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What's the best HR software for an SME?

Background - what is needed in an HR system for a small - medium sized business?

Let's start be clear from the start. There's probably no single "best" HR software. Especially as you get to larger businesses which have many different requirements. If you've followed some earlier posts in this blog, you'll see I'd originally been looking for some HR software for a tourist attraction which employed between 150 - 200 staff during peak season, dropping back to around 60-70 staff during the winter. They had some quite specific requirements, especially for these flexible, zero-hours staff.


However, once we'd solved some of their "bespoke" requirements for the flexible staff requirements, there were then around 30-40 "core staff" who were either full-time or part time employees, most of the year round. The HR requirements for these staff were then very similar to most 25-50 person businesses


In parallel with reaching that clarity, during 2018, I had been been researching HR systems for some other consulting clients with between 5 and 50 staff. I had also recently become Chairman of Cambridge Networks, an IT support company with around 15 staff, who, like many companies, had their HR records in a combination of files on a network server, paper files, and holiday and pay records in a variety of spreadsheets.


It became clear that for every one of the clients I was working with, all of whom were SMEs, there were a core set of requirements they needed:

  • holiday requests and records

  • time off records for other types of leave and illness

  • a core database with staff details such as name, contact details, job role, pay/salary, who they report to

  • Onboarding and off-boarding records to ensure they start well, and leave cleanly

  • disciplinary records

  • an applicant tracking system capable of enabling a good recruitment process, without having the complexity that the system that the tourist attraction I worked with had needed

In addition, there had to be a few key attributes:

  • easy to use, so that it is intuitive for regular staff and managers to use. It shouldn't be just for HR specialists

  • it must be secure - staff's contact details, e-mail addresses, postal addresses, phone numbers and pay details are very sensitive to the employee. And they're "personal data" under GDPR data protection regulations. So any system must automatically help the company to keep the data secure.

Shortlisting some options

If you do a search for HR software for SMEs, you'll likely find many, many potential choices. I certainly did. You can sign up for various evaluations, and try to pick which one to go for. And I encourage you to do so.


However, in case it is useful to you, I thought I'd share the top 3 that I found for use in the UK, and which one I settled upon as a default choice.


What follows is the process we went through with Cambridge Networks, which I found then very relevant for other SMEs too.


I took the starting list of all HR software that I'd previously researched, see my earlier blog post for that list. I updated it with some fresh google searches to identify new entrants. Although I was wary that a new entrant had to be very good to ensure they had the stability and track record to compete with the established players on my previous long list.


After reviewing them all, the 3 top choices I settled on were:

I'd actually looked at each of these in late 2017/early 2018. At the time, I did a trial of Breathe HR and People HR.


However at the time, there were issues with each:

  • BambooHR - looked likely to be the best, but we were just coming up to the GDPR rules coming into force, and they were based in the US and didn't seem to have much focus on the UK or Europe, and didn't have a data centre in the EU. So I didn't even do a trial.

  • BreatheHR - was easy to use when I tried it, but their answers to security questions didn't inspire confidence.

  • PeopleHR - seemed quite complex to use on the trial system

None of the businesses I was actively working at the time were quite ready to adopt a new HR system. They had more urgent priorities. So rather than pursue the questions at the time, I put it on the back burner.


I came back to in January 2019. And I'm glad I did, because they'd each moved forward.


  • Breathe had moved forwards the least. But it was already pretty good when I'd looked at it in 2018, if did all the core functions that an SME would want, and was easy to use.

  • PeopleHR had moved forwards quite a lot. Like Breathe HR, it had all the core functions than an SME would need, although it seemed a little more complex to use than Breathe.

  • BambooHR. Although the marketing of BambooHR had been great when I'd looked at options the previous year, they didn't have pricing on their website so I had no idea about cost, and because they were US focused, and didn't seem to have addressed GDPR/EU privacy issues, it seemed likely the data would be held in the US. So I hadn't evaluated it in 2018. They now made it clear that they had a UK data centre, so I set up an evaluation, and was really impressed - it had everything an SME needed, and was very easy to use.

So we now had 3 very credible alternatives. All of which work and do the basics fine.


Refining the short list to a final choice

There was lots of analysis that I did of all of them. I won't share all the details with you.


