The 5 disadvantages of old HR software & systems we’ll be covering:
If you're reading this post, chances are you’re frustrated with your existing HR system. Processes becoming unmanageable? Systems don’t integrate? Too much time being spent on manual tasks? It’s difficult to disagree - the disadvantages of not using HR software are too great to ignore.
But you’re not sure whether to:
- Ride the wave and hope for the best (and continue to live in perpetual frustration)
- Take action before your business begins to suffer
Sadly, too many business owners take the first option, and before they know it, that ‘wave’ becomes a tsunami… and it won’t be long before staff start turning on their Indeed notifications…
We don’t want to scare you here at People HR, but when effective HR systems aren’t in place, who suffers most? Your employees. And the SMB space can be volatile when staff turnover becomes an issue.
With that in mind, this article provides an honest assessment of the disadvantages of old HR software.
Keep on reading...
1. A disorganised HR system
Allow me to paint a picture: endless Excel files that have no tail or head, constantly being late to the race in the fight for talent on the job market, employees not getting paid on time…
These are just some of the disadvantages of old HR software (and indeed if you don’t have HR software at all).
And, this is what happens when businesses don’t utilise their people processes and data effectively: the epitome of disorganisation. And it’s all-too-common for SMBs who are using a manual or outdated Human Resources Information System (HRIS).
One of the biggest advantages of HR software is the level of organisation it can provide to your business - most notably a centralising employee database. This means you can kiss goodbye to those spreadsheets and gain full control of important (and often sensitive) information.
Modern HR software doesn’t just mean increased control of your database, though. It also frees staff up to focus on wider business issues.
And when staff are taking more time to focus on business growth and skilled work -rather than remedial admin tasks – you can expect happier employees and a more profitable business in the long-run.
2. Additional office costs
When discussing the advantages and disadvantages of HR software, cost focuses heavily on the conversation. HR software does come with a price tag – there’s no two ways about it. And you may not be ready to implement new HR software if business funds can’t facilitate this investment.
But it’s also worth considering the office costs you’re currently making; in particular, the cost of time. Manual processes waste time that could have been used to grow your business.
More tangible spends include cumbersome filing systems as well as the cost of human error. For instance, a payroll processing error can become very expensive and can even carry significant fines.
Digitising your entire HR system – and that includes adding mobile app functionality for increased usability – means you’re reducing the need for printing. Not only does this mean less paperwork, but you’re also reducing your carbon footprint – which is something every business should be concerned about.
Having your HR processing within the cloud can also save a lot of money. Instead of purchasing expensive hardware that will need regularly upgrading, HR software can be implemented based on your storage and data needs at the time of implementation, meaning you won’t be spending more than you need to. And when your business grows, so too should your HR system.
Key takeaway: We strongly advise you selecting HR software that has ‘scalability’ as one of its key features. You want software that’ll grow with your business over time. Modular HR systems can be adapted to your goals and needs as time goes on.
3. Lack of employee engagement
An outdated HR system – or no HR software at all – can lead you to unintentionally neglect your employees, as you’re unlikely to have reminders in place to carry out performance reviews. This can result in a high employee turnover and a lack of progression.
At a time when employee engagement and wellness is finally taking centre stage in the world of business, is your company doing its best to meet the needs of its employees?
Here are some stats, taken from TheCircularBoard, to consider:
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- Companies that effectively turn feedback into action have an 80% employee engagement rate.
- Employees are 17% more engaged if they can participate in a regular feedback programme.
- 61% of the Gen Z population would feel less stressed about their financial situation if they are offered financial wellness benefits.
- A disengaged employee can cost a company anywhere from $3,400 to $10,000 a year in salary (that’s over £8,000)
Does your current HR process address things like employee engagement, feedback and rewards? The biggest sign of this is employee retention rate – and this is one of the many disadvantages of not using hr software.
So, let’s explore how HR software can help with a lack of employee engagement.
First and foremost, performance review software is one of the best features of a modern HR system. It can provide employees with meaningful and defined goals, feedback and performance reviews with ease, directly impacting employee growth – and therefore business grown.
Let’s take a look at other features of HR software that can support the wellbeing and engagement of your employees:
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- Communication – A modern HR system makes it easier to ensure everyone is kept in the loop. Most platforms these days offer a degree of self-service functionality, which provides greater autonomy.
