HR automation for SMEs
hr-in-small-company
We are often asked these questions from SME: Can HR automation help us? What are our needs in this area? What will be some of the challenges we will face during HR automation? This article tries to address these questions.


What is an SME?
There are various criteria to define an SME and these may vary across geographies and verticals. In the context of this article, any company that meets one or more of the following points may benefit from the thoughts presented hereafter.

  1. Your employee strength (number of computer users) is less than 100.
  2. Annual turnover is less than USD 5 million.
  3. HR department does not exist or deals only with personnel administration.
  4. You are spread out across multiple locations.
  5. Your management wants the managers to take quick data based decisions.
  6. Your compliance and statutory requirements continue to change & evolve and it is extremely important to be on top of this.
  7. You aim at speedy growth of your business.

Types of SMEs: We can further segment the SMEs into two distinct categories since their HR automation needs may be different.

  1. Category A: Companies in this category have a large percentage of white collar employees who are used to working on computers and prefer availability of all information on a click of the mouse. These may be primarily in domains such as consultancy, web or internet, banking, finance, insurance, technology, education and similar companies.
  2. Category B: These companies have a larger population of blue collared employees, managed by a limited number of managers or supervisors. While the entire population may have computer skills, these may not be needed as a part of their job requirements. Such businesses include small scale manufacturing sector, retail outlets, construction or infrastructure and service providers in the travel, hospitality, maintenance and distribution business.

Requirement of HR automation:
In areas of HR Automation, both categories of companies discussed above have some common requirements and some specific ones applicable to one category only. These are tabulated below:

Area Applicable to both Specific to Category A Specific to Category B
Time and attendance
  • Accurate record of leave of all employees
  • Credit, debit, encashment of leave
  • Approval & regularization process at employee level
  • Attendance interface with bio-metric devices
  • Calculation of overtime and undertime
  • Shift management
  • Regularization at supervisor level
Employee database (HRIS)
  • Maintenance of employee records
  • Capture of statutory documents
  • Reminders on key events
  • Interactive viewing & update of personal data by the employees.
  • Capture of experience, job history, qualifications, skills, competencies
  • Mass upload of employee data
  • Mass update of employee data
  • Strong upload/download capabilities.
Payroll & Statutory compliance
  • Automated payroll processing
  • Integration between time, attendance and payroll
  • Availability of online payslips
  • Capabilities to download reports for government filing
  • Integration with financial systems or ledgers.
  • Management of complex salary structures
  • Perquisites/garnishments and benefit based deductions
  • Capabilities to view tax liabilities, investments and deductions and self help features
  • Integration of expenses, variable pay with payroll processing.
  • Capability to process salaries for different periods (daily, weekly, bi-weekly, monthly)
  • Handling various payment calculation methods (commissions, hours worked, piece rate)
  • Integration of loans and salary day advances
  • Quick processing of Full and Final.
Employee Self Services
  • To be able to quickly and easily view data
  • To manage queries through a self-help mechanism
  • View company policies online
  • Employee Engagement
  • Communication and self-help
  • Availability of time & expense, investment declarations, data updates,
  • Benefits enrolment due to life-events
  • Request management (such as letters, experience certificates, dependents details)
Manager Services
  • View employee availability
  • Understand trends
  • Manage discipline
  • Recommend promotions, transfers, increments, rewards
  • View changes in employee performance
  • Work scheduling
  • Reports on productivity, attendance
Performance Appraisal
  • Identify top performers and non-performers.
  • Manage salary increments.
  • Identify training needs
  • Develop competency and skill banks
  • Get feedback from multiple employees (360)
  • Complex workflow management with employee acceptance
  • Simple supervisor driven appraisals that take feedback on teamwork, discipline, adherence to company policies/ practices.
Goal setting & Tracking
  • Transparency in performance measurement
  • Alignment
  • Tracking achievements
  • Periodic Counseling
Not needed
Training Management
  • Training recordkeeping.
  • Planning tool
  • Skill development
  • Training budget management
  • Statutory requirement (safety, compliance etc.)
Organization Chart (Organogram)
  • Budgeting
  • Manpower planning
  • Career growth and transfer planning
  • Cost optimization

Expectations of SME segment:
Since most SMEs do not have significant experience in implementation of enterprise software, they expect support during the pre-sales, sales and implementation processes. In addition, their expectations also include:

  • A user-friendly software designed for ease of operation. The training and implementation costs should be negligible.
  • Ease of configuration without any intervention of technology teams.
  • Capability of the software to map largely to the HR processes of the company.
  • Real time visibility of data through reports and dashboards to enable quick analysis.
  • Affordable budgets, yet a complete solution. Small companies would mostly accept a less than optimum solution, if its meets most of their needs at low budgets.
  • No incremental investments in hardware or expensive software.
  • Easy payment options.
  • Secure data and role based access.
  • Capabilities to add or remove features as needs change with experience of using automated HR.

Conclusion: Sooner or later each small company aims to graduate to a mid size or large company. The process will be easier if they are using a scalable HR platform and have well defined HR processes.