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What is HR software – and how can it help your business?

If you care about employee retention and staying compliant, then you need HR software in your tech stack. Dive in and learn what HR software is, what types of HR software are out there, and how it can benefit your business.

Keith MacKenzie
Keith MacKenzie

Passionate about human resources, employment, and business management, and an expert at sharing that expertise.

What is HR software?

HR software helps companies manage their human resources. It can provide a variety of features such as employee tracking, recruitment, performance management, payroll management, benefits administration, and more.

HR software can automate manual processes and reduce paperwork, allowing HR departments to focus on more macro-level, strategic work. It can also help improve employee engagement and productivity.

Why do businesses need HR software?

HR software can help streamline and automate many of the tedious and time-consuming tasks associated with human resources, such as keeping track of employee information, payroll, scheduling and attendance, onboarding and training, and performance management.

It can also help improve communication between departments, align processes and objectives, and provide insights into key HR metrics and trends.

HR software can also provide the tools needed to manage compliance with employment laws, regulations and policies. In addition, it can help organizations analyze data to make better decisions, improve the overall employee experience, and support the long-term success of their business.

Now that’s covered at the surface level, let’s go through the benefits of HR software one by one:

1. Improve communication across the organization

HR software streamlines communication processes and automating mundane tasks. It provides a centralized platform where employees can access information, share files, collaborate on projects, and communicate with one another in real-time.

HR software can also be used to send out reminders, announcements, and event notifications to ensure everyone is on the same page. It also provides a platform to store employee data and records, making it easier to access important information for managers, employees and, of course, HR professionals.

2, Improve compliance

HR software can help your business stay compliant by providing a centralized database of employee information, automating employee onboarding processes to ensure accuracy, automating employee training processes to ensure all employees are up to date on regulations, and providing automated alerts and reminders to ensure compliance with local laws and regulations.

HR software also has reporting and analytics features that can help you identify areas where your business might be falling short and help you stay on the right side of the ever-evolving compliance landscape.

3. Reduce administrative costs

HR software cuts down on administrative costs as well. We mentioned automation of mundane tasks including processing payroll, benefits administration, and attendance tracking. All that time spent manually entering and processing data is now freed up.

HR software also streamlines hiring processes, such as applicant tracking and onboarding, which can reduce the amount of time and money spent on recruiting and onboarding.

And all that paperwork associated with managing employee records, such as benefits forms and performance reviews? Gone. It’s now stored in a central resource in the software, cutting down on all that time organizing, processing, maintaining and storing documents.

4. Ensure consistency

HR software ensures a more consistent workflow by automating and streamlining many of the processes associated with overall human resources management.

Consistency also has an equity element to it – because HR work can now be more uniform and replicable for each employee, you’re ensuring that all employees are treated fairly and have a consistent experience without the disruption of unconscious bias.

This is also a compliance consideration – you’re ensuring that all company policies and procedures are followed equally and that employees are trained and informed on a regular basis.

5. Deepen your data analysis

HR software supports data analysis by providing users with comprehensive, organized data that can be easily sorted, filtered, and analyzed as needed. This data can be exported into other forms, such as graphs and charts, to help visualize patterns, trends, and correlations. The resulting reports – whether it’s focused on people data or company processes – can be immensely useful when making strategic business decisions.

What are the different types of HR software?

There are numerous different types of HR software, all of which meet the varying needs of an organization depending on size, complexity, priorities, goals, budget, operations, location, and other variables.

1. Human Resources Information Systems (HRIS)

Human Resources Information Systems (HRIS) is a software solution that stores and manages employee data and automates the processes related to human resources departments. It simplifies and streamlines administrative tasks such as payroll, benefits, recruitment and performance management.

Additionally, an HRIS can provide insight into employee data and trends, allowing HR to make more informed decisions. Think of it as a resource-oriented software that compiles information and administration into a single place.

2. Human Resources Management Systems (HRMS)

Human Resources Management Systems (HRMS) expands on the above-described HRIS capabilities by supporting a company’s management of internal HR functions, including employee data management, payroll, recruitment, benefits, training, talent management, employee engagement, and employee attendance.

Yes, there’s obviously overlap between this and an HRIS – the difference is that where an HRIS is primarily about storage and centralization, an HRMS focuses more on management.

