There’s SO much to consider with this topic, so I’m going to split it into a couple of parts. Look out for weekly installments! This week I’ll cover when you should switch and why.
You know that feeling when you’re supposed to be doing something and you just keep pushing it off? You know once you do it everything is going to get easier but the act of sitting down and focusing on a new project is just not in the cards. If you’re in HR, that time spent waiting and wishing can be detrimental not only to your job, but your employees.
You know things are not going as well as they should with your current hrm solution – payroll has had issues, there aren’t enough products and you shudder at the thought of open enrollment. It’s time for a change.
When should you switch?
When you switch really depends on how you operate as a business. A lot of businesses have their calendar and fiscal years line up to simplify processes. Q1 starts when the ball drops on January 1st and Q4 ends when the ball goes up December 31st.
This company model makes the hrm software switch the easiest. You don’t have to worry about transferring payroll/W-2 information from two different applications – you start fresh. You have all pertinent employee information in the system, so you can just flip a switch and start running payroll.
The decision to switch should generally be made by late October if you’re looking for a January 1st start. This much lead time gives you and your new provider ample time to get any time clocks set up (if necessary), employees imported into the new system, benefits admin setup, etc.
*If you’re a small or new company, set up can be a breeze. Having a salaried staff with all direct deposits is way easier to set up. Depending on what software you choose, setup could take anywhere from a couple hours up to a week or two.
Depending on the industry or business structure, fiscal year end might come in the middle of the year. Sound confusing? Think about it like this – you’re running a golf course, October - December is not going to be your best season (especially in Michigan) and you want to end your year on a high note so it keeps employee morale up.
A lot of courses will end their fiscal year at the end of June, when business is a boomin!
Another aspect to consider is how your business is set up, read more about that here.
Note - if you’ve already filed a calendar year or fiscal year and want to switch, you must provide a ‘business reason’ for the IRS to allow you to switch up your reporting cycle.
Why should you switch?
Why should you switch? Payroll isn’t that difficult to run, W-2s were an issue last year but it seems they’ve straighten that all out, the HR portal doesn’t have everything you need, but who does?
This should be the main reason behind your search. HR is in the middle of a renaissance and you should see some of the masterpieces companies are creating. There are a couple things to watch for; what I call enterprise software and stand alone.
Enterprise software is an all-in-one solution. You can run payroll, timekeeping, hr, benefits and more from the same system.
Upside - all the information is there, you don’t need to remember a bunch of different passwords, and each individual feature should speak with the rest of them (i.e. applicant tracking speaks to onboarding which speaks to payroll which speaks to hr). Buh bye dual entry!
Potential downside - like anything or anyone that tries to specialize in everything, there can be small lapses or issues and unfortunately some systems still are not totally integrated across all facets of the software. Hey hey dual entry!
Stand alone would be software that specializes in one specific aspect of hr. Payroll/tax software. Applicant Tracking/Onboarding software. They do these single products very well, but there are downsides besides just remembering 5 passwords. Separate systems don’t really talk to each other unless…
An API (Applicant Program Interface) is a way for non-native software to talk to each other, though they can often have issues. Think about it like two people speaking different languages with a translator in between. The translator could be fluent in both languages but there’s always a chance something is lost in translation.
Even with its downfalls, APIs are a great way of linking all the processes of your back office if you’re not totally ready to look at enterprise software.
Next week, what you need to make a switch to a new software.