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By tradition, human resource management is a manual, paperwork-heavy role. But that’s quickly changing as companies embrace HR automation and transform tedious, time-consuming admin tasks into painless processes. But while larger businesses readily embrace HR automation, small-to-medium enterprises (SMEs) aren’t as willing. Growth priorities can see SMEs choose to invest in customer-focused automation instead—even though HR automation is just as critical.  Inefficient HR processes present challenges that reduce business-wide productivity and limit high-quality talent acquisition, putting SMEs at a competitive disadvantage. But whether you’re trying to go public, scale your business, or just streamline your operations, the benefits of automation are plentiful.  According to Zapier, 88% of SMEs say automation enables them to keep up with larger companies. How? By streamlining internal processes to improve productivity and minimize human error. HR Automation

Image sourced from Zapier

So, let’s identify the key areas for effective HR automation and explore the far-reaching benefits in more depth. But first, let’s quickly break down the common challenges SMEs face.

Common challenges faced by SMEs

Without HR automation, SMEs face various challenges that can have serious—and potentially even fatal—consequences. Let’s get into it.

Resource constraints and limitations

Like large enterprises, your SME must accelerate toward digitization to keep up with customer demands and achieve sustainable growth. But where SMEs tend to go wrong is that they rush toward automating marketing processes or sales, in turn neglecting other critical areas. As a result, back-office teams like HR are prone to crippling resource constraints and limitations. And this affects not only the HR team but also the overall productivity and satisfaction of employees. 

Time-consuming administrative tasks

Administrative tasks are a necessary evil of business. Despite their inherent value, admin activities are often so repetitive, tedious, and time-consuming that they can leave employees feeling dissatisfied and burnt out.  If that’s not bad enough, manual administration is prone to human error. Whether it’s a lost document or an inaccurate data entry, human error can slow down business operations even more, furthering the productivity drain that admin has on HR teams.

Difficulty in attracting talent

Attracting and employing high-quality talent is a time-consuming and costly endeavour—especially if it’s all done manually.  HR teams need to strategically advertise vacancies, shift through resumes, screen candidates, organize employee contracts, communicate regularly with candidates—the list goes on. If you haven’t streamlined your recruitment marketing strategy and hiring process, this can become a tedious, drawn-out affair that burdens employees and costs your business high-quality talent. Poor hiring experiences drive away high-quality candidates. According to a recent survey, two of the main reasons candidates withdraw from the hiring stage relate to HR inefficiencies, specifically, poor time management. Poor communication can also put people off the process.


Compliance issues

It’s not just highly-regulated companies or those undertaking IPO that need to prioritize stringent compliance. From GDRP and CCPA to labor laws, there are numerous regulations that SMEs should be aware of.  Failing to comply can result in hefty fines and significant damage to your business’s reputation. According to IBM, the total cost of a data breach stands at $4.24m. Almost 40% of this cost can be attributed to lost business incurred from customer turnover, system downtime, and the increased cost of acquiring new customers in the wake of a damaged reputation. HR Automation statistics

Image sourced from IBM

The cost of non-compliance can cripple an enterprise, let alone a small business. But for those who rely on inefficient, manual, and paperwork-heavy compliance practices, non-compliance is a looming threat. 

Benefits of HR automation for SMEs

Fortunately, HR automation resolves all of the challenges we’ve mentioned above—and then some. These are the main ones, starting with cost savings.

Cost savings

Automating traditional administrative tasks reduces operational and labour costs. Without the need for paper-based processing expenses like filing and printing, you can direct more of your budget toward strategies that drive business improvements. Also, by reducing manual administration, you reduce the potential for manual error. Rectifying mistakes can be costly, so eliminating this issue can incur serious cost savings, too.

Increased productivity

When HR teams are freed from repetitive, redundant admin, it empowers them to engage more productively with tasks that offer more business value.  Instead of spending hours filling in forms or locating files, HR can dedicate more time to people-centred activities. Tasks like resolving workplace conflicts, offering support, monitoring performance, and promoting company values are critical for maintaining a positive culture in the workplace.  HR automation also improves operational productivity and efficiency when integrated with enterprise resource planning (ERP) software. ERP looks at every aspect of the organization to optimize processes and connect employees in different departments to help your SME succeed. Within ERP, HR automation is an essential element of a company-wide strategy to streamline operations and increase productivity.  Centralizing documents into one system eliminates data silos and increases organization-wide visibility. Teams from different departments can locate, collaborate, and share data without the frustrating communication and handoff delays that occur in siloed paper-based offices. In fact, Zapier found that increased productivity was the main benefit of automation for knowledge workers. HR Automation statistics