3. Employee Document Management Software

Employee document management software is what it says – it supports the creation, storage, tracking and management of employee documents specific to payroll, insurance, benefits, policy and procedures, contracts, and other employee-specific paperwork that can be stored in a central hub.

4. Applicant Tracking System (ATS)

An applicant tracking system (ATS) is a software that supports and automates the administrative processes related to hiring and recruitment. For example, ATSes enable self-scheduling capabilities for interviews, distribution and promotion of job postings, employer branding, applicant management and candidate evaluation through the recruitment funnel.

5. HR Payroll Software

HR payroll software supports and optimizes the management of an organization’s payroll – including salary, paychecks, bonuses, and other forms of compensation.

6. Human Capital Management (HCM)

HCM – or Human Capital Management – software is more of a complete suite of the above, focused on processes related to employee management, development, and productivity.

What’s the difference between HRMS, HRIS, and HCM?

HRIS stands for Human Resources Information System, which is a system used to store and track employee information.

HRMS stands for Human Resources Management System, which is a software application used to manage HR functions in a tactical way.

HCM stands for Human Capital Management, which is an approach to managing people within an organization. It focuses on the development of people to help the organization achieve its objectives.

What are the latest trends in HR software?

Just like any technology, HR software is always evolving. Let’s look at the latest trends that impact HR software:

1. AI & machine learning

AI and machine learning are increasingly being incorporated into human resources software to help streamline and automate a range of tasks.

With a good HR software, you not only can automate processes, you can also predict employee performance based on existing data, personalize L&D experiences, identify potential compliance issues, and even make AI-driven decisions.

2. Workforce management

Workforce management is an increasingly popular tool in HR software, used by employers to streamline and optimize labor management processes including time and attendance, scheduling, payroll, benefits and more.

The growing sophistication of workforce management as a feature in HR software means that employers can more accurately forecast labor hours and productivity, allowing better allocation of resources and reduction of redundant and overlapping processes – saving on costs across the board.

3. Integrated systems

As digital transformation (DX) continues in companies as a result of the migration to remote and hybrid environments, the digitization of everyday work processes, and the incorporation of technology into workflows, smooth integration of different softwares and tools is a must.

4. Company branding

The HR function has been described as becoming more crucial in a company’s overall branding, including as an employer. People are at the heart of a company’s growth and success, and human resources teams are at the core of attracting and retaining top talent.

With the many capabilities and tools in HR software focused around benefits management, learning & development, and team-building, HR software can play a huge role in making a company more attractive to work for.

What core functionalities should you look for in HR software?

When shopping for HR software, you should look for a variety of functionalities. They include but are not limited to:

1. Recruitment and onboarding

HR software should cover all the elements of an employee’s lifecycle with an organization, and recruitment and onboarding is no exception. Make sure your HR software has a capable applicant tracking system – or is at least integrable with one in your existing toolbox – and enables a smooth onboarding experience for your new hires. This includes options for training, orientation, policy review, and employee information collection.

2. Payroll

Your HR software should include at least basic capabilities for management and tracking of your organizational payroll down to each individual employee. This can also include other fiscal elements such as bonuses, raises, and work-related expenses, and fit cleanly within your financial tech stack.

3. Time, attendance and scheduling

Even with the advent of flexible work, many companies still need to regulate and manage their employees’ working hours. Monitoring attendance, allocating time slots, and managing time off are all time-consuming when controlled manually – every HR software should include capabilities for all this.

4. Benefits administration

Employee benefits programs – including health insurance, retirement plans, paid leave and other compensation packages – are a core element of human resources. HR software must include options for managing, administering, and communicating these programs on a regular and repeatable basis.

5. Compliance

Whether it’s employee data privacy or equal employment opportunity, there are numerous legislations to be aware of when managing human resources. Your HR software should have ISO-certified capabilities for storage of sensitive information and the ability to create and send reports to comply with regulations in your area of operations – for instance, those related to GDPR and EEOC.

6. Reporting and analytics

Because of its storage and management functionalities, HR software is naturally designed to accurately track employee data. When you’re playing a role in business strategy, this data is valuable. The ability to build reports and stay on top of your people analytics is a must-have in any HR software system.

Final thoughts on HR software

Now you know what HR software is, why your business may need one, what types of HR software are available, and what standard features should be included in any HR software.

What’s next? That’s up to you. Whether you’re in the market for a new HR software to support your business, or just looking to learn more, it’s always good to be aware of the options that are available.

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