The MSME sector is a major contributor to India’s GDP. However, it can do even better if many of its companies switch from the traditional methods of managing their human resources to using HRMS. When empowered with a capable HRMS, their HRs can complete tasks faster and better while still having the time to accomplish more.
HRMS handles everything from payroll to employees' professional growth. But even though the holistic advantages of using it are far-reaching, many MSMEs in India are not convinced. From misconceptions to lack of information about these systems, here are some of the biggest reasons why this is happening.
Why Do Indian MSMEs Not Use HRMS?
1. Strong Belief in Traditional Methods
Many MSME businesses like to use management methods that have been tried and tested. The traditional ways of doing things work, but they involve a lot of paperwork, sheets, and keeping track of multiple things. They are indeed time and effort-intensive. However, it is understandable why MSMEs rely on them.
MSMEs may not always have the resources to try and experiment with new management methods. Additionally, if anything doesn't turn out as planned, the repercussions can be harder to deal with for smaller businesses.
2. Lack of Awareness About HRMS
Most founders are not fully aware of the true potential of such software. This connects back to the previous point where the founders are hesitant to make big changes. It's hard to use something if one doesn't fully understand it. When it's about using something that can directly affect one's business, the hesitation is completely justified.
This is more evident in MSMEs that are run by owners who are not completely comfortable with relying on tech for crucial tasks.
3. More Emphasis on the Core Business Activities
Imagine you are an MSME business founder, what is the one thing you’ll want to focus more on initially? Improving your business and getting more clients, right? Correct, but the problem starts when the founders dedicate all their resources to continue growing and neglect the HR department.
An underfunded HR department might not be able to purchase a capable HRMS. The irony here is that getting this software could help increase employee productivity, which in turn can bring better results in the main business. In the case of HRMS, spending could simply result in more profit.
4. Using Other Employees for HR Duties
India is the birthplace of ‘Jugaad.’ This word is used for surprisingly effective and unconventional solutions created using minimum resources. While jugaads can work well, it can also put limitations on what can be achieved as a company.
One such jugaad is using employees from other teams to handle a few of the HR duties to save some spending on the HR department. What gets overlooked is that not everyone is experienced or capable of doing these tasks. As a result, the output can be subpar or just good enough to keep things going. MSMEs that are on a tight budget do not consider this a major issue.
5. Built for Bigger Companies
Many MSMEs believe this software isn’t made for them but for larger organizations with bigger workforces. This hesitation exists because the requirements of MSMEs are lesser than those of larger companies. MSMEs don't have to keep track of 500-600 or more employees. As per Forbes, less than 250 individuals are working in Indian small and medium-sized enterprises. The number is even lower for small businesses- just 10 to 49 employees.
Even though HRMS from companies like greytHR can be scaled and customized to fit every company like a glove, the perspective that HRMS is just for large companies is hard to shake.
Benefits of Using HRMS in MSMEs
With this section, we aim to answer why an MSME business founder should consider using HRMS.
1. Stores Data Easily and Securely
The amount of paperwork and spreadsheets HR departments must manage can be overwhelming, especially when these documents contain important and sensitive employee data. On top of that, storing them solely on office devices is insufficient, as theft, fire, and other issues can lead to the loss of valuable information.
HRMS effectively addresses both of these concerns. It seamlessly stores all essential employee data, from hiring to retirement, including payment records, provident fund information, leave balances, and more. It makes this data readily accessible to HR professionals and other employees with just a few clicks. All of it is stored in the cloud, so it remains secure even if any on-site issues arise.
"In terms of handling employees' data, greytHR increases the security of HR data and processes." Vigneshwari S. HR Manager
2. Acts as a Resourceful Digital Arm for HRs
Once a company adopts this software, its employees no longer have to repeatedly follow up with HR for certain tasks. Similarly, this software becomes a helping hand to the HR department as they can now drop updates about smaller things on the HRMS itself. Actions like applying for leaves, checking attendance information, accessing payslips, and more can be done in a matter of seconds on HRMS. Many of the updates about the company and personnel will be available on this software.
