Small business employee benefits cost about 20% of a company’s labor budget. In addition to sick and vacation leave, group health insurance plans, retirement savings, and other small business employee benefits costs, the business has to cover the cost of administration for all of these employee benefits. In fact, according to a survey conducted by the National Small Business Association, the average small business spends about ten hours per month just managing payroll taxes for all of its employees. If you took the time to crunch the numbers, you probably already realize that this means the average small business pays a full-time employee three full weeks of labor just to manage payroll taxes each year! When you add in the amount of effort that goes into other aspects of employee benefits management, it is no surprise that small business employee benefits cost a company so much time and money.
Because of the excessive level of effort that has to go into employee benefits management, the adoption of human resources software to automate to process is quickly becoming a thing that all businesses rely on, not just large-scale corporations. In addition to the reduction in small business employee benefits costs, a few other reasons human resources software solutions is beneficial includes:
- Improved Productivity
As we mentioned, managing small business employee benefits cost a company a great amount of time and money. Manual record keeping of all of the different aspects of employee benefits is a huge drain an HR department’s resources. On the other hand, using an HR software solution automates all of the busy work and frees HR staff up for more important functions (or reduces the amount of stuff that is even necessary).Additionally, when employees must go through their management or an HR staff member to inquire about their own benefits, it costs the company valuable time while the information is collected. Most modern HR software solutions have self-service options so that employees can check on their own benefits and make changes as they see fit, without the work of another employee.
A comprehensive human resources software solution also improve the processes for recruitment, hiring, and on-boarding of new employees, as well as evaluations, and performance management. Each of these features further improves the productivity of a small business.
- Enables Better Decision-making
The leaders within a small business need information on key metrics in order to make informed decisions for the company. When a human resource software solution is in place, management has access to reporting tools they give them real-time information on labor and employee costs, which empowers them to make better steering decisions for the business. - Great ROI
The price tag associated with acquiring a software solution is one of the biggest factors that prevents small businesses from jumping on board the HR software bandwagon. However, the ongoing savings of the reduced labor costs and increased productivity means that a good HR management software system pays for itself fairly quickly. - Reduction of Mistakes
Anything that is processed by a human being has the potential for human error. Even the most precise human hands make mistakes every now and then. When employee information is processed through an algorithm in a computer, the potential for mistake is far lower; this is especially the case with a tried-and-true software solution that has been thoroughly tested and vetted.
When a mistake is made with human resource information, from the health insurance option an employee selects, the payroll tax codes designated for an employee’s withholding, to their retirement plan selection, can have a huge negative impact on both the employee and the company. This reduction of errors is a huge benefit to adopting HR software. - Improved Security
The private information regarding both a business and its employees that is managed by the human resource department is incredibly sensitive. Information such as employees Social Security numbers, their medical records, the business’s financial information, and so forth is all stored within human resource records. Managing this information through a software portal that has security encryption built into it provides an extra layer of protection for both employees and the company.
Has your small business adopted an HR software solution? We’d like to hear about the pros and cons of it in the comment section below!