Folks has released its 2026 State of HR survey, revealing that HR teams in small and mid-sized businesses (SMBs) are still heavily burdened by administrative work. The findings highlight a persistent gap between operational demands and strategic HR priorities such as culture, employee development, and workforce planning.
HR leaders have long been expected to act as strategic partners to the business. Yet, new data from Folks suggests that for many SMBs, that vision remains out of reach.
According to the company’s latest survey of more than 450 HR professionals across Canada, 70% of HR time is still consumed by administrative and operational tasks. Activities such as managing employee records, recruiting, onboarding, and internal coordination dominate daily workflows—leaving limited bandwidth for initiatives that directly impact business performance.
Administrative Overload Still Defines HR Roles
The survey breaks down where HR teams spend most of their time. Managing employee files and general administration accounts for 37% of workloads, followed by recruiting and onboarding at 32%. Internal communication and coordination add another 12%.
These figures underscore a structural issue within SMBs: HR departments remain heavily process-driven rather than strategy-focused.
This imbalance has consequences. Strategic functions like performance management and workforce planning—areas critical to long-term growth—are often deprioritized. In effect, HR teams are operating as administrators rather than drivers of organizational value.
Strategic Priorities vs. Operational Reality
The disconnect becomes even more pronounced when compared to HR priorities for the coming year. According to the survey, 60% of SMBs identify organizational culture as their top focus for 2026, while 57% plan to invest in employee development.
These goals reflect broader workforce trends, where employee experience, engagement, and continuous learning are becoming central to business success. However, achieving them requires time, resources, and tools that many HR teams currently lack.
Insights from Gartner indicate that organizations with mature HR strategies are significantly more likely to outperform peers in employee engagement and retention. Similarly, McKinsey & Company has found that companies prioritizing workforce development see measurable gains in productivity and innovation.
Yet for SMBs, administrative overload continues to act as a barrier to these outcomes.
Technology Adoption Remains Fragmented
While technology is often positioned as the solution, adoption across SMBs remains uneven. Only 18% of respondents report having a fully integrated human resource information system (HRIS), while nearly 80% operate within fragmented or siloed systems.
This lack of integration limits visibility and efficiency, forcing HR teams to rely on manual processes and disconnected tools. The result is duplicated effort, increased risk of errors, and reduced capacity for strategic work.
Folks’ survey estimates that implementing an HRIS could save organizations more than 800 hours annually—equivalent to approximately $25,000 in redeployed salary value. For SMBs operating with lean teams, such gains can have a meaningful impact on overall productivity.
The Role of Integrated HR Platforms
The findings reinforce the growing importance of unified HR platforms that consolidate core functions such as time tracking, performance management, and absence tracking.
Enterprise vendors like Workday and SAP have long emphasized integration as a key value proposition. However, SMB-focused platforms are now catching up, offering scalable solutions tailored to smaller organizations.
Folks positions its own software as an all-in-one platform designed to simplify workforce management and improve efficiency. By centralizing HR data and automating routine processes, such systems aim to shift HR teams from administrative roles to strategic contributors.
Jimmy De Santis, Director of Customer Operations at Folks, highlighted this transformation, noting that centralizing and democratizing HR information enables HR professionals to have a more meaningful impact on their organizations.
Why This Matters for SMBs
The survey’s findings arrive at a time when SMBs are under increasing pressure to compete for talent while managing limited resources. In this environment, the ability to optimize HR operations is becoming a critical differentiator.
Organizations that can reduce administrative overhead are better positioned to invest in culture, employee development, and workforce planning—areas that directly influence retention and performance.
At the same time, the shift toward digital HR infrastructure is accelerating. Platforms from providers like Microsoft are enabling integration across business systems, while AI-driven tools are beginning to automate more complex HR workflows.
The Bigger Picture: From Administration to Strategy
The core takeaway from the Folks survey is not just about time allocation—it is about the evolving role of HR.
As businesses navigate a rapidly changing workforce landscape, HR teams are expected to deliver strategic value. But without the right tools and processes, that expectation remains difficult to meet.
For SMBs, the path forward lies in adopting integrated, automation-driven solutions that free up time for higher-value work. The challenge is not just implementing technology, but ensuring it is used effectively to transform how HR operates.
Market Landscape
The SMB HR software market is expanding as organizations seek affordable, scalable solutions to modernize workforce management. Vendors such as BambooHR and Gusto are competing alongside regional players like Folks.
The market is increasingly defined by ease of use, integration capabilities, and automation features. As AI adoption grows, the next wave of innovation is likely to focus on predictive analytics and intelligent workflow automation.
Top Insights
- Folks’ 2026 survey reveals that HR teams in SMBs spend 70% of their time on administrative tasks, limiting their ability to focus on strategic priorities like culture and workforce planning.
- Core HR activities such as employee file management and recruiting dominate workloads, highlighting inefficiencies that persist despite growing digital transformation efforts in HRTech.
- Only 18% of SMBs have fully integrated HR systems, with most operating in silos, leading to duplicated work, reduced efficiency, and limited strategic visibility.
- Implementing an HRIS could save over 800 hours annually, enabling organizations to reallocate resources toward employee engagement, development, and performance management initiatives.
- The findings underscore a broader HRTech trend where automation and integration are critical to transforming HR from an administrative function into a strategic business partner.
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