Image sourced from Zapier

Improved recruitment and retention

Remember—-your employees' experience begins at recruitment. Providing a fast, streamlined hiring experience is key to securing high-quality talent. HR automation technology can screen resumes according to preset criteria and schedule interviews with candidates, utilizing AI algorithms to eliminate unconscious bias. You can also send automated emails to candidates, enabling you to communicate reliably with them throughout the process.  By creating employee recruitment experiences that value speed, efficiency, and effective communication, you can retain high-quality candidates through to the onboarding stage.  And it doesn’t stop there. With the ability to auto-fill forms, sign documents electronically, and create an online training portal, you can digitize your onboarding process to create a smooth, stress-free, and empowering user experience.

Enhanced compliance standards

In the rise of the digital era and with increased access to employee data, compliance is more critical and complex than ever before. HR automation is essential for ensuring adherence to new and updated labor laws, data regulations, and cybersecurity best practices.  HR automation software enhances compliance standards on numerous levels, helping companies navigate complex and ever-evolving regulations. For example, it preserves data integrity and hardens data loss prevention strategies, automating classified document management within a cloud environment to secure sensitive employee data.  Being integral to the success of achieving SOX compliance, HR automation is also a key factor in large-scale initiatives like going public. Combined with IPO accounting software, HR can make serious strides in achieving the hyper-accurate financial reporting and robust data security required for SOX compliance and subsequent IPO success.  Instead of being a time-consuming, stressful, and sometimes nerve-wracking experience, compliance auditing and reporting becomes painless with HR process automation.

Key areas where HR automation can make a difference

Automation can be applied in various places within HR, but here are the key areas that SMEs should prioritize:

Employee data management

Even small businesses amass hoards of employee data. From hundreds of candidate profiles to your employees' sensitive information, HR systems must be able to effectively collect, store, maintain, and share employee data. Without HR automation, all of this data is difficult to keep track of. Silos and human error can pose significant compliance risks and slow down workflows. By centralizing and automating employee data, you can achieve real-time visibility and use these insights to drive improvements. From streamlining recruitment and training processes to refining the daily management of payroll and benefits, HR automation empowers HR teams to manage workforces with enriched efficiency. 

Time and attendance tracking

Manual time and attendance tracking are tediously inefficient and difficult to execute consistently. Yet, they’re a necessary part of running a productive business. This is why time and attendance management is one of the core processes enlisted in HR automation strategies. Automated time and attendance tracking systems log in-work activities, such as system log-ins/log-outs, break times, hours worked, etc. They also log vacations, sick days, and paid time off.  As for the benefits—there’s plenty to choose from.  Time and attendance automation improves payroll accuracy, saves labour costs, mitigates the risk of time theft, and ensures compliance with employment laws and regulations. It also frees HR managers from manual scheduling, giving them a huge productivity boost.

Performance management

Performance management is another area where applying HR automation can drive significant business growth.  To maintain high-level performance, you need to collect employee performance data to ensure that you're meeting targets and producing high-quality work. But this is almost impossible to do via manual observation alone. HR automation technologies collect individual and team performance metrics and KPIs to determine performance levels and track progress in real-time. This increased, immediate transparency allows HR to make better employee management decisions. For example, poor performance may highlight the need for better employee training in a certain area. Or, it could illuminate ineffective delegation on the part of managers. Whatever the case, HR automation facilitates swift actionability that limits the negative impact of poor performance and ensures that improvements are focused in the right direction.

Automation: The future of HR

In the years to come, all of the key HR functions and activities that can be automated will be. But far from reducing jobs, HR automation will empower teams to perform in their roles better than they've been able to before. No more hunting for lost paperwork, rushing to rectify manual errors or waiting in frustration for data from other teams. HR can efficiently manage documents, review employee performance, maintain strict compliance, and much more through centralized and streamlined systems. Also, with more time for strategic and people-centred activities, HR can channel their productivity into engaging, value-based tasks that drive large-scale improvements.  It’s not just large businesses that should be reaping the benefits of HR automation—SMEs should be paying attention, too.
Article updated on: 14 August 2023
Talent Garden
Written by
Talent Garden, Digital Skills Academy

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