4 HR Issues That Could Be Hurting Your Small Business

You don’t need to hear another cliché about all of the hats you need to wear as a small business owner—it’s the reality you live day after day.

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You need to find, hire, and onboard the right talent. You need to maintain a positive company culture. You need to address employee issues and conflicts. You need to oversee compliance with regulations (and keep all of that paperwork straight). 

Sigh. It’s a lot more to keep track of, especially if you’re a small business owner without a dedicated HR department, HR service, or team of HR professionals to lean on. And unfortunately, failing to do it effectively can translate to unhappy employees, a high turnover rate, and even potential lawsuits. 

The good news is that you don’t need to muddle your way through. Employee relations software (which you might also hear referred to as human resources software or a variety of other terms—we’ll cover those in a bit) can help you effectively manage the various HR issues your business might run into. 

The Lowdown on Human Resources Software: What It Is and What It Does

Before we get into the nitty gritty of the various problems HR software can help solve, it’s important to have an understanding of what exactly it is. 

It’s fairly simple: HR software is a digital platform or tool that you can use to manage the various human resources tasks that your business needs to perform. 

That’s pretty broad, so understandably, there are a number of different types of software that could fall under this category. These could include: 

• Human Resources Information Systems (HRIS)
• Applicant Tracking Systems (ATS) or Talent Management Systems
• Employee Relationship Management Systems 
• Payroll Systems
• Learning Management Systems (LMS) 

It’s not an exhaustive list, but more than enough to give you a taste of what HR functions can be addressed with HR software as a service (SaaS). Let’s give a quick overview of what each of these are.

What Are HRIS Systems?

This is another fairly broad term, as it can be applied to any type of software that helps businesses address HR needs. Most commonly, though, it’s a database where companies can keep all sorts of information like employee demographics, compensation information, benefits choices, and more. 

A comprehensive HRIS system could include all of the features and uses we described above, which means a business might only need this type of solution as their one-stop-shop for all of their HR needs. For that reason, you might also hear it referred to as a Human Resource Management System (HRMS). 

What Is a Talent Management System? 

Applicant Tracking Systems (ATS) and Talent Management Systems (sometimes referred to as Workforce Management Systems) are focused specifically on the people that a business employs. These platforms help with a variety of people-oriented tasks like: 

• Receiving, processing, and tracking job applications
• Detailing steps for training and onboarding

Underneath this category, you might also hear of something called an ER/LR system. That’s software specifically focused on managing ER/LR cases. What are ER/LR cases? It stands for Employee Relations and Labor Relations. 

So basically, if an employee files a grievance or an issue, the software acts as your case management platform/case management system/case management software (yep, those are all different terms for the same thing!) where you’ll manage that investigation—including all of the necessary documentation and reporting that might be required. It’s a process that’s often referred to as “employee relations case management.” 

What Is an Employee Relationship Management System?

The experience your employees have with your organization is important, and that’s what this type of software is focused on: making sure your business has beneficial and successful relationships with all of your employees.

In many cases, that will center on the relationship between employees and their managers. But, this software can cover a variety of tasks including: 

• Employee development and training 
• Employee performance management and performance reviews
• Employee surveys and feedback

There’s some overlap with talent management systems, and oftentimes you’ll find what you need in a single solution.

What Are Payroll Systems?

Of course, there’s the administrative stuff that you have to handle. A payroll system automates the payroll process so that you can do the following without a ton of manual effort: 

• Tracking time and compensation
• Running payroll
• Logging payroll and compensation data
• Making the appropriate deductions
• Managing paid time off (PTO) 

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Some payroll systems (like Hourly, as one example) will also help you provide workers’ compensation to your employees. Hourly syncs your payroll data directly to your workers’ comp policy so you only pay exactly what you owe on your premiums, not an estimate. Hourly's goal is lower audit risk, faster payroll runs, and better claims and safety services for small businesses everywhere. Hourly is a licensed insurance agent with products underwritten by various insurance companies.

What Is a Learning Management System (LMS)? 

The purpose of this type of system is right there in the name: learning. This software is focused on offering various learning opportunities—most frequently, online courses—to employees. 

