Whether your organization has just a few employees or a few thousand, its staff is its most valuable resource. To manage that resource effectively, you need to track all sorts of information—from information about your employees’ demographics to salary history to their annual performance goals. How do you make sure that data is safe, accurate and easily accessible?
Human resources management systems and human resources information systems—commonly abbreviated as HRMS or HRIS—can reduce administrative time and improve efficiency by helping your organization track and organize its human resources data.
This sounds great to most organizations, but few of those we spoke with—including a number of experts—agreed on the specifics about what a good HR system should include. What areas would it cover, and what information would be tracked? What benefits would it provide, and would it be worth the investment?
We also wanted to know at what point in an organization’s lifecycle would these systems help free up enough staff time to make them worth the resources that would go into purchasing and implementing them and training employees to use them.
To find out, we talked to a number of nonprofit HR staffers and consultants specializing in the area to find out what they were using and what recommendations they might offer other organizations.
The State of Nonprofit Human Resources
A look at the nonprofit world shows that organizations are typically devoting limited staff resources to HR. According to the 2012 Nonprofit Employment Trends survey, most smaller organizations—64 percent of 450 surveyed—don’t have a staff member dedicated to HR, assigning the responsibilities to other staff, including executive directors, directors of operations, and office managers.
Often the task falls to a long-time employee who is well-liked and knowledgeable about operations, but has no specific HR training, said Carol Kardas of KardasLarsen, an HR consulting firm based in Hartford, CT, that works with nonprofit clients. They tend to take on the tactical side of human resources, but not the strategic planning. So who handles the higher-level issues?
“They don’t know what they don’t know,” Kardas said.
Sarah Gort, Director of Operations at CompassPoint Nonprofit Services in San Francisco, believes nonprofits don’t prioritize HR because so many are already struggling for resources. But HR tasks still take up staff time—in a 2011 survey, CompassPoint found that 63 percent of executive directors cited HR-related tasks as a source of on-the-job frustration and burnout. That’s more than any other part of their job description.
With HR low on the scale of priorities, nonprofits tend to take a similar view of software to manage human resources. In general, the nonprofit sector needs a “fundamental cultural change to understand the benefit of technology,” said Heather Carpenter, Assistant Professor at Grand Valley State University’s School of Public, Nonprofit and Health Administration. That’s not necessarily true of for-profit companies, which often use HRIS as a powerful tool to analyze their compensation, recruitment and training practices, and to monitor employee retention rates, she said—all areas with which many nonprofits struggle.
Kardas agreed, and said that metrics should be considered as important to evaluating a nonprofit’s HR practices as they are in evaluating its programs.
“If you can’t measure it, you don’t know if you’re successful at it,” she said.
Human Resources Information Systems
There are a number of systems available to help track human resources data. The field is segmented into multiple areas, with applications dedicated to managing recruitment, hiring, training, employee records, timekeeping, benefits, compensation, and myriad other issues. Many higher-end HRIS platforms, including Sage HRMS, ADP Human Resource Management and Agresso HR, are marketed as all-inclusive, but are expensive enough to be out of the reach of most small and mid-sized organizations. Anecdotal evidence also suggests that no one system can truly excel across every area of HR data.
In fact, most organizations we spoke with that were using HR systems had individual systems aimed at a particular area of human resources, and some were using multiple systems. This approach isn’t ideal, however. Several front-line HR staffers we interviewed noted that they found dealing with multiple data entry points inefficient, and wished their different HR systems interacted with each other more seamlessly—especially since these systems are meant to be time-savers.
Let’s take a closer look at four areas nonprofits might consider using an HR system to manage.
For nonprofits that don’t have any other kind of HRIS, their payroll system can function as a kind of light-duty HRIS. Even low-end systems, like Intuit’s Online Payroll (formerly PayCycle), can serve as a basic repository of employee contact information, social security numbers and the number of vacation days a staff member has. For mid-sized organizations, the marketplace leader here is ADP, or Automatic Data Processing, which processes around 10 percent of the U.S. workforce’s paychecks. Most nonprofits we talked to employed some form of payroll tracking system. This responsibility might fall under HR in a small organization, but is likely to be handled by a dedicated finance department at a larger organization.
While employee time and attendance are an integral part of payroll—and at larger organizations, likely managed by the same department—many smaller nonprofits we spoke with reported skipping dedicated time-and-attendance programs like Kronos in favor of simple tools like Excel spreadsheets or Google Docs for employees to keep track of their own hours.
