When to Start Automating HR: A Practical Guide for Growing Businesses
s a small business grows, so does the complexity of managing your workforce. What once worked as a manual process utilizing spreadsheets and paper forms eventually becomes a bottleneck. But knowing when to automate and what to automate first can be tricky.
HR operations expert Michelle Fooden works with a wide range of clients to pinpoint what level of automation makes sense for their size and budget. In this post, she helps break it down by company size, so business owners can see where they stand, what’s essential now, and what to plan for down the road. Think of it as a roadmap for building a scalable HR foundation without over-investing too early.
Stage 1: Fewer than 15 Employees
Keep it simple but smart
At this size, most companies are running lean. You’re probably handling HR tasks manually, and that can work fine for a while. However, there are a few smart investments you can make early on that will save you headaches later. You might also consider a light level of HR support such as SwiftStart HR.
What to Automate or Invest In:
Basic HRIS and Payroll System: This is a tool that integrates Payroll with HR Record Keeping. There are a wide variety of vendors that offer HRIS platforms tailored to various business sizes and needs. Many of these platforms are designed to scale with a business as it grows. At their most basic level, these systems help companies:
- Pay your employees correctly and on time
- Ensure you’re compliant with tax filings (especially if your state has unique benefits and leave policies)
- Manage compliance and reporting, including workforce metrics used to help maintain records needed for legal and regulatory compliance
- Maintain employee data including salary history, manager changes, etc.
Bonus Consideration:
PEO (Professional Employer Organization): If you’re planning to stay small for a while, a PEO can be a great shortcut to offering benefits that would otherwise be inaccessible to very small teams.
Stage 2: 15–24 Employees
Time to formalize processes and reduce manual entry
As your team grows, so do compliance requirements, benefits offerings, and the risk of human error. At this stage, you should consider bringing in fractional HR support. You may not need full-time HR yet, but it is worth having an expert to help.
What to Automate or Improve:
Benefits: You may be looking into expanding company benefits to your employees as a tool for both hiring and retention. In partnership with your benefits broker, consider looking into systems that provide access to a number of benefit plans aimed at smaller companies and allow bundling with vision and dental benefits.
Digital Open Enrollment: Move from paper forms to digital forms. Your HRIS, benefit broker, or potentially even the benefit platform itself, may offer tools for this. It’s not only easier, but it is what employees expect from modern companies.
Onboarding: As you start hiring more people, you want to make sure that all new hires receive consistent experiences. A strong onboarding program leads to higher productivity, strong alignment to company culture, and of course compliance with legal hiring requirements.
Stage 3: 25–50 Employees
Build structure for retention and performance improvement.
Now that you’re no longer a tiny team, you need to start building infrastructure that supports employee growth and keeps your best people around.
What to Automate or Introduce:
Benefits Integration: Now’s the time to connect your benefits providers to your HRIS. That way, whether you onboard a new hire or terminate an employee, the information flows automatically into your various benefit plans. Between medical, dental and vision coverage as well as ancillary benefits like FSA, HSA, Life Insurance and 401k, some companies find they have half a dozen systems they need to update with every headcount change. Integration can save considerable time and reduce the chance of making mistakes. (Some providers do require a minimum headcount before they allow integration)
Performance Management System: Many HRIS platforms offer add-on modules for performance reviews, or you can integrate a separate software. These tools:
- Let employees and leaders manage 1:1s and complete structured reviews
- Collect a variety of feedback including 360, peers, and skip level
- Help automate reminders and review cycles
- Standardize the process so everyone’s on equal footing
Learning Management System: Many states require anti-harassment training, and depending on your particular industry, you may benefit from providing employees access to things like OSHA or Digital Security training. An LMS can not only provide you with access to courses designed to comply with local legislation, but also the ability to track participation, send reminders, and launch training automatically for new hires. Your HRIS may have an LMS module available for an added expense, but there are also several excellent stand-alone providers.
Compensation Planning: Essential to supporting sustainable growth, compensation planning enables you to attract and retain top talent by offering competitive and consistent pay packages. A well-structured approach also promotes internal fairness, helping to prevent pay disparities. Additionally, compensation planning allows leadership to align salary decisions with the company’s budget and growth strategy, ensuring you can make informed, financially responsible choices as the business scales
Employee Engagement Surveys: Anonymous (or at least semi-anonymous) feedback becomes especially valuable as an employer grows because they help maintain a strong connection with employees during times of change. As the organization expands, it becomes harder for leadership to have direct, day-to-day visibility into employee sentiment across teams and locations. Surveys provide structured, scalable feedback that helps identify emerging challenges and track morale over time. They also support data-driven decisions around leadership development, policy updates, and resource allocation.
Stage 4: 50+ Employees
Culture, connection, and experience become key.
At this size, everyone may not know everyone else anymore, especially if your workforce is remote or distributed. You begin the transition from a culture where ‘everyone wears all the hats’ to one with clearly defined roles and scalable systems.
What to Automate or Enhance:
Rewards & Recognition Tools: Platforms that let managers or peers send gift cards, or public praise go a long way toward making employees feel seen and appreciated.
Anniversary & Life Event Gifts: Automate birthday shout outs or send thoughtful milestone gifts. It’s a small cost for a big morale boost.
Social Connection Programs: Tools like Donut can randomly pair employees from different departments for virtual coffee chats. This strengthens cross-functional relationships and makes the company feel more human.
Every company’s journey is different. What you automate should be based on your size, your goals, and your budget. The key takeaway: automation isn’t just about efficiency, but rather about building a long lasting and meaningful employee experience that scales with you.
You don’t need to tackle everything at once. Start with the basics like payroll and benefits. As your business grows, you can begin to focus on more strategic areas such as performance management and compensation. At the same time, don’t overlook the value of tools that help your employees feel supported and appreciated. Simple gestures like company shout-outs and recognition can make a big difference.
Want help figuring out which tools might be right for your stage of growth? Let us know. We’re happy to help guide you through it.