Organizations can streamline their human resource processes by leveraging digital technology – namely, an effective Human Resources software system.
What is HR software, and why do companies need it?
By automating some of their more mundane tasks, they can refocus on what is most important – those who make up their organization. HR software benefits not only HR staff but other employees too, giving them a better understanding of their organization’s HR policies and procedures.
The remote work revolution has made it necessary for businesses to learn how to foster dynamic and successful teams in an ever-evolving environment. Therefore, HR departments are tasked to introduce performance management solutions that employees can use, regardless of location. Investing in these tools is essential for companies hoping to remain competitive and achieve optimal results from their teams.
Understanding the different types of HR software
When it comes to digital solutions for Human Resources, three major types of software stand out from the rest. Each has unique capabilities and strengths, so understanding their differences can help you determine which best suits your needs.
Here are the three systems that dominate the realm of modern Human Resources technology:
Human Resources Information System (HRIS)
To maximize efficiency, many organizations rely on HRIS software as their main source of employee information and management. These tools are available both online and in a software form and can be hosted by the company’s server, a cloud provider, or a third-party vendor.
Primary benefit: A centralized database houses all personnel data that can be accessed at any time from any location. This makes it easier for HR teams to enter and manage employee records confidently.
Human Capital Management (HCM)
Human Capital Management (HCM) is a more comprehensive version of HRIS, integrating all the same features with more sophisticated solutions and a focus on talent management.
Primary benefit: HCM focuses on employees’ life cycle and career paths within an organization, from recruitment to management and optimization. Furthermore, it can be tailored to any company’s requirements enabling close supervision of employee well-being and satisfaction, resulting in a higher retention rate.
Human Resources Management System (HRMS)
HRMS is an advanced HR software combining the best of HRIS and HCM features with a focus on administrative processes. Its dynamic features extend beyond just the management of time and labor to encompass an automated payroll system.
Primary benefit: Organizations can take advantage of its powerful capabilities, such as productivity reports and analyses, designed to maximize efficiency in the workplace.
Not enough? Take a deeper dive into the differences between HRIS, HCM and HRMS.
Essential features of HR software
For small and midsize businesses (SMBs), a Human Resources system with specific features is essential. Here are some key functionalities that an SMB should consider when selecting HR software.
Personnel management, or employee information management, helps businesses keep tabs on the whereabouts and details of their staff.
- It includes personal information, contact info, previous work history, and demographic data
- It enables organizations to plan ahead for absences and delays so resources may be swiftly reallocated
- Employers can easily monitor the hours worked and location of remote personnel such as salespeople
Organizing your company’s multitude of benefits programs is made easy with the help of this feature.
- Allows the HR staff to stop chasing after employees to sign paperwork
- Lets employees manage their benefits autonomously through an online portal
- Automatically notifies employees about vendor upgrades or government regulations
Data collection and management is a key component of the role of Human Resources, and reporting allows for a greater understanding of this data.
- Organizations will be able to identify trends that can inform future hiring decisions
- Data can be used to pinpoint issues to determine how to best address them
- Gives you accurate insights on how to upgrade your business strategy
- Helps ensure your compliance with local, state, and national regulations
The size of your organization and the sector you work in will determine the type of HR software that is right for you. Further features that are available with some of the best HR software on the market include:
- Employee management: This feature involves managing employee workload and compensation
- Recruiting: This feature uses a centralized database for candidate information
- Benefits management: This feature allows employees to self-manage benefits by choosing their preferences via a self-service portal
- Learning and Development (L&D): Organizations need to be able to deliver training uniformly and in a well-structured way, which is where a learning management system (LMS) comes into play
A look at the top 5 HR software providers
Understanding the HR software marketplace can be a daunting task. To save you time and effort, here are the top 5 HR companies for businesses.