But some smaller organizations choose to outsource their payroll processes altogether. If you’re happy with your payroll software and feel that some form of HR information system might benefit your organization, you might explore HR software modules that work with your current payroll system as a way to ease into more systematized HR data tracking.
Tracking Employee Data
Payroll systems can provide a minimal level of demographic and employment data, but any organization that wants to do reporting on this information is likely to need a different way to track it. For example, Writopia Lab uses Google Docs to track human resources data, but is exploring a move to the Salesforce CRM in the hopes of tracking donors, students, communications and other data in a single location along with employee data. Director of Operations Jeremy Wallace-Segal said that, for an organization as spread out as his, keeping HR in an online system where it’s easily accessible from multiple locations is critical.
The YMCA of Metro Chicago uses an HR system to track employee data, and Employment Coordinator Sarah Hertsted-McCrary said its reporting functions greatly reduce the amount of time employees would otherwise spend aggregating that information. Since most organizations don’t have the luxury of hiring additional staff for HR duties, she said, such systems can help make existing staff more efficient.
Expensive systems like Oracle’s PeopleSoft Human Capital Management are another option, but Kardas said her nonprofit clients have had success with customized MS Access databases and Excel spreadsheets, too. She believes nonprofits need to be more data-driven in general, and having the ability to report on employee age, race and gender in a meaningful and statistically driven manner can help organizations with everything from managing staff to increasing diversity.
Recruiting and Hiring
Online job postings can attract thousands of resumes for every position, putting a new strain on hiring managers. The HR experts we spoke to were interested in ways systems could help make the recruiting and hiring process more efficient. Hertsted-McCrary said the YMCA of Metro Chicago uses the software-as-a-service (SaaS) platform iCIMS to manage the 1,100 annual vacancies her organization must fill, and noted that she’s happy to move away from the “random spreadsheet” model. The software helped cut down on data entry, she said, but she still has to manually oversee the multiple state- and federal-government background checks potential employees must undergo—and she can’t use the system for volunteer- and intern-hiring, a major concern for many nonprofits.
Since nonprofits are closely monitored by government and other regulating bodies, HR systems can help them remain compliant with employee and volunteer background checks, immigration status, and other regulations, like the Health Insurance Portability and Accountability Act (HIPAA), avoiding legal headaches.
Performance Management and Training
A few organizations were experimenting with using technology as part of the employee training and review process. Dottie Moser, the Vice-President of Human Resources at the Chicago-based Easter Seals, Inc., doesn’t currently use an HRIS, but is looking at investing in specific performance management software to help her employees reach performance goals.
Several other nonprofit HR staffers were also interested in this area—they voiced frustration with the paper-based review systems currently used by their organizations, and said they felt that integrated software could help advance the performance review process from an annual or biannual event to an ongoing conversation between employees and their managers. Ideally, this performance management software would also accommodate the internal and external trainings employees undergo as part of its functionality.
Does Your Organization Need an HR System?
At what point in an organization’s lifecycle does it make sense to invest in an HR management system? As in all software decisions, consider your own needs and resources when making this call, but for very small nonprofits, it probably doesn’t make sense to buy a dedicated system to manage fewer than a handful of employees.
The experts we spoke to differed in their opinion of how much bigger an organization needed to be before it did. Some said that conventional HR wisdom—which maintains that a full-time HR person should be brought on board once an organization reaches 100 staff members—also applies to human resource systems. Others felt that smaller organizations could reap benefits from these systems, since staffers in charge of HR in addition to other areas would theoretically be able to more easily juggle multiple duties.
One thing they all agreed on was that HR policies should be up-to-date and easily accessible for all employees, a goal within reach of most organizations. If your organization delegates human resources data to the executive director, operations director, or anyone else whose plate is already full, good data practices can help them manage human resources—its most valuable asset—more successfully, avoiding their burnout and staff frustration.
For More Information
If your nonprofit is just starting out and needs to standardize HR practices across the board, visit the Management Center’s resource library, which offers free templates for forms that deal with recruitment, hiring and other common HR issues. Many thanks to Dorothy Lee, Carol Kardas, Heather Carpenter, Dottie Moser, Sarah Hertsted-McCrary, Sarah Gort, Melissa Remite, Katie Kerr, Jeremy Wallace-Segall, Ian Mogavero, Shoma Haque, Ananda Valenzuela, Eric Leland, Julie Alailima, Marc Baizman and Robert Weiner for their generous advice used in preparation of this article.
This article was published in the September 2012 issue of the NTEN:Change Journal. Click through to read the case studies associated with this article, or the other insightful articles in the journal. (Free subscription required.)