The pros and cons of a simple HRMS for an SMB

Are you responsible for HR in a small or midsize business (SMB)? There are a number of HRMS on the market today, from simple streamlined systems to heavily complex solutions. Is a basic HRMS a match for your business? Read on for some key pros and cons to investing in a simple HRMS for an SMB.

Pros

1. Cost

Simple solutions are usually the cost leaders due to their lack of complexity and development. When a small HR vendor has created a solution, it is often competitively priced. Some larger vendors provide ‘lite’ versions of their main products at no cost to SMBs, with the idea that when you grow larger you’ll upgrade to one of their other options on a paying contract.

2. Ease of use

Basic HRMS are often as intuitive and instinctive to use as consumer technology, since there are a limited number of actions and transactions that you can accomplish in the system. If you are a lean SMB with limited HR resources for building user-education materials and delivering training, these basic solutions can be a perfect match for your needs.

3. Save time and effort vs. building your own

Simple HRMS cover the main HR system activities that most companies need, such as talent management and inputting pay increases, as well as related activities like maintaining learning management data and running payroll. You can save implementation time by using an HRMS suitable for an SMB straight out of the box. A hybrid solution could be to use a simple open-source HRMS, where the basic HRMS is delivered and can be used ‘as is’, but by using open source code a developer can make modifications to customize it for your business. This is still a head start when compared to beginning from scratch.

Recommended Reading: HRMS Software Guide - Find an HRMS for SMBs

Cons

1. Limited functionality or room for growth

The lack of features can cause workarounds or extra manual efforts. Some of these products have no ‘developer option’, so you get the HRMS as it is delivered with no possibility for customizing the layout, field labels or pages. While a simple HRMS may suit your business in the beginning, you may struggle as your business expands and your simple solution cannot grow with you.

2. Lack of recognition by other software applications

Large HRMS often have pre-built integration options for other large HRMS or commonly requested systems, such as financial ERPs or customer relationship management solutions in sales. When you use a basic HRMS, it often is not recognized by other solutions. As a result, integrations require manual effort, such as running a report from your HRMS for another solution to manually import it. These regular, operational tasks take on-going effort and costs.