If you’ve been managing your human resources tasks through a human resources information system (HRIS), you could be costing yourself more money and time than you think. Although automated HR software tools have historically been viewed as a money and time-saver for the small business owner, the use of such a system can actually limit you in a variety of ways. Instead of devoting so much time, cash and other resources to managing this software, you could opt for the alternative of using a specified HR account manager. Also, at some point, your company will outgrow HRIS software and will be prompted to make the switch anyway.
HRIS’s are software programs developed for keeping tabs on employee movement, such as applicant tracking, performance management, attendance, compensation, benefits management, and scheduling. While there are some benefits to using these tools, there are some major disadvantages that you should be aware of.
The Disadvantages of HRIS
If you’re a small business owner who wears many hats throughout the day, using an automated HRIS can prove to be a challenge. The same benefits that this type of software boasts (allowing the business owner to handle his or her own human resources tasks from one platform) are the same ones that are actually robbing you of time and money that could be better spent on growing your business. From potential for human error, to software malfunctions, to employee privacy concerns, to expensive updates, these problems have a way of eating away at your budget and time almost indiscernibly.
Let’s go deeper into some of these problems.
Cost of HRIS
As a small business owner, you may not be in a growth phase. This means you are in survival mode, and cash is tight. Cost is a major downside of HRIS software. Here’s a breakdown by CostOwl.com report:
- Overall prices for locally-hosted systems range from $40 to $100 per user for companies with up to 50 employees and $200 to $300 per employee for larger ones.
- You may be facing an additional bill of up to $50,000 for installation, setup and consulting. You could opt for a remote-hosted system, which ranges from $5 to $10 per user.
- Training your staff will cost you, whether the training is part of the purchase or not. Errors and do-overs can be costly, especially when it comes to potentially litigious circumstances.
- There are other costs that come up when your software goes down or when human error comes into play. Delays in payroll or benefits, leading to disgruntled employees and possibly higher turnover, is extremely costly.
Lack of Employee Privacy
When an employee is on-boarded, they give more personal information than in nearly every other interaction, other than getting a mortgage or new car. Inputting this into a system which many members of the company have access, the waters of privacy can get murky. Identity theft from outside sources is also a real threat. Can you afford the lawsuit that comes with such a breach of security? Using a dedicated HR managers puts the liability in the hands of the HR company you use, saving you nights of lost sleep worrying about misappropriated social security numbers and home addresses.
When Should You Make the Switch?
Someday, if all goes well, your company will outgrow automated HRIS’s. If you have 30 or more employees, it’s time to start shopping for a dedicated HR manager.
Size of the business is not the only factor, however. Consider the time you’re spending on HR hassles.
- Are you in frequent contact with your company attorney dealing with too many employer legal questions and problems?
- Is your business suffering because you don’t have significant time to spend on planning the future?
- Are you spending a high percentage of your day managing an automated HRIS?
These are all signs that it’s time to make the switch.
When considering the disadvantages of a human resource information system, perhaps even more than cost, consider how your business (and its employees) will be better served with a dedicated HR professional on staff to shoulder these details.
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