In addition to having a centralized place to provide information, training, and resources, an LMS will also give employers the opportunity to do things like: 

• Set learning goals for employees
• Monitor progress on courses
• Review analytics about employee learning and development

4 Common HR Issues (and How the Right Software Helps to Solve Them)

While there’s a lot that falls under the human resource or employee relations software umbrella, rest assured that you don’t need all of these—especially if you’re a small business. You can typically get the features and functionality you need from only one or two solutions. 

How can you figure out what you actually need in your toolkit as a small business owner? Well, looking at the challenges you typically deal with is a great place to start, as it means you can find the right software solutions that best address your needs.

Now that you have a high-level understanding of the functions that an HR system can help with, let’s dig a little deeper into the specific challenges it can help you solve. 

Challenge #1: Complying with Laws and Regulations

Keeping up with the mile-long list of laws and regulations in any given industry or jurisdiction can be enough to make your eyes cross and your head spin, even for the most efficient small businesses. 

The U.S. Department of Labor decides the standards for worker treatment, payment, overtime, and more under the Fair Labor Standards Act (FLSA), and wading through all of that jargon, technical language, and requirements can be challenging. 

One thing you need to know for sure: A company’s owner or HR team (if you have one) has to keep detailed records of all applicants and hires and maintain strict compliance with labor laws like having workers' compensation insurance. 

Take note that this isn’t a box you can check once. Employment laws aren’t set in stone and things like minimum wage and workplace safety requirements can be subject to change—which means you need to keep pace with those shifts. 

Failing to keep up with the local laws, regulations, and rules means running the risk of unnecessary lawsuits that cost your business time and money. In 2017, the average cost for cases that resulted in a defense and settlement payment was a whopping $160,000—taking 318 valuable days to be resolved. 

How Can HR Software Help?

Rather than tearing your hair out trying to understand what you need to do to abide by the various anxiety-inducing regulations that apply to your industry, HR software can keep you organized and in compliance. 

You can upload signable W-4 forms and file other IRS paperwork, keep track of employment contracts and compensation information, create automated workflows for important HR policies, and easily manage tax filing and remittance through this type of software. 

Additionally, an HR solution can provide reminders and notifications about important tasks you need to address—like when you’re due to have employees update required paperwork or when approvals are needed on things like time off requests. Those types of things can easily slip through the cracks, but they’re important to ensure your bases are covered.

Another thing you need to comply with? Carrying the right insurance. For example, nearly all employers are required to carry workers’ compensation insurance. If you’d rather not wade through policy documents, a solution like Hourly can help you satisfy this requirement—while eliminating a ton of stress, guesswork, and even cost. 

This means you or your HR professionals have more time to focus on other aspects of the business, like employee retention, initiatives for employee engagement, and other team-focused activities. 

Challenge #2: Finding (and Retaining) Top Talent  

One of the most important investments for any business is people.

It’s difficult to pinpoint the exact cost of hiring an employee, but, according to Glassdoor, the average U.S. employer spends about $4,000 and 24 days on this task. 

That makes it feel like recruiting and finding new employees is a full-time job in and of itself. You need to write accurate job descriptions, advertise in the right places, sort through applications, conduct interviews and background checks, and more. 

What’s potentially even more frustrating? Despite all the effort that goes into recruitment, there’s no guarantee you’ll find the top talent for the job—especially in today’s competitive, candidate-driven labor market. Recent data shows that there are about one million more job openings than people looking for work right now.  

How Can HR Software Help?

Think about all of the paperwork and administration that goes into recruiting, hiring, and onboarding new employees. There are job descriptions, applications, resumes, interview notes, contracts, benefit enrollment paperwork...the list goes on and on. 

HR software (and specifically, applicant tracking systems) can help you streamline time-consuming, repetitive tasks associated with hiring. They give you a centralized management system where you can do everything from crafting templates for job descriptions to monitoring incoming applications. 

You’ll even be able to program specific keywords and screening questions, which the system will then use to weed through resumes. You’ll end up with a smaller stack of applications that actually use those keywords and meet your requirements, so you don’t have to spend time reviewing application materials that obviously aren’t a fit. 

