New HR Solutions Must Match the Reality of Everyday Business

Denmark is home to many small and medium-sized enterprises (SMEs) that, just like larger organisations, have much to gain from digitising and streamlining processes through IT solutions that create connectivity, insight, efficiency, and new strategic opportunities.
Today, most organisations can see the value of transforming HR into a strategic business partner through increased digitalisation. However, the best way to achieve this depends greatly on the size of the company and the realities of its daily operations.

For larger organisations, standard models and best practices are rarely enough on their own. Their competitive advantage often lies in tailoring solutions to their specific business needs.

For SMEs, on the other hand, a template-based solution built on standards and best practices can be exactly what is needed to digitise and elevate key functions where significant resources are currently being spent.

“It is about finding the right balance between standardisation and customisation, and about understanding the daily HR challenges within SMEs so they can see themselves in the solution and the opportunities it provides. If a new intelligent IT system requires a level of maturity that the company feels far from achieving, the business may lose motivation to increase its level of digitalisation altogether. There are still many benefits to be gained through a simpler and more selective approach.”

In general, SMEs are more dependent on generalists than larger organisations. Employees – and often managers as well – wear multiple hats.

“And the leadership hat may be quite small. Getting managers to work strategically with HR is therefore often a challenge. Limited resources and a high administrative workload mean that HR frequently becomes highly operational. Strategic direction may be lacking, along with visibility into the benefits that digitalising HR processes can bring. SMEs may already have processes for salary reviews, employee engagement, and other HR activities, but these are often disconnected fragments. Real value emerges when consistency is created across HR processes. As long as HR remains siloed, it is only viewed through the lens of the HR department rather than through the lens of the business that relies on those processes.”

An HR system that integrates relevant data across all processes can eliminate the duplicate data entry that remains a reality in many SMEs.

“It is not uncommon to enter a new employee’s name and address five to seven times between the first interaction with a candidate and the point where the candidate has been hired and onboarded. Producing even simple reports on performance, engagement, and other important HR KPIs becomes difficult because the necessary data is missing. It is essential to monitor employee performance and understand how to improve it, but that becomes challenging when both data and time are lacking.”

The financial investment required for new HR solutions is perhaps the greatest challenge for SMEs unless the IT partner understands the realities of small and medium-sized businesses. Most HR systems today are priced based on software licenses and implementation services. While the license cost per user remains largely the same regardless of company size, implementation costs per employee can be significantly higher in smaller organisations.

“Smaller and medium-sized companies therefore often need a more standardised approach instead of the highly customised solutions used by large enterprises, where systems are designed through multiple iterations based on customer input. Projects of that type drive up the cost per employee and simply become too expensive for SMEs.”

The key is for SMEs to choose a partner that offers a template-based solution and project methodology from the outset, providing an integrated solution where data is shared across processes without requiring the customer to design the system themselves.

“Once that foundation has been established, SMEs are certainly not locked into the template solution forever. A good partner should have a standardised model for supporting additional requirements as the business evolves, along with a service model that is both practical and cost-effective.”