Exploring HR Automation Challenges in Small Companies

Hi,

Penetration of automation in HR is perhaps the lowest. Finance leads the pack through ERPs, sales, and service functions are also catching up with CRM. And yet, while there is no dearth of HR software, HR has not seen much by way of automation. Whatever automation exists is restricted either to the payroll processing or for other HR processes, in only very large organizations.

Why don't companies with less than 500 employees automate HR processes? Do share with everyone your views, especially if you are with such a company or have been exposed to one in the past.

Regards,
Sumeet

PS: I am deeply interested in understanding these barriers as I head a company that provides HR automation solutions and strongly suspect that people like us are missing some key user perspectives.

Dear Sumeet,

There are no constraints on automating "HR" processes; in fact, many companies do automate them. However, at the end of the day, "HR" is something personal and requires a "personal" touch as you are dealing with humans. That is why automation cannot be 100%.

Since you are in the business of 'automating,' I am sure you fully understand the extent of automation that has been implemented in HR! If you claim there is none, I am sorry, but you are not in sync with the market. You need to read more!

Regards,
SKP

Hi SKP,

Appreciate your perspective. For the record, I do not believe for a moment that HR automation is nil; my comment was relative. Also, I suppose employee data being maintained in XL files also counts as automation.

Your point of HR being a touch-and-feel thing is valid but only up to a point. As humans, there are times we want to talk to a person, and at other times, we prefer the privacy and efficiency of a machine. Just as a customer would like to check balance and withdraw cash from an ATM but would like to discuss with a person before deciding on, say, taking a loan. Similarly, not all work HR does necessarily requires a human interface. I would like to imagine that HR, freed up from the mundane processing, would actually be able to spend more quality time with employees.

I would be keen to know what you feel.

Regards,
Sumeet

Dear Sumeet,

Hi again, well now that we are interacting, I am sure we both understand the extent of automation. It would be better if you can air out your concern areas. To my understanding, all good companies have their own portals that handle most of the 'hygiene' factors of HR. For smaller companies, it is a decision between the cost versus having an HR person who can handle it. I am sure I have not addressed everything, but if I know what you are referring to, it would give focus to our discussion.

Thanks and Regards,
SKP

Dear SKP,

My focus was on smaller companies (less than 500 employees). The impression I get talking to HR people in such companies is that beyond 150 or so, it gets difficult even for the HR person (typically they would have one or two of them) to manage the information, so the HR person vs automation trade-off tends to weaken after a point. Among other reasons I have heard are the unwillingness of management to spend money on acquiring such systems and the lack of a systematic approach to HR, which is almost a prerequisite to automation.

I am hoping to discover more reasons why automation does not happen in such companies. For instance, is self-service not seen by employees as a basic "hygiene" factor or how do these organizations manage MIS. Unfortunately, there is very little formal research on the subject (at least I have not come across any).

Regards, Sumeet

Dear Smit,

I absolutely agree with you that companies with fewer than 500 employees are reluctant to invest in HR automation.

Let's call a spade a spade; in all midsize companies, HR still remains a support function and is not considered a strategic business function. Assuming these SMEs to be in expansion mode, the focus is more on maximizing revenues and gaining market share; however, beyond a point, all such organizations have to embrace automation to cut down excessive overheads incurred through service departments.

On the contrary, in larger organizations, automation is the only path to manage resources and track apportionment of costs, so in very few large companies, you would find the processes still being done manually.

In the coming years, we will surely see a change in this trend; we all have started to realize that to thrust efficient growth of the company, strategic HR processes need to be in place. But from the organization's point of view, automating processes will only be justified when the return on investment is more than the investment made on manpower at equivalent cost value.

I would appreciate it if you could pitch in your views as well!

Regards,

Partha.

Dear SKP,

It's funny how we are having this conversation in the wide open space of this forum and no one else is pitching in, though I am sure some are reading us :) Come on, guys, sharing only grows what you know.

The point about ROI through the replacement of manpower is interesting but tends to undervalue the benefits. But that could well be the stark reality. I guess the challenge here is to really calculate how this cost is saved. Maybe hiring a second or third member in the HR team can be avoided through bringing in automation, but can it really replace the first?

I haven't heard this being articulated much, but I suspect that at some level the complexity of acquiring and implementing a technology-based solution could perhaps be an inhibiting factor. HR software is not exactly a "convenient" thing to buy or to implement when compared to, say, creating a spreadsheet of data or even posting a job on a job site. It is still a big step to take with all the concomitant risks and apprehensions about cost, functionality, technology, and implementation support.

Regards,

Partha

Hi friends,

It is really a very interesting subject for discussion and debate. I request all HR professionals to join the discussion and share their opinions, which may lead to opportunities for conducting valuable research, including case studies on this topic.

Please email your points on the above discussion. It is truly a topic worth discussing.

Have a wonderful day.

Srinivaskvmk