Is there too much tech in HR? New as it is, the Software-as-a-Service (SaaS) model is already a game-changer in the Human Resources field. The upsides seem clear: for small companies with limited time and resources, SaaS HR can streamline processes such as onboarding, time-off tracking, managing benefits and insurance, and compliance. Some such automated services are offered free of charge, earning their revenues as go-betweens for insurance companies. If you’re getting something for nothing, it’s hard to argue with the price.
Too Much Tech In HR Managment
However Human Resources isn’t a black box. Humans aren’t algorithms, and the seemingly “free” automation sometimes isn’t free. What happens when you need human intervention? Who do you talk to when you have a compliance issue? All of a sudden what was supposed to be“free” can become very costly to your organization. Managing compliance alone can take a significant amount of time. And the free services don’t guarantee compliance. If essential compliance questions are left to a machine, there is too much tech in HR.
Even small companies need to ask themselves, what’s the goal of HR—are you treating these tasks as administrative time-drains to be outsourced, or as opportunities to be used as you build your company? Saving overhead makes sense, surely, but if the SaaS provider is new and under-resourced themselves, and if their gears don’t mesh with yours, then you can find out how costly a false economy can be.
Some of the friction reported by users of new SaaS HR include:
- implementation and sign-up troubles
- miscommunication with insurance providers resulting in lost time
- compromised coverage
- inflexible plan options and extra fees
and perhaps most costly,
- morale problems resulting from the uncertainties when such issues aren’t handled promptly.
It’s predictably ironic to experience disruptive HR problems in dealing with a company that’s disrupting traditional HR. The good news about SaaS is that it’s part of the future of business, but as even its supporters admit, it’s not free.
Optimizing HR Resources
The key idea isn’t minimizing your HR operations, it’s optimizing them. Particularly for smaller companies, it’s critical to treat employees as valued and vital. You can’t afford to replace and train people the way a Fortune 500 multinational can. If you’re growing, you’re building a culture and a reputation, so finding and keeping quality people is a key to achieving every one of your goals. When you and they need to resolve a question that directly affects their lives and their finances, it directly affects your company. If your people are being asked to invest themselves in your growth, they need to see that you’re invested in theirs.
The most insightful critics of commoditized HR services for small companies question the cost in terms of company culture. That’s hard to reduce to numbers, but so are morale and teamwork and mutual support, and those unquantifiable factors can spell success or failure for small companies. Good cultures are easy to spot: people feel engaged, valued, and rewarded. Even easier are the bad ones: people can’t wait to find another job.
Automated Human Resources doesn’t necessarily mitigate the pressures that your business experiences:
- 2000% increase in employment litigation, since 1995 (US SBA)
- 60% to 80% of an employer’s time is spent on non-productive administration (Forrester Research, Inc.)
- More than 40,000 pages of federal employment regulations plus state and local regulations (US SBA)
- The median jury award for employment cases in 2005 – $276,711.00 (ABA)
- Average Attorney’s fees for cases that settle before trial – $95,000.00 (ABA)
- # of harassment and intimidation cases against small companies filed with EEOC in 2006 – 8,650
An alternative to SaaS HR is the Professional Employment Organization (PEO), which delivers a partnership model, helping small businesses manage HR administration on a day-to-day basis and co-manage HR risk. Clients retain control over their workforce but limit their liabilities.
The Human in Human Resources
Small company owners and managers can make HR more than just a budget item–it needs to be an asset for the whole bottom line. The “free” solution might not be the optimal one for your company. The help of HR specialists who understand the needs of small companies like yours can be a cost-effective investment and the optimal solution you need.
Total HR is a premiere regional Southern California HR outsourcing company. We are the answer to the too much tech in HR problem. We provide big company benefits with boutique service. Our goal is to help businesses succeed with an HR function that enables growth and is managed effectively and efficiently. You focus on what you know best, and we focus on what we know best. Our high-touch approach has resulted in double-digit growth year after year and a 95% client retention rate.