6 Ways HR Software Can Reduce Costs

11 Oct
6 Ways HR Software Can Reduce Costs

This article is a guest post written by Randa Kriss from Fundera.

Small business owners have numerous technology and software options available to them to streamline processes and create efficiencies. But more often than not, these options come with a price tag and they must ask themselves whether the investment will be worth the long-term savings. With tight budgets for Human Resources (HR) operations and the price of HR software options, it’s no surprise that many small businesses consider HR software a luxury.

HR software options with up-front costs can range from $10,000 all the way up to $100,000. And HR software options with monthly payment plans, while easier to afford, can still cost up to $20 per employee per month. Such major investments aren’t necessarily attractive for small business HR teams that are on a budget.

That said, a careful cost-benefit analysis will show that HR software can often reduce net costs overall. By effectively streamlining and improving your business’s processes, HR software can pay for itself—and then some.

Here are six ways that HR software can help your business reduce costs.

1. Automates employee management tasks

When you invest in HR software, you’re taking hours of busy work away from your human resources team. With filing, sorting, and recordkeeping off their hands, your HR team can spend more time helping your employees, rather than organizing paperwork.

HR software will save your HR team from repetitive administrative tasks, and allow them to invest time and resources into your employees. They could hold company-wide focus groups, organize team-building initiatives, and build career maps for employee development with more time on their hands. With this additional capacity for employee management, your human resources professionals will come up with next-level insights and solutions that, otherwise, you’d need to hire another employee to access.

2. Allows you to avoid tax fines

If you run your company’s payroll through an HR software, then you’ll be much more likely to avoid expensive tax fines. In fact, many payroll software optionsv offer a tax guarantee. A tax guarantee means that if the software files your taxes incorrectly, and your company incurs fines as a result, the software company will cover those fines for you.

3. Reduces employee turnover

It’s no question that HR software improves the employee experience—that’s the main value proposition. But, did you know that improving the employee experience could actually save your company huge sums of money in the long run by preventing turnover?

That’s right—there’s a dollar cost to employee turnover. Estimates from Forbes put the cost of turnover for entry-level employees at 50% of their salary, mid-level employees at 125% of their salary, and senior executives at over 200% of their salary.

Sure, retaining employees on a budget might seem difficult, but replacing them on a budget could be even more difficult. Investing in HR software that improves your overall employee experience now could save you hundreds of thousands of dollars in turnover costs down the road.

4. Streamlines recruitment processes

When inevitable employee turnover does happen as team members move, seek other opportunities, or retire, HR software can help streamline recruitment costs. Recruiting through HR software means accessing top talent, filing down administrative tasks, and speeding up the hiring process. These improvements are common reasons for small businesses to hire recruitment agencies to fill a role, which can cost much more than an HR software and only address a one-off need.

All in, using HR software during your recruiting process means hiring fewer agencies and having less downtime between employees, which can drive down the costs of employee turnover.

5. Improves employee performance

HR software can help improve employee performance within the team you already have. With the systematized reviews and employee development programs that many HR software options often offer, your team will gain insights into what they do well, and where they could improve. This means your business gets to access even more insights and expertise, without paying to hire and employ new talent.

6. Helps reduce printing costs

If you’re still using hard copies for your HR documents, you’re spending a significant amount on printing costs, especially if you have a large team.

Administering HR documents digitally through HR software will bring these printing costs down to almost nothing. If employees need to print HR documents themselves for any reason, be sure to offer your office resources, so that printing costs aren’t simply rerouted to your team. That said, even with the cost of the occasional hard copy of an HR form, HR software can decrease what you spend on printing overall.

Reducing costs with HR Software: The takeaways

HR software can be expensive, but just like any other worthy investment for a small business, it can more than pay for itself. Through increased efficiency, improved processes, and greater employee capacity, the effects of HR software aren’t simply nice to have—they’re crucial if you want to scale your small business. Even if you’re not planning on growing at a rapid pace, improving your revenues and cutting down costs is something that all small businesses should make an effort to do, and HR software can help you meet those goals.


Randa Kriss is a staff writer at Fundera, a marketplace for small business financial solutions. She has a bachelor’s degree in English and Spanish from Iona College and writes extensively on human resource solutions, payroll, ecommerce, and small business trends.