tax contribution. These are also prone to changes and it can be hard for SMEs who do not have the resources to stay updated as quickly as possible. This not only saves SMEs the trouble of having to deal with fines and lawsuits, it only absorbs the costs of these which can be incredibly hefty.
Digitalisation is here to stay, and HR matters are no exception from this. A robust HRMS system can save SMEs plenty of time, money and trouble. All of which are important in order for an SME to be able to grow their business and retain talent. While managers of SMEs may be tempted to skip out on HRMS due to the cost, this would include skipping out on plenty of benefits that will help the business save further costs, retain and attract talent as well as stay competitive. HR Systems are getting increasingly technologically advanced, and SMEs need to keep up with them.