HR Systems: Key Differences Between Small and Large Firms

Finding out how HR systems differ in small and large companies can help you decide what features you need - and what you don't - in your next HR software

Does your workplace regularly experience payroll errors? Struggling to find the data you need, or overwhelmed with too many tasks to focus on payroll-related duties? Then it's time to consider a new payroll system. A modern, efficient payroll system can streamline processes, reduce errors, and free up valuable time, allowing you to focus on what truly matters: supporting your team and driving business success.

Whether you have just a few employees or several thousand, there are differences and similarities between companies. However, your online HR system shouldn't be a one-size-fits-all solution, because depending on your goals, there are different tasks and goals you want to achieve: the key difference between your brand and others. Here's how HR systems differ in small and large companies.

HR system requirements and features in small companies (up to 200 employees)

Of the 13 case studies on system implementation in small and medium-sized companies (SMEs) that had just implemented HR software, nine of them didn't have a system at all. So if you've just started a business, or have been running a business with just a few employees for a while, you're not the only one in this situation.

And if there are only a handful of you in a company, your de facto HR manager may have another role (or two) to fulfill. While this person may also perform ownership or management duties in addition to HR functions, they can only stay that way for so long. As a general rule, once you have 10 or more employees—or if the person in charge of HR administration is making mistakes and taking up so much time that their attention is being diverted from strategic-level work—you should think about delegating these core administrative tasks to an HR specialist.

If your company employs up to 200 people, there are probably few people dedicated exclusively to HR tasks (if any). And because of the small number of employees, you'll have a set of HR goals that are different from those of larger companies. Almost all of these goals are long-term, so they should be part of your business plans for the next three to five years.

One of these goals will be improving employee retention. Not only does turnover increase costs, it also negatively impacts productivity. To counteract this, you need to create an environment that is positive and motivating for your most valuable employees - which in turn will help improve retention.

This company culture will be embedded in your company's core values. If you haven't already established them, they should be included in your mission statement and relate to employee satisfaction (as well as customer satisfaction). So it's these goals that you'll want to achieve to cultivate this positive culture.

Your evolving industry - no matter what it is - requires an organization that is flexible and dynamic when it comes to change. Develop a process that will prepare you for future developments. With this change management plan, you can easily resolve any problems that arise from new situations.

So how can your HR system support your small business in these initiatives?

First, implementing an HR system allows you to centralize your employee data and make it easier for your employees to access their own information (e.g. salary, available benefits). An HR system will keep this data confidential and meet compliance regulations, regardless of whether it is an off-the-shelf HR software or a configurable solution.

You'll also get more time back. That's because some of your HR functions can be performed more quickly and easily: not just by your HR team (be it a small, dedicated group or a senior executive with other responsibilities), but also by your employees.

So if someone wants to check how many vacation days they have left for the year, they can access the HR system themselves to find that information. Previously, they might have to submit a request and wait for someone to have a chance to go through the details - which doesn't exactly make for a great digital employee experience.

What can your HR team do with all that extra time? Focus on the other initiatives for your small business, like employee engagement and retention, company culture, and change management programs.

HR system requirements and functions in mid-sized organizations (201-1,000 employees)

You're now part of an HR team in a growing company. You're no longer considered a small business, but you're not considered a large employer in your industry either (at least not yet). And as the company grows, the demands on HR will change too.

The old ways you've been working - such as paper printouts of employee information - will become unmanageable once you reach a certain number of employees. If you haven't already, implementing an HR system in your mid-sized business will become a priority.

Even if you have more people in your HR department, you can still overcome some of the challenges that small businesses face. First of all, you don't have access to the same resources as large companies: you have to make smart choices when it comes to tools and strategies that fit your budget.

And that impacts your responsibilities. Or, more precisely, the responsibilities of your HR staff. Since there are fewer people on the team compared to larger companies, you won't focus on a single area of ​​HR, but will take on a mix of tasks. However, this type of job is suitable for those who like some variety in their job.

However, your company should be careful not to overstretch its HR resources. You need to stay focused on strategy and bring experienced HR professionals onto your team. Investing in your HR team (and the software and tools they use) is an investment in your entire workforce, as the flexibility of this department means it can help your company achieve its business goals - many of which depend on having the right people with the right skills and experience working in the right roles.

At this stage of your company's growth, your main HR priorities may also include:

• Aligning employee activities with the company's strategies and goals
• Identifying the L&D needs of each employee so they have the right skills for their role, advance their career, stay engaged at work and ultimately stay with the company longer
• Managing performance
• Fostering effective two-way communication between managers and their direct reports
• Finding the most talented and valuable employees and including them in your future plans
• Ensuring compliance with regulatory requirements

When choosing an HR system for your mid-sized company, cost and basic functionality will be just as important to you as they were before. But there are more complex considerations too.

Take performance management, for example. It contributes to overall company growth and influences decisions about promotions and salary increases. But that's not all: As your company grows, each of your employees needs to know what their responsibilities are. Your HR system will make it easier for you to identify your employees' skills - and their shortcomings - to effectively plan training and development so you can upskill and reskill your employees. Therefore, you should choose an HR system that has built-in performance tools and can integrate with your chosen learning management system to give you a 360-degree view of your employees and their performance.

And as your business grows, you'll store more data about a growing number of employees, so you'll want to pay more attention to data security. Pay attention to where the data is stored, what security processes your provider uses, and whether they meet the ISO 27001 information security standard. Also, ask if your HR system will help you comply with GDPR, as well as other compliance-related functions for your industry.

There's another consideration: the integration capabilities of HR systems. Human resource management solutions like IceHrm's can integrate with other third-party applications via an API, making it easy to create a holistic view of the data and add (or remove) tools from your HR tech stack as your needs evolve.

HR System Requirements and Features in Large Organizations and Enterprises (1,001+ Employees)

Despite similar goals in planning, hiring, and problem-solving, there are many differences between the HR department of a large company and one with just a few employees. There's the amount of resources available, of course, but also the different responsibilities of employees.

As there are more people working in HR in a large company, the workload (which can be significant and variable) can be shared between you - although you're more likely to specialise in one area of ​​HR - while it's easier to be mentored by more experienced colleagues.

If you find that you're better supported by bigger budgets, it also means there's more money available for technology investment - but you should still spend wisely on the HR systems you choose.

Recruitment is one of the areas where the differences between large and small companies are most apparent. While some small and medium-sized companies have automated some of the process (e.g. by using pre-employment screening platforms), larger companies are more likely to have multiple rounds of interviews, assessments and background/reference checks, as well as a higher volume of applications - meaning it's even more important to automate and streamline as much of your hiring process as possible.

It's unlikely that your company has grown to its current size without having HR software in place. However, it's likely that your existing HR system is no longer sufficient to support efficient workflows or the strategic planning now required of your team. That's because your company, which may have multiple offices in different countries, could have a variety of systems in place to store data. With no central source of data, it can be difficult to get an overall view of basic details like the number of full-time employees. Creating comprehensive, coherent HR technology is key to success here.

Choosing the right HR system is crucial for your company's growth and efficiency. For small businesses, simplicity and core functions are key, while mid-sized companies need robust performance management and integration capabilities. Large enterprises require advanced features for compliance, data security, and comprehensive HR tech integration. Solutions like IceHrm offer scalability and flexibility, ensuring your HR system evolves with your business.