HRIS for Small Businesses: Features, Benefits, and Top Options

Small business owners often struggle with effective human resource management. This can be due to a lack of expertise or limited resources. 

However, inefficient HR processes ultimately affect both employees and employers.

If you, too, are a small business owner, you can relate to this. 

So, how do we deal with this issue? The answer is not that complicated. It consists of four simple words: Human Resources Information System (HRIS).

HRIS for small businesses carries many more benefits than you can imagine. Think of it as a self-service portal for your employees and HR staff.

Currently, as much as 30% of companies worldwide use ten or more different HR systems.

In this article, you will learn everything there is to know about the HRIS system. This will include highlighting some of the most important topics related to this software solution, like,

• What are HRIS systems?
• What are the types of HRIS software?
• Top HR solutions for small businesses and more.

What is an HRIS? 

As complicated as it may sound, HRIS applications are not that difficult to understand. It can be described as software you simply install on your computer or can use online to manage your employees. 

HRIS systems help automate some of the core HR processes. They also provide valuable insights into workforce management, leave management, payroll, and time tracking.

Although HRISs can vary widely in complexity and features, they all serve one purpose: to make human resources management more efficient and data-driven.

To help you better understand this software application, here are some of the most basic yet important features of the HRIS system for small businesses. 

• Consolidating all PTO (paid time off) requests in one single space. This means easier tracking and approval capabilities.
• Generating compliance reports for labor laws and regulations.
• Keeping track of employee training progress and certifications.
• Providing a platform for employees to check their pay stubs and tax forms.
• Scheduling and monitoring employee performance reviews and documenting the outcomes.

HRIS vs HCM vs HRMS: Understanding the Differences

HRIS, HCM (Human Capital Management), and HRMS (Human Resources Management System) all fall under one umbrella: HR technology. They offer a secure, streamlined way to store and analyze your employees’ data. 

But does that mean that they are the same software systems? Absolutely not. 

The main difference between these three HR technology types is their capabilities. The baseline remains data storage and management. 

However, HRMS and HCM systems add extended features for strategic support. 

An HRIS system is the best choice for small businesses. However, an HCM platform is a wiser choice if you manage a larger organization. 

Here is a detailed table to help you understand the differences better.

Benefits of an HRIS for Small Businesses 

Businesses already face numerous challenges when hiring internationally. Understanding the local labor laws and complying with taxation requirements require a significant investment of energy and money. 

So, why make managing your international employees even more difficult for your HR team when you have an effective solution, like HRIS, right at your fingertips?

Here, we have highlighted two of the most important benefits of HRIS systems for small companies.

1) Streamlined payroll and time management

One of the main benefits of HRIS is that all your employee data is stored in one centralized place. This means instead of combing through multiple filing cabinets and spreadsheets, you can access every piece of information within seconds. 

This carries a huge advantage, especially for global payroll management. For any organization (small or large), international payroll can be extremely complicated. There are so many country-specific regulations to follow that it can become very confusing. 

However, with an HRMS, you no longer have to worry about these issues. It can singlehandedly increase accuracy and compliance and reduce the chances of manual error.

Furthermore, HRIS applications also help gather time and attendance data from employees. In the past, this entire process was manual. Employees would write down their working hours on a piece of paper. 

The manager would then manually enter the data into a time-tracking system. Finally, payment orders would be generated and paid to the workers. 

But now, with an HRIS, all these processes have become much more simplified and automated. Workers nowadays mostly check into work with a card synced with the company’s HRIS. 

This provides the exact time for their arrival and departure. If there are any issues with lateness, they can also be detected very easily.

2) Data accessibility and employee self-service

One of the main goals of HRIS systems is to make employees more autonomous. They should be able to manage most, if not all, of their information, such as requesting leaves, viewing their schedules, or updating their information. 

It has been a crucial factor in improving the employee experience at an organization. They no longer need to go through a supervisor or the Human Resources department.

Additionally, when all data concerning employees and HR is stored in a unified platform, the chances of any canon are reduced. 

Everyone in the organization is on the same page, and any important information related to scheduling events or time cards is automatically sent through notifications.

The ultimate result? Employee empowerment and reduced admin time.

The best part is that most HRIS platforms feature top-notch security measures. This is especially important in protecting the sanctity of personal data of both your employees and your organization.

Types of Small Businesses HRIS

Here, we have highlighted two main types of small business HR systems.

1) Operational HRIS

Operational HRIS helps you collect and report human resource data, such as employee position details and performance appraisal information. 

It serves as a single source of information that management can later use to perform important tasks such as promotions, internal personnel changes, and performance management. 

If you are tired of your HR department spending too much time on repetitive people management tasks, implementing an operational HRIS application can be a good decision.

2) Strategic HRIS

Strategic HRIS is different. It is more focused on helping with strategic analysis and decision-making. It helps HR managers fulfill important tasks related to goal-setting or future planning of the workforce. 

Strategic HRIS platforms usually hoard essential information like market data and operations budgets. 

This way, you can create awareness about available labor resources and use the data for proper workforce planning. 

Strategic HRIS platforms can be good if you aim to expand or grow your organization through intelligent, data-driven decisions.

How to Choose the Best HRIS for Small Businesses

A 2022 HRIS report claimed that companies spend an average of 15 weeks choosing an HR system. 

Selecting the top HRIS platforms can be daunting, not to mention the huge investment involved. 

Therefore, to help you on this journey, we have shared tips and tricks for choosing only the top-rated HRIS systems. 

