Small businesses need their HRIS to perform differently to large businesses.

Most small businesses have employees who need to perform duties across departments, with no dedicated HR team on-hand. That’s why selecting the right HRIS is extremely important for small businesses.

An HRIS is here to make your small business run more smoothly.

But, what do small businesses search for when selecting HRIS? We look at

• How much small businesses pay for HRIS
• How many people use a small business HRIS
• The reasons why small businesses implement HRIS

We’ve analyzed our HRIS report data to share some insights into user numbers, reasons for implementing, and the cost of HRIS for a small business. 

Compared to the average percentage of users for HRIS, which is 4% across businesses of all sizes, small businesses have a significantly higher employee percentage actively engaging with their HRIS.

Users, here, are responsible for managing and maintaining the system and are usually members of the business’ HR department. Unlike in larger businesses, small businesses are more likely to have employees with a wide range of departmental responsibilities. This may mean that employees have to wear many hats, so to speak, and have HR duties spread across multiple employees.

Department managers may be administrative users for their reporting personnel, which may require them to manage and maintain their department’s HR records on the system.

Further, HR duties may be distributed on a task by task basis requiring access by multiple parties as HR duties can often be a bolt-on duty for small businesses.

Companies with 0-99 employees implement HRIS to:

• Increase efficiency (35.3%)

• Gain greater functionality (19.6%)

• Support growth (13.7%)

The driving factors causing small businesses to implement an HRIS were mostly due to increasing efficiency and gaining greater functionality. In fact, the focus on improving HR on a process-orientated level using technology amounted to over 50% of the objectives to be achieved from HRIS.

This suggests that small businesses are turning to HR technology to improve and streamline their processes, which is especially important in organizations where employee’s duties are spread across multiple departments. The emphasis on increasing efficiency shows businesses see their HR system as a worthwhile investment in terms of cost.

It’s also worth noting that supporting growth was the third most popular reason for small businesses to implement an HRIS. It’s positive that these businesses are growing at a rate that requires more HR process support.

The average budget for HRIS software is $6,125 per user over a five year period. For smaller businesses with 0-99 employees, this figure drops to $6,000 per user over a five year period. 

The difference in budget between small businesses and mid-sized businesses, with 100 to 499 employees, is marginal. This could indicate that small businesses' expectations of HR software are in line with expectations of larger companies, and show the value placed on the software. Similarly, businesses with 100 to 499 employees also cited improving efficiency and gaining greater functionality as two of their top objectives for implementing a system.

The close budget figures between these businesses should be seen as positive in line with small businesses goals for future growth, meaning it is unlikely to have a large impact on their HR software cost as functionality requirements will likely remain the same but at a higher scale. 

To read more insights about the HR software market, please visit our HRIS report.