Four questions to ask vendors when selecting HRMS for small business

An HRMS system is a daunting project for any business. But an HRMS for ‘small business’ (i.e. less than 50 employees) can seem like a particularly significant investment, so it’s therefore especially important to make the right choice of software.

In the past, the cost of an HRMS kept many small businesses using paper-based procedures - spreadsheets, forms and of course many, many filing cabinets – to keep track of their employee records. If you’re still using such means, then you know how tedious, inefficient and prone to error it can be. Luckily with the rapid growth of cloud-based SaaS HRMS over the last few years, small businesses now have access to a wide variety of more cost-effective ‘enterprise’ technology.

If you’re looking to leave the paper behind (or just upgrading your system, having already made the leap to a more automated way of doing things) then there are a few questions worth probing more deeply with potential vendors.

1. How does it handle the basics?

First of all, any HRMS for small business needs to be rock-solid on the core HR functions around administrative tasks, record-keeping, and compliance. This might seem obvious but these are the source of your prime time-saving efficiencies; features such as personnel records and tracking, employee self-service, and basic reporting & analytics.

Recommended reading: find HRMS for your small business with our completely up-to-date HRMS vendor directory

Of course, the more sophisticated functions – such as payroll, benefits, time and attendance, learning management, talent recruitment and management, absence and leave management, and performance management – carry benefits too but the foundation is based on the benefits you can leverage from basic automation.

2. Is your HRMS product cloud-based?

The deployment option has a bearing on the total cost and ease of implementation. On-site installation is almost certainly not appropriate for a small business because of the investment in hardware and servers, and also on-site systems are more likely to have a traditional (i.e. more expensive up front) licence-based pricing model than cloud HRMS.

Another deployment aspect to investigate is the system’s mobile functionality. Unless all your people work out of the same office or location, you probably need an HRMS that works as well through a smartphone browser as it does via a desktop terminal. Is the mobile app compatible with the devices that your people use? And does it offer full or limited functionality?

3. How intuitive are the software interfaces?

Any business is looking for an intuitive interface and easy-to-use processes, but a small business looking for immediate time savings, and without the time for intricately detailed training needs an HRMS that people can get to grips with easily and quickly; practically ‘plug & play’.

In terms of making life easier, one particular feature to focus on is legislative compliance. An HRMS for small business should be fully up-to-date with whatever rules and laws operate in your country or territory. Ask about mandatory record-keeping requirements and whether the system automatically notifies you to take the action you need to take to stay on the right side of your local labor law.

4. What’s the total cost of ownership?

Different HRMS vendors offer different pricing models; the broad types are: license fee and regular maintenance, subscription by number of employee records, subscription by number of system users. The first model tends to be more expensive for small businesses. However, many vendors (especially those with cloud systems) offer easily scalable pricing models based on the size of the organization. In particular, you should explore any hidden costs (e.g. does the price quoted include helpdesk services?) before deciding on the HRMS for your requirements.

Just like a multinational conglomerate, a small business is looking for an HRMS that will support its business needs, both current and in the near future. You’re looking for a small-scale system that will grow with you, give you some essential functionality and a few extras that will make a genuine difference, and all without breaking the bank. Happily, the market is full of such systems and vendors. The challenge is whittling down the options to find the best option for your business.

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Dave Foxall

About the author…

Dave has worked as HR Manager for the Ministry of Justice for a number of years, he now writes on a broad range of topics including jazz music, and, of course, the HRMS software market.

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Dave Foxall