Key Features to Look for In an HRIS

• Applicant Tracking System (ATS): Ensure your HRIS systems have a built-in ATS. The ATS houses all recruitment information, such as applications, resumes, and applicant questionnaires, in one convenient location, making hiring new candidates easier for your organization.
• Payroll: Managing payroll manually has always been a difficult task. Even the most minute calculation errors can cost your company hundreds of dollars. Therefore, only select HRIS platforms that have automated payroll capabilities. You can input banking information or pay rates and let the payroll system do the rest.
• Performance management: A good HRIS system also has performance tracking capabilities. Depending on the program you implement, you can examine your employees' performance simply by examining a graph or table.
• Third-party application integration: Even the top HRIS platforms often lack certain functionalities to complete the job. This is why selecting a system that allows third-party integrations is very important. This way, you can keep your existing tools without switching vendors as your business requirements increase.
• Employee onboarding: Last but not least, select an HRIS platform that can effectively automate most of the employee onboarding tasks. In this way, you do not have to spend much time managing administrative tasks. You can instead use it to form valuable human connections with your new hires.

Cost Considerations and Stakeholder Needs

Moving on, here are some of the most common pricing models of HRIS systems for small companies.

Challenges in HR Management for Small Businesses

Compliance is a crucial responsibility of running a small business. However, it can sometimes be very complicated, particularly because of limited resources. 

Unlike large organizations, SMEs do not generally have a dedicated team of legal professionals. All compliance responsibilities usually fall on the shoulders of the business owner or a small team juggling multiple roles. 

The result? Wage and hour violations, improper worker classification, or inaccurate payroll processing. 

But, HRIS for small businesses has effectively solved these challenges. Most of these HRIS and payroll systems come with automated record-keeping capabilities. 

This is especially important for FLSA and FMLA compliance. Ensuring accurate and updated employee records can lower the risk of non-compliance, if not more. 

Managing Payroll Compliance

Global payroll management is a challenging affair, to say the least. It includes various tasks, like,

• Wage calculation: Determining employee wages based on hourly rates, commission structures, or salaries.
• Deductions management: Making the right amount of deductions at the right time. These can be taxes, insurance premiums, retirement considerations, etc.
• Time and attendance tracking: You must keep track of your employees’ work hours and attendance so that their wages and taxes are calculated correctly. 

Manual payroll management is a wise choice for small businesses with few employees. But what happens when you hire more and more workers? Or when you hire international employees subject to different country-specific laws? That is where the real challenge begins. 

This is why implementing HRIS systems is so important. As mentioned, they help you track employee attendance and time and automate employee record keeping. 

In addition to this, they can also help you with compliance tasks. For example, an HRIS can generate accurate reports required by regulatory agencies, ensuring adherence and timely submission. 

They can track and manage statutory employee benefits and their subsequent deductions.

Why Small Businesses Should Consider Global HR Platforms

A global HRIS is not exactly like traditional HRIS platforms. Think of it as a more specialized version for businesses with international operations. It is built to handle the tricky parts of international hiring, such as country-specific labor laws, currency conversions, language differences, etc. 

Take leave management as an example. Say you are a US business planning to hire workers in the Netherlands. Under US federal laws, your employees are entitled to 11 public holidays in a year. But this does not apply to your employees in the Netherlands. 

Under their labor laws, there are also 11 official holidays, but employees are not legally entitled to take a day off on those holidays. 

Their collective labor agreement, or employment contract, decides whether they are free on holidays. 

This is just one example. 

Tax regulations and payroll requirements vary greatly depending on the country. It can be very difficult to handle all these and stay up-to-date with changes in country-specific laws by yourself. 

This is why global HR applications are so important. They help you adapt to different laws and regulations, making international compliance much easier.

Streamline HR with the Right HRIS

To put it bluntly, an HRIS is more than just a technological upgrade. It is a very important tool that guarantees compliance, efficiency, and growth for your business. 

We have already discussed the many features and benefits of HRIS systems for small companies. Although these may not seem like much right now, once your business demands increase, you will realize their importance. 

So, why not make the right decision now so that you can reap their benefits for a long?

Additionally, it is important to select only the top-rated HRIS systems. Be very careful about the factors and features you must consider, which we have discussed above. 

It does not necessarily have to be expensive; a simple, quick plug-and-play option may be all you need to get started.

Simplify Your Global HR Management with Skuad

Skuad’s global employment and management solutions have long been the preferred choice for businesses. With expertise in 160+ countries, we cover everything from India and the USA to the Netherlands and Japan. 

We oversee all aspects of international HR functions, including sourcing, screening, hiring, ensuring compliance, managing employee benefits, and more. 

Furthermore, with our global EOR solutions, you no longer have to worry about currency conversions. We feature a multi-currency payroll (100+ currencies) and provide competitive FX rates to all our clients. 

Schedule a demo today and experience a new global talent acquisition and management version with Skuad!

FAQs

1: Is an HRIS suitable for a small business?

HRIS for small companies or small businesses HR software offers incredible benefits, such as improved compliance, better payroll management, data-backed decision-making, and more. It provides a more formal and efficient way of managing HR processes.

2: Does a small business need an HR department?

Yes, a successful small business needs an HR department to manage its employees. The absence of such a department can lead to bad hires, high turnover rates, miscommunication, and decreased productivity.

3: What is the cost of HRIS?

The cost can differ based on factors such as the types of HRIS software (operational vs strategic), the kinds of services you need, the total number of employees, or if you need any additional features. 

4: How do I choose an HRIS system?

Consider your business needs, examine the key features of the HRIS systems (compliance, payroll, integration capabilities, data security, etc.), evaluate the platform's UI/UX, and understand the associated costs when selecting HR applications like this. 

5: Does HRIS include payroll?

Yes, the top HRIS platforms usually include automated payroll capabilities to help reduce administrative burdens and minimize the chances of errors associated with manual processes.