- Recruitment & on-boarding - It’s not t just about engaging your existing employees; it should help you look after new talent, too. Effective on-boarding takes employees less time to settle into a role, which increases confidence and engagement.
- Learning and development – Most HR platforms come with a Learning Management System (LMS) to ensure every employee has a working development plan. It offers a formalised process for employee improvement, enabling the structured development of an individual’s training goals.
Learn more about: Performance review software.
4. Miscommunication issues
HR is responsible for a lot of communication within a business: training, wages, benefits, general company news...
But often, the bridge connecting employees with leadership is broken and messages don’t get passed down sufficiently. Miscommunication is one of the key disadvantages of old HR software.
If you’ve experienced issues involving sick days, holidays, or employees clocking in and out at the wrong time, you’ll know the impact a breakdown in communication can have to an SMB. At worst, it can cause you to fall behind on crucial projects.
According to Gallup, 74% of employees feel that they're missing out on company information and news, suggesting that miscommunication is an issue companies face, worldwide.
Whilst not all communication issues can be solved with HR software, it can provide useful tools that can aid in improving this core area. Things to look out for include:
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- Messaging tools – Many HRIS platforms include messaging options, allowing workers to communicate and collaborate using their own devices from wherever is convenient. Quite often, email threads get lost and not actioned in a timely manner. Instant messaging removes the formality of email and allows employees to get answers to their questions instantly.
- Group messaging – In addition to one-on-one communications, group messaging options can help with collaboration across teams. Company announcements can also be shared in this way.
- Self-service workflows – Employee self-service includes things like time-off requests and changes to personal information – all routine operations that, when done manually, can take up significant time and hassle.
- Time and tracking software – This enables businesses to keep timesheets accurate and easy to manage, giving your employees a simple way to clock in every day.
- Centralised employee records – Old HR systems often leave users feeling frustrated with the volume of files and paperwork, making it difficult to find necessary documents. A central hub provides instant access to files as and when needed.
5. Too many separate HR tools
Outdated software often consists of an amalgamation of different platforms that have built up over time. And more often than not, this isn’t intentional; rather, something that occurs as your business’ needs grow. But when these platforms don’t work together, data loss and failures can become commonplace – not to mention the impact on data accuracy, compliance and general efficiency.
If you have one platform for recruitment, another for talent management and another for benefits, then perhaps it’s time to simplify your HR process and centralise it under one global system? When researching HRIS systems, look out for the following integrations/functionalities:
HR software can solve the issue of a disjointed, clunky system through seamless integration and one centralised platform for the different HR tools and mobile apps.
And, as a result, the implementation of an integrated HR system can:
- Remove confusion – Employees want to interact with something that’s simple and easy to use. Different applications for various services will quickly create frustration and confusion for your people.
- Makes data more efficient and reliable – Collecting data from various sources and then analysing them can become a time-consuming process and one that will hinder productivity. HR software can bring up detailed reports across all HR functions in a matter of minutes.
- Make compliance easy – Keeping on top of compliance within business can be a stressful responsibility. HR software can automate the process of compliance, allowing you to schedule reminders when compliance forms are due, whilst alerting you in case there is a breach of guidelines and regulations.
- Increases payroll accuracy – If you’ve ever been paid late or inaccurately, you’ll know how frustrating it can be – especially with the cost of living increasing. Many people rely on their pay date in order to not fall behind with bills. Manual payroll also relies on the individual accounting for tax dedication, benefits, unpaid leaves, commissions and more. Integrated HR systems mean you don’t have to collect inputs from different systems, it will automatically calculate salary amount with accuracy and you can schedule timely payment directly into your employees’ bank account.
Next steps
Just one of these issues could be the root cause of myriad problems within your business, making your HR department inefficient and overwhelmed, especially if your HR software is outdated.
SMBs often focus too heavily on the bigger picture (i.e. growth, outperforming competition, world domination) whilst unintentionally failing to meet their employees’ needs. So if you’re scaling and found your head nodding at least once in this article, perhaps it’s time to address your HR functions before it’s too late.
Don’t forget – you can always opt for a free trial of People HR to see just how much HR software can help you. There’s no lock in contract, so you can cancel any time – if you feel it’s not right for your business.