They all did the core basics of storing the contact details for each staff member, a process for recording holidays and other leave.


I found that BambooHR had a particularly good Applicant Tracking System. As well as the basics of tracking the status of each applicant, it enables the sending and receiving of e-mails with the candidates from within BambooHR or from your own e-mail, and all logged into the ATS, and a successful applicant being able to digitally sign an offer letter. The was also the ability to automatically post vacancies not only onto the company's website, but also to Indeed.com. All good stuff. BambooHR didn't have the advanced "pick an interview slot" functionality that Eploy has, which I mentioned in a previous blog post. Neither did BreatheHR or PeopleHR. But for most SMEs that wouldn't be necessary.


So the ATS part of BambooHR would probably not suit a company recruiting 50-100 staff each year in a wave for a seasonal business, but for the average SME that may recruit 1 - 10 people per year, it was perfect.


Whilst BreatheHR and People HR both had an ATS, they weren't quite as advanced as BambooHR. So that was a tick in BambooHR's column, because Cambridge Networks was looking at recruiting 2-3 staff in the upcoming few months, and wanted to be more organised in their recruitment than they had been the previous year.


The other are of particular concern was around security,

  • partly, because GDPR has made it very clear that staff's personal details is very much sensitive data that companies must take appropriate action to secure that data

  • partly, because I used to be CEO of an IT security company, and I always worry about whether security is done right! Not just firewalls and ISO27001. But other things such as, is access to personal data secured using 2-factor authentication (2FA), because passwords are just not secure enough. Especially with cloud-based software. And if a company isn't applying 2-factor authentication, which is a technology that has been around for 20+ years, are they doing the other security things I'd consider "the modern basics", segregating the different parts of their network, ensuring their own staff can't access personal data, encrypting data in the database when practical to do so

  • and partly because one of the companies that I was doing the research for, Cambridge Networks, is an IT support company. They recommend 2-factor authentication and other security technology to their customers. So they need to "walk the talk" and demonstrate both to their own staff, and to their customers, that they are applying suitable security to their own HR system

Given that it doesn't matter to me whether we are talking about Cambridge Networks with 15 staff, or some of our other customers with anywhere between 5 and 150 staff, the personal details of that companies staff is really important to look after. I knew that after deploying a solution to Cambridge Networks, and that most other customers we work with really needed something better for their HR than spreadsheets, a file share, and paper. So I knew that picking a solution that I'd be willing to recommend to other customers was really important, and security was a key influence of whether I'd be happy recommending a solution.


Therefore I looked into the security of each solution a lot.


BreatheHR

  • When I first looked at Breathe, I asked about security, and 2-factor authentication specifically. They tried to be incredibly helpful, and pointed me at their ISO27001 statements and said how they take GDPR very seriously, and that they'd passed their ISO27001 audit. Which to an average owner-manager, would all sound good. However given my security knowledge, I know that an ISO27001 certificate just says that you have a process for managing security, it doesn't say how secure a company is.

  • So when I asked about 2-factor authentication, the answer was that no, they don't support 2-factor authentication. They said it is something they are asked for sometimes, and it is on the roadmap to implement, but they couldn't promise a timescale.

  • When we were then evaluating this second time around, to decide whether to keep BreatheHR in the shortlist, I asked again. A year later, they still had not implemented 2FA, and again pointed out that they had passed their ISO27001, and offered no timescale for when they'd implement it.

  • So regretably, I had to decide to strike BreatheHR from the shortlist. I say "regretably", because the system seemed easy to use, did most things we wanted (might have needed a bit of improvement on applicant tracking), looked very cost effective. They were UK based, and if I can support UK companies, I do like to, so long as they are good enough to meet or exceed our needs.


PeopleHR

  • They seemed to be evolving rapidly. There seemed new features from when I'd first looked at People HR. There were comments about taking security seriously and GDPR, having ISO27001 certification. My notes indicate that at the time that there wasn't support for 2-factor authentication, however at the time of writing (Sept 2019), there is support for 2-factor authentication using Google Authenticator. It's just one method, and it's not a centrally managed 2FA system, but it does support 2FA which is good. So this marked them ahead of BreatheHR


BambooHR

  • this is where BambooHR really started to shine. As well as having all the basics of an HR system, and being easy to use, BambooHR had support for adding 2-factor authentication using a variety of 2FA vendors, using the SAML single sign on protocol. This had a number of advantages, not only could we add 2-factor authentication using our own choice of 2FA system, be it Google Authenticator, Duo, or one of a myriad of other systems.

