How do HR systems differ in small and large firms?

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Finding out how HR systems differ in small and large firms will help you decide which features you may – or may not – need in your next HR software

Are there regular payroll errors at your workplace? Can’t you find the data you need, or have too many responsibilities to concentrate on people-oriented tasks? Then it’s time to get a new HR system.

Whether you have a few employees or a few thousand, there will be contrasts and common ground between organisations. But your online HR system shouldn’t be a one-size-fits all solution, as there will be various tasks and goals which you’ll want to achieve depending on your targets: the defining difference between your brand and others. Here’s what you need to know about how HR systems differ in small and large firms.

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HR systems requirements and features in small organisations (up to 200 employees)

Here’s a statistic to consider: of the 13 case studies on system implementation of small and medium-sized enterprises (SMEs) fresh from implementing HR software, nine of them had no previous system at all. So if you’ve just started a business – or you’ve been running a company for a while, but with only a few employees – then you won’t be the only one in this position.

And, if there are just a handful of you within an organisation, your de-facto head of human resources may also have another role (or two) to fulfil. So while this person can handle ownership or management responsibilities alongside HR functions, this can only continue for so long. The general rule is to think about delegating these core admin tasks to an HR specialist once you get to 10 or so employees – or when the person who’s managing HR is making errors, and it’s taking up so much time their focus is being drawn away from strategy-level work.

If you have up to 200 people working within your business, then chances are there will be just a few individuals dedicated solely to HR functions (if any). And, because of the small number of employees you have, there will be a certain set of HR goals you’ll want to achieve that’ll be different to larger firms’. Almost all of these will be long-term targets , and therefore these should be part of your business plans for the next three to five years.

One of those goals will be improving employee retention. Turnover not only increases costs, but also has a negative effect on productivity. So, to combat this, you need to create an environment that’s positive and motivational for your most valuable employees – which, in turn, will help you improve retention.

This company culture will be incorporated into your organisation’s core values. If you haven’t added them already, then these should be in your mission statement and relate to employee satisfaction (as well as customer satisfaction). So it’s these goals you’ll want to achieve to cultivate that positive culture.

Your evolving industry – whichever one it is – means you’ll need to have an organisation that’s agile and dynamic when it comes to change. Create a process that will prepare you for future developments. With this change management plan, you can easily solve any problems that may arise from developing situations.

So how can your HR system support your small organisation with these initiatives?

With HR system implementation in the first place, you can centralise your employee data  and make it easier for your colleagues to access their own information (eg salary, available benefits). An HR system will keep these details confidential and adhere to compliance regulations, whether it’s off-the-shelf HR software or a configurable solution

You’ll also get more time back. That’s because some of your HR functions can be performed quicker and more easily: not only by your HR team (whether that’s a small, dedicated group, or a senior manager with other responsibilities), but also by your employees.

So if someone wants to check how many days of annual leave they have left for the year, they can access the HR system themselves to find this information. Previously, they may have to submit a request and wait for someone to have the opportunity to go through the details – which doesn’t make for a great digital employee experience.

With all this extra time, what can your HR team do with it? Focus on those other initiatives for your small organisation, such as employee engagement and retention, company culture and change management programmes.

HR systems requirements and features in medium-sized organisations (201-1,000 employees)

You’re now part of an HR team of a growing organisation. You’re not considered as a small firm any more, but neither are you viewed as a major employer within your industry (not just yet, anyway). And as the organisation grows, its HR demands will evolve.

Those legacy methods you’ve used  – maybe having hard copies of employee information, for instance – will start to become overwhelming once you get over a certain threshold of people. So if you haven’t already, implementing an HR system in your mid-sized organisation becomes a priority.

But while you may have more people within your HR department, you may still share some of the challenges found in small organisations. For starters, you won’t have access to the same resources  as those at large firms: you’ll need to choose wisely when it comes to tools and strategies that fit with your budget.

