Small businesses need to keep a balance between building their team, ensuring their stability and growth, and maintaining a tight budget while keeping their clients happy. That’s why choosing an HR software solution can be an overwhelming prospect and a high-stake decision for SMBs… especially in a market full of all-in-one platforms promising to do everything, from benefit management to performance reviews.
Here is the truth: when operating an SMB, not every feature is worth your time or your money. In this article, we will break down what small businesses actually need in an HR system, and what is just glorified extra noise.
What Small Businesses Really Need
1. Centralized Employee Data
Like all organizations, small businesses need a single source of truth for employee information such as contracts, certifications or emergency contacts. Having crucial data scattered across homemade spreadsheets or multiple platforms is one of the main issues small organizations face, and it can considerably slow down their daily operations, and ultimately, business productivity.
The main goal of implementing an all-in-one HR software solution like Folks HR is to centralize employee data and get all your information on a single platform, in a matter of seconds. This reduces errors and saves hours of back-and-forth spent on endless email chains. Therefore, a good HR system for SMBs is one that focuses first and foremost on employee profiles and document management features.
2. Performance Appraisal Features
Performance management might not be the first HR process that comes to mind, but it is one of the most essential to support talent and business growth, no matter the size of your organization!
Unlike larger enterprises, however, small businesses don’t necessarily need complex 360-degree feedback tools with endless bells and whistles. What they do need is an easy way to set individual goals, share feedback annually or on a more regular basis, and conduct efficient performance reviews.
A good HR system for SMBs integrates performance management features that reduce administrative work, such as automated reminders, simple goal-tracking dashboards and customizable performance appraisal forms. It should also let employees access their individual objectives and past performance reviews; after all, workers who are involved in their own goal setting are 3,6 times more likely to be engaged in their role!
3. Time-Off and Absence Management
When it comes to small and medium-sized businesses, time-tracking doesn’t need to be fancy, it just needs to be reliable and easy-to-use.
Your HR software should make it easy for employees to request vacation time or sick days, and for managers to approve them in a few clicks without the usual hassle. In most cases, timesheets can be straightforward and filled by your teams daily or at the end of the week. Bonus points if they are automatically synchronized with your payroll system — but more on that in the next part!
4. Integrated Payroll Module
When an organization doesn’t have an extensive HR department or payroll experts at hand, implementing a solution that streamlines both talent and payroll management can be a life-saver to say the least. This is often the case with SMBs, and they have a lot to gain by choosing a solution that integrates human resources and payroll features.
With the right HR system, your timesheets and PTO information can be seamlessly synchronized with your payroll features so that your employees’ pay slips are always accurate. Plus, your coworkers can download them whenever they want directly from their profiles, which prevents back-and-forths and increases their satisfaction.
To top it all off, it is often cheaper to get HR and payroll features from the same provider rather than looking for two separate solutions and hoping that they can work together!
5. HR Compliance Made Simple
For many small businesses, HR compliance is intimidating. After all, mistakes in this area are easy to make, and quite costly to fix. Good HR software makes it easy to stay compliant with labour laws by tracking work hours, documenting performance (such as probation reviews and annual performance appraisals) and securely storing employee records.
Remember to go for a solution that ensures data confidentiality and lets you choose who has access to each piece of information. For SMBs, picking the right HR system is as much about peace of mind as it is about efficiency.
6. Employee Self-Service
If you invest in HR software, you might as well make sure your employees will use it! Employee self-service features are essential in this regard. If your coworkers can easily access and update their information whenever they need to, or request paid time-off in a few clicks, they are more likely to make the most out of your new HR system.
For SMBs, there are two main factors to take into account when considering employee self-service:
- Is it easy-to-use for my teams? Depending on the industry and the demographics of your organization, you might need to put a stronger focus on user-friendliness.
- Is the employee portal self-explanatory? Portals and profiles should be at the top of the page and clearly identifiable so that your employees can access key information in a few seconds.
Depending on your needs, you might also want to evaluate mobile application availability and other features specific to your industry.
7. Affordability and Scalability
Budgets are often tight, and small businesses need an HR system that delivers value without draining too many resources. Organizational growth should also be taken into account so that your technology investment does not become obsolete in the next two years.
Therefore, pricing has to be transparent and designed for growth so that the tool scales as your company evolves. For instance, are you limited in the number of employee profiles you can manage, or does the pricing evolve with your headcount (as it should)? Another interesting question you can ask yourself is the following: does the provider offer other solutions you might use in the future, such as employee engagement platforms or recruiting software?
What Small Business Don’t Need
1. Overcomplicated Integrations
More often than not, integrations are nice-to-have. However, if they mean that your HR software takes 6 months of setup and a dedicated team to manage the implementation process, they are simply not made for small businesses.
Instead, you should focus on the integrations that are a must-have for your company. Even better, you can choose an all-in-one HR software made for SMBs so that human resources, payroll and performance reviews are managed and stored on the same platform, no overcomplicated integration needed!
2. Heavy Customization
Custom tech is great, but it is mostly designed for enterprise-level businesses. Why? Because customization is complex to develop and to use, hard to implement, and above all expensive.
Smaller organizations often fare better with intuitive tools that solve common pain points and are adapted to most businesses’ everyday needs.
3. Endless Reporting Dashboards
There is no denying that HR KPIs and analytical features are great, but do you really need dozens of different dashboards and countless report templates?
For small teams, the most important metrics are straightforward: headcount, retention and turnover rates, training completion or days of time off taken. Anything beyond these key indicators risks becoming data overload and leads to unnecessary additional costs.
Still, it is important to evaluate reporting features when choosing your HR system; they absolutely need to cover the basics and be able to grow alongside your organization.
4. Fancy Features You’ll Never Use
Some providers offer global payroll for over 20 different countries, or AI-powered modules that seem great and revolutionary… on paper.
If you are operating in a small company, these features will not help you run your business. In fact, they might even hinder your growth because of data overload and lack of strategic focus.
Paying for tech that looks flashy will rarely solve your actual HR challenges! Instead, focus on key features that will actively help you centralize and automate your HR processes at every step of the employee lifecycle.
5. User-Hostile Tech Tools
If you are running a small business, chances are your HR software implementation needs to be quick, and you don’t have dedicated resources to train your employees on using the system when it is finally set up.
That’s why the solution you choose needs to be user-friendly for your entire team, and focus on employee self-service so that your coworkers can quickly access and update their information, fill their timesheets, and make PTO requests.
6. Hidden Fees
SMBs need to be particularly wary of pricing plans that seem to lack transparency or are too restrictive. As your company grows or your utilization of the platform evolves, you might come across hidden fees that will impact your budget.
To avoid bad surprises, choose a provider that details all the pricing conditions you need to know during meetings and in the contract. During demonstration meetings, don’t hesitate to ask all the questions to anticipate your future needs while respecting your budget constraints.
How to Choose the Right HR Software for Your Business
Knowing all this, here are some of the questions you should ask yourself when evaluating HR solutions available on the market:
- First and foremost, does it solve the pain points your team faces on a daily basis?
- Is the pricing transparent and does it align with your budget?
- Will your managers and employees actually use the platform?
- Can it grow alongside your company without becoming too expensive, inefficient or complex?
- Is the vendor providing real support, or just selling features?
At the end of the day, the best HR software solution for your small business is the one that makes your life easier, not harder, like Folks HR does. It should solve your main pain points and come with top-notch support and guidance throughout (and after) the implementation process.
Most of the time, as an SMB, you won’t need a host of brand new complicated features… But even as your company grows, you can trust that data centralization, robust HR modules and human-powered support will never go out of style.
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