It even helps with more complicated tasks like creating elaborate workflows, performing comprehensive TDS (IT) calculations, and maintaining detailed records as per government rules. This can free up a major chunk of the HR department's time and make things simpler for everyone.
"greytHR has good features of tax calculation and it is always updated with the latest tax rules of India" Mrugesh V. Sr. Technical Lead
3. Saves Money and Increases Efficiency
One of the most important concerns for founders is the cost of buying HRMS. It may seem high at first, but the returns can overpower it. HRMS increases the company's efficiency, as employees don’t need to get on calls or have meetings with the HR department for everything. The HRs can perform more tasks better and faster.
There are many more advantages to paying for HRMS. We have given many examples and here's one more. It assists the HR team in the recruitment process, which is very much needed. According to Forbes Advisor, 36% of HR staff say they don’t have the resources to recruit top talent. HRMS can be a good solution here as it helps in finding the ideal candidates by sorting through heaps of applications. This way, they can focus on the ideal applicants, making better use of their time and finding the right fit for the company.
"User Friendly Application, Supportive Team and Competitive price-value for Money" Satish K. Joint General Manager -HR
4. Enhances Employee Satisfaction
A happy employee leads to a happy company. For this to happen, employees need to know that their opinions are heard and their grievances are attended to. HRMS makes it possible by letting HRs create elaborate polls, organize detailed feedback sessions, take surveys, and even help celebrate employees' success and milestones.
HRMS not only makes it easier for employees to voice out their opinions, it does it all quickly. This further improves the impression that the employees have about the company. Many HRMS also have a Performance Management System (PMS) which is a tool that measures, evaluates, and helps in enhancing employee performance. HRs and other seniors can enter performance parameters, set goals, track activities, and more to accurately track the professional growth of employees. Another way this software engages employees is by training them about the company and its culture to help them fit right in.
"Its simplistic UI enables employees to raise requests easily and the admins to approve or reject them very easily. Overall, it saves us a lot of time to automate a lot of processes." Sumit A. Associate Product Manager
5. Assists in Maintaining Statutory Compliance
The role of HR is also to handle the legal processes for the company. In case of mishaps, the companies could be fined as well. There are many rules, regulations, and laws for every process in the company. So, everyone who’s handling the HR, payroll, and the finances of the company has to be in the loop of things at all times. The HRMS is designed to be ready for such cases too, as it takes care of such changes automatically.
Final Thoughts
While Indian MSMEs have reasons to believe that HRMS won’t be useful to them, it is necessary to adapt to such changes to grow. HRMS supports and boosts the workings of HR teams, which in return saves the company time. It adds value to the company by being a lot more than a payroll management tool. From protecting employees' data to keeping every step of human management smooth, this tool gives a lot more than it costs.
FAQs
- How Can HRM Software Benefit a Business?
Human Resource Management Software (HRMS) can significantly enhance a company’s productivity and efficiency. It streamlines various HR processes, such as employee engagement, lifecycle management, and more. By automating routine tasks, HRMS frees up valuable time for the HR department, allowing them to focus on a wide range of other important tasks. Additionally, it provides a centralized platform where employees can address their issues, grievances, and feedback. Overall, HRMS not only optimizes HR operations but also contributes to a more engaged and productive work environment.
- What Problems Does HRMS Solve?
HRMS addresses several key challenges faced by businesses. It efficiently manages employee data, including payroll, attendance, leave, bonuses, taxes, and a lot more. By automating routine and time-consuming manual tasks, HRMS significantly reduces the administrative burden on the HR department. HRMS also helps speed up the time-intensive recruitment process by filtering the applications as per the company's exact requirements. These are just a few of the problems a capable HRMS can solve.
- What is the Core Purpose of HRMS?
The core purpose of HRMS is to improve the productivity and efficiency of the business by automating tasks that are manual and repetitive. Another purpose of this software is to digitalize, computerize, and centralize the crucial HR processes.