Once you find the right employee and make the hire? It’s time to tackle the onboarding process. 

According to Gallup, only 12 percent of employees think their company has a proper onboarding process. Why? Most onboarding is done over the course of a day or two—leaving employees unsure and dissatisfied. It’s no wonder why 31 percent of employees leave their jobs within the first six months.  

Effective onboarding is about so much more than a warm welcome or offering company swag and incentives. It’s about equipping employees with the information and tools they need to thrive within your company. 

HR software will help you map out a workflow for getting a new hire up to speed. You’ll make sure you check every box—from setting up their email address and logins for any software to providing on-the-job training. That series of steps will be documented within your software, so you can ensure you’re taking the right steps in the right order. 

Challenge #3: Keeping Employees Engaged and Happy 

You’ve probably already heard some alarming statistics about the state of employee engagement like this one: 80 percent of employees are not engaged or actively disengaged at work—costing the U.S. economy a whopping $8.1 trillion.

Human resources plays a major role in ensuring that work environments are safe, happy, and productive places for employees. Don’t have an HR team or HR professional on your staff? Well, then ensuring a positive employee experience is your job as the business owner.

There’s a lot that comes into play here. Everything from providing development and learning opportunities to soliciting and implementing employee feedback is crucial for making sure employees actually enjoy their roles, feel a certain level of commitment to your organization, and don’t feel tempted to hit the road. 

How Can HR Software Help?

It’s easy to feel like you need a crystal ball in order to crack the code on what your team members want from you. But in reality, it doesn’t need to be that complicated—especially with the right employee relations software on your side. 

While you might think that this type of digital tool puts another layer of separation between you and your team, that’s not the case. Instead, think of this HR software as a centralized place where you can: 

• Keep team members informed about company updates, policies, and HR processes
• Create a self-service knowledge base where employees can get answers to common questions
• Solicit feedback, opinions, and suggestions from employees about how your workplace and company could improve
• Provide kudos, rewards, and other incentives to recognize great work
• Offer information and resources to help them learn, develop, and improve (which is important when one Udemy study found 80 percent of employees would feel more engaged if they learned new skills) 

All of those help your employees feel less like a cog in a wheel and more like a valued and contributing member of your team. 

Challenge #4: Delivering on Diversity and Inclusion Promises 

Among all types of businesses—big and small—diversity has become a major area of focus. Not only is building a more diverse and inclusive workforce simply the right thing to do, it also offers a number of advantages for companies.

In a study by Boston Consulting Group, companies with above-average diversity scores had 19 percent higher revenues. Not only this, but McKinsey found companies in the top quartile for gender diversity on executive teams were 25 percent more likely to have above-average profitability than companies lying in the fourth quartile. 

How Can HR Software Help?

Fortunately, HR tech tools can help you better navigate diversity and inclusion—and keep yourself accountable. This type of HR software can help you with a number of functions related to diversity, including: 

• Tracking historic and real-time demographic data of your employees to understand the makeup of your current staff
• Storing compensation and employment data so you can identify and address any wage inequality issues
• Setting diversity goals and monitoring your progress
• Collecting employee feedback specifically about diversity and inclusion
• Creating and managing employee resource groups (ERGs) where employees can connect over shared experiences

There are also diversity-specific ATS platforms that will market directly to diverse candidate pools.

It’s worth noting that technology isn’t (and will never be) a replacement for an actual diversity, equity, and inclusion (DEI) strategy, but it can be a great complement to keep you organized and on the right track. If you’re feeling particularly overwhelmed, you can consult with a DEI expert to help you figure out your best steps.

Combat Today’s HR Challenges Using Software

The challenges HR departments face today keep evolving. And if you’re a small business owner without a ton of HR professionals and resources at your disposal? Keeping up with it all can make you feel like you’re chasing your tail. 

This is where the right HR software can help automate the time-consuming, manual, and tedious tasks so that you (and your HR team, if you have one) can focus on what truly matters: Creating a safe and productive environment for your people.