What is human resource management system (HRMS)?

Luula Abdulkadir -

When you run a small business, there’s always something to do. In fact, a 2023 Gallup survey found that 39% of small business owners work over 60 hours a week. And although that sort of stretch can be required from time to time, working consistently at that level isn’t healthy or sustainable. So what’s the solution if you want to run a successful small business?

The old saying ‘work smarter, not harder’ has probably never been more true than when it’s applied in the context of small business. And perhaps the most essential of these tools is human resources management software (HRMS) – because automating as many tasks as you can when it comes to HR, makes more sense as a business so you can free up space in other areas. 

But exactly what is HR management software? And does it really make such a difference to a small business?

Well, that’s what this article is here to tell you…

What is an HRMS (Human Resource Management System)?

An HRMS digitises and automates all essential HR tasks so that businesses can manage them more easily and efficiently. 

Good Human Resources management software will enable you to effortlessly manage the lifecycle of every employee, from recruitment and onboarding to performance reviews and time off. It streamlines the way you handle all necessary HR tasks, improves people-related decision making, ensures compliance, and helps you to better understand and support your team members. 

In short, HR management software is a bit of a game changer — especially for small businesses who don’t have the luxury of big HR teams with years of combined knowledge and expertise.

What’s more, an HRMS moves small businesses away from error-prone paper files, spreadsheets and computer folders. And provides you instead with an easy-to-access and secure platform that saves you time, hassle and worry. 

Note: HRMS goes by a multitude of names. So if you hear someone talking about any of the following, they are just referring to HR management software by a different name: 

What does HR management software do?

HRMS is software that you use to manage anything related to human resources — i.e. your people. 

Though not all human resources management software is created equal (ideally, you want something that’s easy to use, has great functionality, and is specifically created for small businesses), they all should provide most of the following:

  • A secure place to store employee data, company HR policies and other important documents
  • Automated onboarding of new employees
  • Time-off tracking and attendance management
  • Automated performance reviews
  • Employee engagement polls and surveys
  • Perks and benefits
  • Compliance with UK employment law
  • Automated offboarding for exiting employees
  • Data analysis and reporting
  • Integration with other software

An HRMS removes all of the time-consuming and fiddly manual elements of essential HR admin, helping you to stay compliant and freeing you up to concentrate on other things. 

What are the benefits of HR management software for small businesses? 

An HRMS software brings big benefits for small businesses, such as

Better retention rates

How does HRMS contribute to better retention rates?

Features such as automated performance reviews can strengthen relationships with your team. When people feel heard and see that their development is an important part of their time at the company, they probably will be more inclined to stay for longer.

Why does it matter for small businesses?

A lot of people who join startups and small businesses do so because it's easier and quicker to grow. Smaller structures often mean you have to jump between different roles, acquire a diverse set of skills, and be ready for a promotion early on, filling the role gaps as the company grows.

But the lack of time many small business owners suffer from can get in the way of these opportunities, and when employees don't benefit from these small structures, they're more likely to leave.

Having an HRMS to take care of your performance reviews can be very beneficial By embracing automation, you'll not only improve team engagement but also free up time from managing complicated processes that can make a real difference for you and your team.

More time in your day-to-day

How does HRMS give you back time in your day-to-day?

HR management software streamlines all of your HR admin and related tasks through digitisation, automation and self-service (where employees are responsible for uploading and updating their own information), removing many jobs from your list and giving you time back to focus on more impactful tasks.

Why is this important for small businesses?

In small businesses, leadership teams (CEOs, Head of Ops, Director, etc) are often in charge of HR – which is kind of a waste since they're amongst the highest salaries in the company. To avoid losing money by giving them tasks that can be automated, you'll be able to redirect attention towards tasks that have a higher impact, whilst taking care of HR (which you can't do without anyway).

Improved recruitment decisions

How does HRMS help you make better decisions for your hiring?

With the right Human Resources management software, recruitment becomes easier and more efficient for both you and your new hires. The key is finding a tool that seamlessly integrates everything — from your ATS to your HR software — all in one place.

This not only speeds up the hiring process, but also makes it fairer. Smart tools like AI-powered CV screening and scorecards help you find the right talent faster and more objectively.

Why is making hiring better crucial for small businesses?

For small businesses, an ATS like this is a game-changer in the long run. Recruitment is a costly and lengthy process in itself – you don't want to make a quick decision based on your own impression without relying on whether the candidate really meets the criteria for the role. It's something you both don't have time for and can't afford: having to end someone's probation and re-hire again would really hinder your growth.

Data to rely on

How does HRMS give you access to a better dataset?

With all employee data stored securely and centrally, and analytics and reporting built in, an HRMS will help you to better understand your business, and make decisions based on true, up-to-date information relating to your team. 

Why would a small business want access to data?

Small businesses often struggle to make the right decisions when it comes to many areas, whether that's recruitment or initiatives for their teams. Automated reports can be a great way to observe trends, and invest where it's needed.

No HR experience required

Do you really need to have no HR experience when it comes to an HRMS?

HR management software like Charlie ensures compliance with UK employment law, reducing the chances of mistakes and ensuring you don't need to have any HR knowledge to use it. Automatic reminders mean that nothing important is missed — your team never forgets, and you never have to chase them up. 

Why is it crucial to a small business?

As small businesses often don't have a dedicated person for HR, it can be a handy way to handle HR with confidence.

If they have a dedicated HR person with an HR degree, CharlieHR is a cost effective solution to assist this person in their day-to-day.

When should you start using HR management software?

My recommendation to small businesses, especially to those starting out, is to use HR management software as soon as possible.

HR management software will save you a huge amount of time on essential and repetitive HR admin, streamline your people processes, and ensure you do it right the first time. 

This will make a big difference to you, your employees and your business as a whole.

And if you're not convinced, you can have a look at our guide where we gathered insights from our customers and interviewed small businesses to understand what's the best choice to make.

Why Charlie is the best HR management software for small businesses

Charlie is HR management software built by a small business for small businesses, so it’s designed to deliver everything you need. 

Charlie automates all of your essential core HR processes: 

  • Data management
  • Onboarding
  • Time off
  • Performance management
  • Engagement polls and surveys
  • Offboarding

You can also have access to our Charlie Recruit tool, the first ATS for small businesses on the market to offer a complete solution in one go. 

With solid HR processes in place from the very beginning, your business will have the foundations it needs for growth and success.

I would highly recommend CharlieHR to any other small business. You get so much more than just an HR platform: you also get insights into your team and help on hand whenever needed.- Ellie Mckenzie Burrell, HR Officer, SEO Works

Charlie will:

  • Help you automate boring, time-consuming and repetitive HR tasks, and cut down on the time that’s wasted flicking between different folders and systems
  • Enable you to better understand your small business from a people perspective, and demonstrate the impact of good HR
  • Allow you to actively impact your team’s happiness and engagement.

All of your HR is streamlined and automated with a single platform, and it’s so quick and easy to set up and use, your team won’t require any training.