  • This also meant that staff wouldn't need "yet another password" for the HR system, because the SAML single sign-on approach meant that staff would be able to log in with their domain username and password - but without BambooHR ever knowing that password.

  • This indicated to me that "not only do BambooHR support 2FA, but they've really thought strategically about the best way to do authentication". It both adds security, but also makes logging in as easy as possible for end users, without having to create a new password.

  • In the trial I was able to set up the single signon to work with our Duo Security 2-factor authentication, and to log in with our domain username and password. All securely without sending any passwords to BambooHR themselves. It was easy to use, and secure. And the 2factor authentication even worked when I accessed from an app on my phone - and could use Apple's fingerprint or face recognition on the phone, so even if someone borrows your phone, they can't get into your BambooHR data.

  • So BambooHR came out best of the 3 with respect to security in my analysis at the time.


So now, BambooHR had managed to create a very good impression of their approach to security.


This approach was reflected in other things - I was worried that being US based, that everything would be US-centric - dates being date then month, salaries being in dollars, data being in the US. So I was positively impressed when every one of the settings I was concerned about, could easily be changed to UK or EU formats - so I was easily able to set the default date format to be dd/mm/yyyy, the default currency to UK pounds, and the data to be held in their UK data centre.


I was impressed even further, when I was asking their support team a question, and used an example user to ask the question. Their support system detected the personal data and obfuscated it so that their support person wouldn't see the personal data. Their approach to security was positive and ran through the business.


In looking at the security, I had delved a little deeper into each of the systems. This led me to their "API". An API is an interface that allows other systems to interact with the HR system. This is generally of more interest to larger companies with established systems, but I always like to know if a cloud-based application is going to integrate with the rest of the company, or "be an island of its own data". The good news is that all of BreatheHR, PeopleHR and BambooHR have their own APIs, so it is possible to integrate all of them with existing systems.


Making a final decision

By this point in time, I had a matrix of many areas comparing them. I won't share the full matrix, but I'll try to summarise how we reached a final decision.


BreatheHR, PeopleHR and BambooHR all are capable HR systems. They all had the basics in place.


However I found that in every area that I looked at, BambooHR was slightly better, or at least as good as the others. Ease of use, yes, everyone liked it. Applicant tracking - yes, it did everything we'd need.


In some cases BambooHR didn't do as much as other systems - it's focused on the core functionality that an SME needs to manage it's HR. For some people, this may be seen as a disadvantage, but I actually found it very positive - because it's so clearly focused, it made it very easy to use, without extra complexity.


It was significantly better on security, but I don't want to overplay that - PeopleHR does support 2 factor authentication. And if you're not as passionate as me about the importance of 2-factor authentication, and if you are prepared to accept passwords to secure your HR data, then you may be entirely happy with BreatheHR's security.


So based upon functionality and easy of use, my inclination was towards BambooHR.


But there's still that lingering question - is BambooHR more expensive?


I always like to mostly evaluate products without worrying about the price (so long as it looks like it will not be extortionate!). That allows me to focus on the functionality with clarity, and not be clouded by thoughts of price. Then I can make an evaluation of whether the price is worthwhile based upon the benefit to the company.


Simple answer - yes, BambooHR turned out to be a little more expensive than the other systems. BambooHR don't publish their pricing to your size and requirements, so you have to inquire directly. So I can't tell you exact pricing, whereas BreatheHR and PeopleHR publish their pricing clearly on their websites. Also, whereas BreatheHR and PeopleHR are based in the UK, so pricing is in UK pounds, BambooHR price in US dollars, so how much it costs will also vary based upon exchange rates.


However I think it's useful to give you context. For a 15 user company BambooHR is in the region of £1k - £1.5k per year, whereas BreatheHR and PeopleHR will each be under £1k. Realistically, even the smallest company should expect to be paying around £1k per year with BambooHR, whereas the others can be much cheaper to start if you just have 5 or 6 staff.


