HR Systems for Startups: All You Need to Know About ATS, Payroll, and HRIS

Startup companies often do not make human resources and people management a priority. While an emphasis on seemingly more pertinent matters like innovation, revenue, and customer concerns may feel like the obvious path to success, startups who do not focus on their people from the start often fail. In fact, counts weak teams and poor leadership among its “Top 7 Reason Startups Fail”. However, startup owners and operators often do not have the time or capital to invest in a proper HR person or process. Many startups are turning to Human Resource Systems for all of their applicant tracking, payroll, and information management needs.

Here’s how and why successful startups are using Human Resource Systems for all of their personnel demands:

  • Applicant Tracking – On average, 250 resumes are received for each corporate job opening, although the applicant number can vary greatly depending on the job and company. A single person with many other responsibilities, much like the manager of a startup, does not have the time to sift through a vast number of applicants, especially if they want to be thorough. Many companies are using Applicant Tracking Systems (ATS) to electronically handle recruitment. An ATS handles the recruitment process by filtering out candidates that do not meet certain criteria, and provides a manager with the best possible applicants for any given position. While there is usually a fee to use an ATS or a Human Resource System with an ATS function, the amount is usually far cheaper than the average $65,000 per year salary of a proper Human Resources Manager.
  • Payroll Management – According to an Entrepreneur article, one in every three small business owners gets penalized for payroll errors by the IRS and 16% of those penalized businesses are spending $20,000 or more on legal fees, taxes, and other internal costs associated with payroll mishaps. It is easy to see why a startup should prioritize proper payroll management, especially during periods of critical growth. A payroll management system is specifically designed to eliminate the unexpected expenses and hassles associated with clerical payroll errors as well as save valuable management time. These systems deal with the financial aspects of employee salaries including allowances, deductions, and taxes. In addition, most payroll management systems are easily implemented which makes them a great option for time and money strapped startups.
  • Human Resource InformationEmployers are required to track many types of employee data including names, titles, addresses, vacation / sick leave, disciplinary actions, and more. In addition, companies also need to keep track of more broad employee management items like handbooks, safety guidelines, and procedures. Many startups are looking to Human Resource Information Systems to provide simple data management solutions. A Human Resource Information System or HRIS is a software or online database much like a CRM where employee data is stored on an easy to query and analyze platform. HRIS platforms also eliminate cumbersome and inefficient paper or electronic files while keeping employee information more secure on encrypted databases.

Without proper HR protocols and procedures, a startup can experience serious damage to its reputation, struggle to hire suitable personnel, and throw away critical time and capital. Utilizing a quality and customizable third-party Human Resource System is a great alternative for almost any lean startup company.