And this has an effect on your responsibilities. Or, more accurately, the responsibilities of your HR people. Because there will be fewer of you in the team compared to counterparts at bigger organisations, you may still have a mix of duties rather than concentrating on just one area of HR. However, this type of role may suit those who enjoy a bit of variety in their job.

Having said that, your organisation should make sure it doesn’t stretch its HR resources too thinly. You still need to focus on strategy, and bring experienced HR professionals into your team. Investment in your HR team (and the software and tools it uses) is an investment in your whole workforce, since allowing for agility within this department means they can support your organisation with achieving its business goals – many of which depend on having the right people, with the right skills and experience, working in the right roles.

At this stage of your organisation’s growth, your main HR priorities may also include:

  • Aligning employee activity to the organisation’s strategies and goal
  • Identifying L&D needs for each employee, so they have the correct skills for their role, develop their career, stay engaged at work, and, ultimately, stay with your company for longer
  • Managing performance
  • Encouraging effective two-way communication between line managers and their direct reports
  • Finding the most talented and valuable employees, and include them in your future plans
  • Ensuring compliance with regulatory requirements

When you’re selecting an HR system for your medium-sized organisation, cost and basic functionality will be just as important to you now as when your company was smaller. But there will be more complex considerations, too.

Take performance management, for example. It’s a contributor to overall company growth and will influence decisions around promotions and salary increases. But, there’s more: as your organisation grows, each one of your colleagues will need to understand their changing responsibilities. Your HR system will make it easier to identify employees’ skills –  and skills gaps –  to effectively plan training and development, so you can upskill and reskill staff. Your ability to effectively develop your people all rests on the data you collect and analyse, so look for an HR system that has in-built performance tools and integrates with your chosen learning management system, to give you that 360-degree view of people and performance.

And because as your organisation grows, you’ll be holding more data about a growing team of people, you’ll want to pay closer attention to data security. Pay attention to where the information is held  , what security processes your vendor has in place, and whether it has achieved the ISO 27001 standard on information security. Also ask if your HR system helps you with GDPR compliance, as well as other compliance-related functions for your industry.

There’s one more consideration: HR systems integration capabilities. People management solutions such as Ciphr’s can be integrated with other third-party applications via an API, making it easy for you to create that holistic view of data, and bolt on (or remove) tools from your HR tech stack as your needs evolve.

HR systems requirements and features in large and enterprise-sized organisations (1,001+ employees)

Despite having similar goals for planning, recruitment and problem-solving, there are many differences between the HR department of a large organisation and one with just a few employees. There’s the amount of resources available, of course, but there’s also the varying responsibilities of those in it.

Because there are more people in a large organisation’s HR team, that workload (which could be significant and variable) can be shared among you –  although you’re also more likely to specialise in one area of HR – while mentorship from more experienced colleagues is more easily accessible.

You may also find you get better support from bigger budgets also means there’s more funding available for technology investment – but you’ll still want to spend wisely on any HR systems you choose.

Recruitment is one of the areas you’ll find the most obvious differences between large and small organisations. While some small and medium-sized organisations will have automated part of the process (eg using pre-employment screening platforms), larger firms are more likely to have multiple rounds of interviews, assessments and background/reference checks, as well as higher volumes of applications – all of which means it’s even more crucial to automate and optimise as much of your recruitment process as possible.

It’s unlikely that your company will have grown to its current size without having HR software in place. But, it is probable that you’ve outgrown your existing HR system, and it can no longer support efficient operations or the level of strategic planning that’s now required from your team. That’s because your organisation, which may have multiple offices in different countries, could have myriad systems storing data. So it can be difficult to get an overall view of basic details such as the number of full-time employees, since there’s no central data source. Creating a comprehensive, cohesive HR tech will be crucial to success here.

How do I select the best HR system for my organisation?

It pays to look around and check what’s the most suitable HR system for your needs right now, and in future. Selecting the wrong software could impact the effectiveness of your HR strategies and the organisation’s performance over the coming years. Discover Ciphr’s online HR system and request a demonstration or download a brochure to find out if our solutions fit your needs.