Arguably, the most successful entrepreneurs create great businesses based on their passion. This can often mean that as the business takes off and more employees are added, it’s hard to manage and scale the back-end operations, specifically HR. For example, consider all the state and federal employee regulations that must be followed. Not every small business owner is fully versed in the Family and Medical Leave Act (FMLA) or the Fair Labor Standards Act for minimum wage and overtime pay. Since HR is estimated to take up 25-35 percent of a small business owner’s time, many don’t have the time to master HR and legal policies. And the fallout of violating those regulations can put the business at risk. This is one of the many reasons behind the rise of employee self-service (ESS) portals.
Small businesses that are looking to grow and add employees can’t afford to overlook state, federal and international employee regulations. Nor can they expect to grow without having their HR bases covered. Yet hiring a FTE to lead HR is often cost prohibitive and isn’t always necessary. This is where ESS portals are an ideal alternative.
Once viewed as a way for employees to update their information or check how much vacation time they have left for the year, ESS portals have evolved. For many businesses, they’ve become a central hub for employees to gain skills through employee training, for managers to streamline the onboarding process, and business leaders to disseminate critical organizational information. Since these scenarios might not apply to every business, ESS portals are built to scale based on the needs of the company and its employees.
While an ESS can’t necessarily replace an HR employee, it can streamline and automate a lot of HR functions, especially for a small business. Specifically, it can provide control and transparency over critical HR functions including payroll, benefits, insurance, vacation time, etc. For employees, an ESS is great because it reduces reliance on HR to address one-off inquiries, therefore boosting productivity for the entire company. However, before investing in an ESS solution, you have to first run a cost/benefit analysis of outsourcing HR.
Cost/benefit Analysis of Outsourcing HR
Depending on the focus of the small business and its big picture goals, run a cost/benefit analysis of outsourcing HR versus investing in an ESS. These are the key factors to consider in that analysis.
- Short- and long-term company growth plans and hiring requirements: Do you anticipate national or international expansion?
- Hiring requirements: Are your future employees highly skilled and require certifications or testing before they are presented with a job offer?
- Types of employees: Are they hourly, salary or a mix of both?
- Type of business: Are you in an industry that’s heavily regulated?
Along with mapping out your company’s employment goals, take a closer look at which HR functions can be automated without compromising employee morale or your ability to recruit strong candidates.
The solution might be a full-time HR person, a full-time HR contractor for a specific period of time, a part-time employee, or an ESS. Alternatively, it could be a hybrid solution that includes an ESS along with a live HR person.
Evaluating ESS Portals for Small Businesses
If the answers to the cost/benefit analysis lead to an ESS, you’re already on your way to determining the critical requirements for it. Additionally, here are three key areas to consider: compliance, security and support.
Compliance: An ESS can help put processes in place to ensure compliance and that employees and managers are acting in accordance with state and federal laws. Depending on your goals, inquire whether the ESS can be extended to support the business as it grows internationally and/or globally.
Security: Everybody who works with applications and tools in the cloud is concerned about security, especially around personal and financial HR information. When it comes to an ESS, make sure that it offers access control and provides managers with a unique set of information that can be easily fine-tuned by your existing staff. For example, providing secure access to salary information or payroll data and making immediate adjustments without requiring hiring IT.
Support: The second most asked question after security is support. Support options will vary by the business requirements and budget, but at a minimum, it should offer access to experienced HR experts that are available online or by phone. This is critical if the small business owner doesn’t have plans to hire a full-time HR professional.
Given the ease of use and ability to streamline HR while reducing and/or eliminating overhead, ESS portals are a great way for a small business to look and act big without having to invest heavily in HR or a new technology solution that has to be implemented and managed.
Small business owners that are weighing the pros and cons of outsourcing HR are finding the latest iteration of ESS portals to be a viable option. Depending on the needs of the small business and the demands of employees, they can be a cost-effective way to prudently grow the business.
Brian Boffa is CEO of Consolidated Human Resources (CHR), a leader in helping businesses reduce the complexity and risks associated with managing all elements of a company’s payroll, 401K, healthcare, compliance and business insurance needs. For more than 25 years, CHR has been providing workforce management solutions, integrating the latest tools and technologies to support today’s dynamic workforce.