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Avoid early HR mistakes: how an HRIS can guide small businesses

Offering legal compliance, efficient employee lifecycle management, and scalability, a plug-and-play HRIS transforms potential early HR pitfalls into growth opportunities. Ideal for businesses with up to 20 employees, it's a strategic asset for effective, cost-efficient operations.

Keith MacKenzie
Keith MacKenzie

Passionate about human resources, employment, and business management, and an expert at sharing that expertise.

In small businesses, especially those in their nascent stages, navigating the complex world of human resources can be as daunting as overall management of the business.

If you’re one of those American small business owners propelled into action after that inspired moment of scribbling down their brilliant idea on a napkin, you may already be familiar with the “oh s**t” feeling of being unprepared for the multifaceted challenges that come your way.

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After all, the Small Business Administration says about 21% of businesses fail in their first year, and just one-third of all small businesses survive their second year.

Lack of money and competition are cited as major factors, but so is poor management.

That can include HR management. Lacking experience in this area, you may inadvertently find yourself embroiled in early HR mistakes ranging from payroll errors to labor law non-compliance. Both can trip up the upward trajectory of your company.

There are also critical processes such as employee onboarding, payroll management, and benefits administration which can be handled in a makeshift manner, without the necessary guardrails or guidance. More trip-ups and more negative impact at a crucial stage of growth.

Plus, you have to think about talent acquisition strategy, employee engagement and retention, and other things that you may be overlooking because you’re fixated on immediate operational needs.

These mistakes can become costly over time. Can’t afford to do that now, can you? No, you can’t. You definitely don’t want to become part of that 21% statistic above.

So how do you avoid these mistakes?

In the early stages, you’re likely to not have a dedicated HR department or even an experienced HR professional on board. This absence of expertise leads to a reliance on ad-hoc methods and gut feeling rather than established HR practices – leading to what we’ve described above.

The good news is that this is entirely avoidable if you could have some sort of system in place.

That’s where a basic HRIS can come in quite useful. An acronym for Human Resources Information System, it’s a software that can serve as your beacon around all these potential hotspots.

It’s like having your very own digital HR manager helping you manage employees and their information within legal guardrails – even without formal HR training.

For businesses with as few as 20 employees, an HRIS can be a game-changer, transforming potential early mistakes into opportunities for growth and strategic HR management.

How can an HRIS guide your small business?

Wait. How can it be a game-changer for your business? An HRIS can guide your business to:

1. Optimize management of core HR tasks

For a small US business with up to 20 employees, implementing even a basic, plug-and-play HRIS can significantly streamline essential HR functions.

This includes automating payroll, tracking employee hours, and managing leaves, freeing up valuable time that owners and managers can redirect towards business growth and development.

2. Assure first-time compliance

Small businesses new to HRIS will find these systems invaluable for navigating the complexities of US labor laws and regulations.

A basic HRIS ensures that even those without prior HR experience can maintain compliance, reducing the risk of legal complications and fines related to HR practices.

Related: Federal & state employment laws – and how an HRIS helps

3. Centralize employee data management

For small businesses without a previous HRIS, transitioning to a system that centralizes all HR data – from personal employee information to performance records – can be transformative.

It simplifies data access and management, enhancing the decision-making process with readily available, organized information.

4. Simplify employee lifecycle management

A basic HRIS provides small businesses tools to manage the entire employee lifecycle more effectively.

From the recruitment and onboarding of new hires to conducting performance reviews, these systems help in creating a more structured and engaging employee experience, which is crucial for retention and overall workplace satisfaction.

5. Grow and scale without breaking budgets

Even the most straightforward HRIS solutions offer scalability, which is essential for small businesses planning for future growth.

These systems can adapt to increasing employee numbers and evolving business needs without significant additional investments, making them a cost-effective solution for small businesses looking to expand their operations while maintaining efficient HR management.

Let the HRIS be your guide

For small businesses, an HRIS is more than just a tool for managing employee data; it’s a strategic asset that can prevent early HR mistakes and foster growth.

The benefits of an HRIS for your small business are pretty clear – it guides your operations so that you can maximize efficiency and effectiveness in the rudimentary operational tasks, and minimize risks and costs associated with the same.

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