BambooHR's pricing does become more cost effective as you get larger though, so don't let the pricing put you off. A company with 100 staff is be in the region of £4.5k - £6k, and 200 staff is in the £7.5k - £8.5k range.


We weighed the options, and for Cambridge Networks and the other companies I work with, looking after their staff is important. Giving them the best experience even on little things like requesting holiday. Making sure we develop each employee's career's, plan and track their training, keep all their records together, and given the sensitivity of the data, ensuring the data is secure is critical.


So although we could save a few hundred pounds per year by choosing a cheaper solution, if we're paying someone £20k - £30k (or more) per year in salary to each person, spending around £100 per person per year on the system that securely manages and holds all the HR data about them and their career development seems good value, and it doesn't seem worth cutting any corners.


So at Cambridge Networks, we were happy for a budget of around £1k - £1.5k for a good system for managing the staff, so we selected BambooHR.


Rollout and adoption

The good news, is that once we'd made the decision and signed the contract, setting up and rolling out BambooHR was really easy.


We've rolled out BambooHR at several companies now, but I'll use one company as an example.


First step was to set up a few policies such as holiday leave policy, and the other leave types. Then of course we had to integrate to our 2-factor authentication system - which was really quick and easy.


Then we just had to add the staff details. As it was only 15 staff, we were able to manually enter the contact details - not enough people to be worth doing an import from spreadsheets. We set each person up, job role, when they started, who they reported to, and invite them to enroll in the self service portal. We added their photo to their profile too, as we already had photos of each staff member. We also entered any holiday for the year that they'd already taken or booked. Again, we did this manually from existing spreadsheets.


This is where the single sign-on and 2-factor authentication really came into its own. For enrollment they didn't have to set up a new password, they just logged in with their existing domain username and password, and authenticated with the 2-factor authentication that the company already used.


So enrollment was really easy, and the employees just had to check their details. They could make corrections if they wanted to, which only took effect once approved by one of the directors. And some of the employees decided to change their photo to one of their own photos to reflect their personality, rather than the "corporate headshot".


The real proof of the pudding was in the eating - everyone instantly took to requesting holidays via BambooHR, and their manager approving it. It was so much easier and streamlined than the old way of asking or e-mailing. So the holiday records were instantly invaluable, and never have I seen a spreadsheet forgotten so quickly!


The applicant tracking system was the next great win. The previous year we had spent around £15k on recruitment fees. A combination of BambooHR automatically posting vacancies onto Indeed.com combined with BambooHR giving as an application form and easy way of processing it, over the following 2 months, we recruited 2 staff members without any recruitment fees. The experience was much better for the applicants, and the managers that were each reviewing incoming CVs were much better able to collaborate and ensure one manager or the other responded in a timely fashion. And they could each see from the notes what each other felt. In total, we recruited 3 people over the first 6 months, with no recruitment agency fees - so the cost of BambooHR was more than covered by the saving even of a single recruitment fee.

And the managers kept saying "this is so much easier, I can't believe we lived without it".


I can quite believe that customers of BreatheHR, PeopleHR, and many of the other HR systems out there have also got similar benefits. So for Cambridge Networks, BambooHR has certainly done everything we expected.


If you're still using spreadsheets, outlook calendars, files in a folder on the server, or paper please consider using an HR system. It will radically improve your HR management, especially if you pick a good one.


Whether the cost is £20 per employee per year, or £100 per employee per year, they will likely be very good value, for the benefits they deliver to your company. So try not to worry about the cost if it's in that range.


Pick the one that's right for you. For Cambridge Networks it was BambooHR. We have subsequently rolled it out to other customers and got similar benefits - especially around holiday management, recruitment, as well as training records and disciplinary records.


I hope that example may help make you think of some of the topics that are relevant to you, and help guide you towards making an informed choice.

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About the Author:

Dave Abraham is an independent consultant, working with a number of small businesses. Working at a strategic level, he looks at the strategic direction of the business with the directors, and helps the business improve processes, people management, and technology to help the business grow for the benefit of the staff, customers and owners of the business.  A core theme in recent years has been helping small companies improve how they nurture, grow, recruit and develop their staff, as it has such a massive impact on how a small company can go from surviving to thriving. 

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