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Watch Out! These 4 HR Tool Mistakes Will Cost You. Many small business leaders continue to face major issues when choosing their HR tools. And the result is often costly.

By Heather R. Huhman Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.


When you're a small business, choosing HR tools is a more demanding and difficult task than it is for a huge corporation, which can draw upon dedicated, more expensive, resources. This is the exact reason why Isaac Oates, CEO and founder of Justworks, started his platform, which automates payroll, benefits and compliance.

Related: The Pursuit Of Talent: Six HR Tools And Technologies Every Business Needs

"Small businesses are the companies that need our help the most," Oates said of his New York-based company. "They aren't operating at scale; they don't have dedicated resources the way that huge corporations do; and they benefit the most from pooled resources."

Matthew Korn, HR manager for North America at UNOde50, echoed that thought. Korn, also based in New York, said he is no stranger to the difficulty of finding the pooled resources Oates describes.

"We were challenged to find a way to connect the system with the human capital management [HCM] solutions from ADP that we had already been using," Korn said by email. "Thanks to the integration of our hiring and onboarding processes, we could fluidly implement an employee's information across systems, reducing the cost and time of investments in onboarding."

Unfortunately, many small business leaders continue to face major issues when choosing their HR tools. And the result is often costly mistakes. Here are four of those mistakes leaders can't afford to make when they're choosing HR tools:

1. Choosing a tool before recognizing the challenges

Technology is constantly evolving, so company leaders face the challenge of testing countless HR tools. However, scanning through each tool before they really know what challenges that tool presents results in wasted time and money.

Related: The Google Tool That Helps You Make Better HR Decisions

"In some cases, HR professionals may not be aware of exactly what solution will fit their business needs," Korn said. "App stores, like ADP Marketplace, allow you to start your search based on the needs of the organization. Because stores have access to a wide array of solutions, search results give users the ability to assess the best technology fit for [their] company's specific needs."

Determining which HR need is primary -- payroll, benefit, compliance or general help -- has become easier for human resources managers. However, they still need to dive deeper into their HR needs before deciding on the right tool.

If this is your own issue as an HR manager, discuss with your team members what would make their jobs easier, what systems the new tool needs to work with and whether one tool that provides multiple services would be ideal.

2. Lowering your security expectations.

Business, employee and client information is sacred -- nothing is worth jeopardizing the cyber security of these systems. That's why Alan Zucker, founding principal of Project Management Essentials LLC, a project-management company in Arlington, Va., suggests thoroughly vetting vendor information security protocols before choosing an HR tool.

"If you are going with a cloud-based or SaaS solution, make sure the vendor is storing your personnel data in an environment that meets your firm's data security standards," Zucker suggested via email. "Most HR systems contain non-public, personal information, which can be something as basic as a name and address or phone number. If this data is lost or compromised, there may be significant ramifications."

The message here: Be slow and thorough when choosing HR tools. Make sure to fully understand these tools' security systems, their reviews and the speed with which their manufacturers' troubleshooting department responds.

If a security breach does happen, will the tool's tech team immediately be there to handle the situation as if it were their own? Tools that are priced inexpensively -- but keep leaders up at night worrying about security for team members' and clients' information -- are not worth the cheaper cost of investment.

3. Dividing HR information across tools and teams.

Small businesses are made up of team members who remain one united front. This means that important tasks are being split up and shared across co-workers and departments. While just such teamwork is crucial for success, this dividing of HR responsibilities can result in miscommunication and even lost information.

Mollie Delp, HR specialist at Workshop Digital, a digital marketing company in Richmond, Va., has a story to tell along these lines. Before she stepped into her role, Delp said, Workshop Digital's HR department was fractured across its multiple team members.

"It was an absolute mess, with little oversight into inefficiencies and inaccurate information," Delp told me in an email. "I highlighted the processes that were the most manual, and by far the most unorganized, and therefore most likely to have mistakes."

After pinpointing these pain points, Delp said, she searched for a system that gave her the biggest bang for her buck and wouldn't spread her work across multiple systems. "After doing some searches on Google and using GetApp to compare products, we whittled down our selection to the tool we use now," she wrote.

That tool? BambooHR. "With this tool, I was able to eliminate over 17 spreadsheets where data and information were previously manually tracked."

The takeaway: Decide which current HR systems are most inefficient. Assess who takes care of specific tasks. How are these people getting information across to other departments? Then search for a tool that takes all of these tasks and puts them in one place.

That way, no matter who is handling HR's most critical jobs, all the information is kept in one easy-to-find location.

4. Choosing tools that won't grow with the company.

Whether a company's goal is to grow into a global enterprise or simply gain 10 new employees in two years, its HR tools need to grow with it. Spending time, money and training on a tool the company will outgrow in a few short years will only bring leaders back to square one.

Before helping her team pick out a tool, Annette Gobrogge, director of human resources at travel insurance company Seven Corners, located in Carmel, Indiana, assessed her company's current situation and its rapid growth.

"In doing so, we settled on several features that were key to our selection process," Gobrogge told me. "These included: the ability to easily generate effective reports, a one-stop shop and storehouse for both HR and payroll activities, user friendliness and cost effectiveness.

"We found all of these with Namely."

Related: 3 Tools That Can Take the Headaches Out of Hiring and HR

With the reduction in steps that's resulted, Seven Corners can now process payroll faster and grow its expanding business as much as it wants.

Heather R. Huhman

Career and Workplace Expert; Founder and President, Come Recommended

Waldorf, Md.-based Heather R. Huhman is a career expert, experienced hiring manager and president of Come Recommended, the PR solution for job search and HR tech companies. She writes about issues impacting the modern workplace.

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