I often see smaller companies keeping important employee information on an Excel spreadsheet.

Does your business store HR information this way?

For very small organizations with just a handful of employees, this way of doing things is often fine. But the problem is that Excel is a data repository that doesn’t allow you to do any reporting.

As an organization grows, particularly as it hits the 50-employee mark, it really needs an HR Information System (HRIS).

An HRIS isn’t just a data repository. It allows you to run reports and get meaningful data out of them, such as the following:

• Retention rates
• Up-to-date information on employee completion of required training, certifications and licenses
• Updates on where employees are in the onboarding process, including completion of background checks and drug testing

Growing organizations need more robust data at their hands—not only to operate, but also to make key business decisions.

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One of the challenges is that there are so many products on the market, some of which are DIY. Coincidentally, I just came across one of these products yesterday.

The organization advertised that for an extremely small fee, you could use its software to write your own handbook in just 5 minutes and upload any employee hiring test onto the software so prospective employees could take the test from anywhere.

There are two big challenges with that:

1. No software package can possibly write an effective compliance handbook in 5 minutes. Yet the company is marketing its product to small business owners who likely don’t know any better. Writing a handbook doesn’t have to take a lot of time, but laws are extremely different from state to state.

I see this and know exactly what the business owners who purchase it are thinking—this seems like an easy way to get into compliance. But that’s a dangerous road to go down.

2. On the hiring side, tests to vet prospective candidates must be validated by an outside source to ensure that they are nondiscriminatory. Simply having a test does not create compliance.

The moral of the story is this: there’s a lot of technology out there, and we need to use it. But organizations must be extremely smart in determining what they need and what’s going to fit their situation.

Smart business owners need to have an HR advisor who knows the ins and outs of the compliance world to help them determine the technology they need.

Despite the story I just shared, I’m a huge believer in technology. I use various HR technologies to serve my clients. But that was only after vetting a number of products to figure out what I could trust and what was going to give me the results I need for clients.

I started off with talking about HRIS, but there are also technologies out there for other important activities:

• Monitoring your training programs
• Administering your performance management process
• Developing processes and procedures
• Managing succession planning

Depending on your business needs, you may not need all of these, but they all play a role in effective management of people resources.

The best use of technology for businesses of all sizes is the ability to go as paperless as possible within the HR function.

HR generates a lot of paper. The more paper you have, the more you’re at risk of that paper getting into the hands of people who don’t need it or shouldn’t have it. By digitizing your documents with an online or cloud-based repository, you’re able to lock down security for HR paperwork much more easily.

I also really support the idea of using online software to automate HR processes. For example, say that it’s time for Jack’s annual performance review. With the right system, HR can set a reminder in the system to go directly to Jack’s supervisor, who will then take care of the necessary next steps and paperwork.

That’s the real power in using HR technology to automate processes. Automation frees HR to do the important work instead of getting bogged down with paperwork and inefficient processes.

I’m a big believer in having employees be self-sufficient, even in terms of simple things like benefit requests. With today’s remote workforce, it’s so much easier to give an employee a portal to log into and request vacation days electronically than to waste time and paper circulating the physical request through multiple supervisors.

The challenge for many businesses is that they see the value of automation, but they think they don’t have the money to actually do it.

I encourage you to look at what it’s costing you to not automate your processes. How much staff time is spent on chains of paperwork instead of customer service? That’s what will determine whether an investment in HR software is worth it. With very few exceptions, the ROI is always very clear.

Large corporations, by necessity, have these types of systems in place. I’d like to challenge small to midsize businesses to take a look at how they can leverage software to better manage their people so they can keep staff focused on quality service and products instead of paperwork flow.

Ed Krow is an HR strategist, speaker and author.  For more information, visit the Net at Work Employer Solutions website or contact us here.