- Cloud-based service is ideal for small businesses that require a high level of communication between employees
- Paid-for subscription service available for up to 1,000 employees
- Options become more complex and varied as you transition from the free plan to the paid version
- Internationally oriented thanks to multi-language and currency options
Why we like it:
- Offers most features that an SMB needs to manage and track staff
- Built-in messenger and employee discussion forums
- Upgrades available one module at a time
- Available in 30 languages and multiple currencies
- Does not have any special hardware requirements
- SSL security, strong encryption, and other data security
Why we don’t like it:
- Free version’s features are limited
- Visual style could be improved
- Limited customization
- Limited choice of built-in templates
- Available in six versions, including a free version for companies with fewer than five users
- Provides tools to manage the entire HR process
- Integrates with other Zoho products easily, such as its payroll solution
Why we like it:
- Affordable and transparent pricing
- Integrates with other Zoho offerings
- Active community forum
- Mobile app available
- Professional setup services are available
- Virtual support assistant
Why we don’t like it:
- Custom quotes needed for larger organizations
- Some features are limited to the upper tiers of the plan
- Lack of direct support options
- Payroll isn’t included
- Limited phone support
- A good choice if scalability is a priority
- Free starter package provides time tracking, reporting, HR admin, and recruitment features, along with employee self-service and other features
- Complete interface for almost all things HR needs
Why we like it:
- Companies can self-host
- User-friendly and good UI
- Excellent time-tracking functions
- Mobile app
- Permission levels for different users
Why we don’t like it:
- Plugins may be required
- Customer support limited
- Price point is comparatively high
- Unlimited number of users in the free version
- Portfolio of task and project management features
- Tools include profile pages, company structure, a social network, and a company knowledge base
- Includes software automation features, file sharing, and email marketing integration
- Will suit companies that want to easily connect to other aspects of the business, such as customer relationship management and website building
Why we like it:
- 35 free tools
- Constant notification of opportunities, tasks, and activities.
- Kanban user interface available
- Free up to 12 users
- Simple reporting features
- Affordable pricing
Why we don’t like it:
- Complex user interface
- Social networking limitations
- Doesn’t support chatbots
- Steep learning curve
- Comprehensive HRIS software with tools for onboarding and employee management
- Branded onboarding portal for a seamless experience
- Dynamic employee profiles for easy organization and updates
- Automatic org chart generation and updates
- Efficient time off tracking and management
Why we like it:
- Streamlines the entire hiring process, from candidate selection to onboarding
- Customizable onboarding activities tailored to each new hire
- Easy-to-use dashboard for tracking multiple onboardings
- Automated onboarding processes save time and ensure timely completion
- Supports multiple profile templates for different locations and employment types
- Company file storage and document templates for easy access and organization
- Flexible time off policies and accrual options to cater to diverse workforce needs
Why we don’t like it:
- Limited in scope and features compared to some other HR software solutions
- Best suited for small businesses with under 20 full-time employees, with limited scalability for larger organizations
- Continuously evolving, meaning the platform may not yet offer the most complete HR software experience on the market
How HR software saves businesses money
HR software can save you money in many different ways.
- Streamlines HR admin: It allows HR teams to spend less time on administration and more on strategic activities
- Efficient onboarding: Technology replaces paperwork, reduces the time to replace an employee, and cuts the cost of hiring an employee
- Employee self-service saves time: Fewer HR calls; therefore, a leaner team is needed
- Cuts the cost of outsourcing: A broad range of HR functions, including payroll, can be performed in-house.
- Eliminates costly errors: Automation reduces the risk of human error
- Ensures compliance: Avoid missing regulatory deadlines that may lead to penalties being imposed
- Supports remote work: Reduces the need for office infrastructure and can therefore save on overhead costs
When you look at the considerable time and monetary savings you can achieve by investing in HR software; you can then weigh them against the costs your organization is currently carrying. This will give you a clear idea of your return on investment (ROI). Once this is clear, you may even decide it’s worth exploring other HR software modules that initially didn’t fit your budget – meaning access to even more savings.
HR hiring software – what is it?
Organizations are turning to specialized software to streamline their recruitment process. Commonly referred to as an applicant tracking system or ATS, this type of software covers every detail, from sourcing and screening candidates to issuing offer letters. Although the two terms are often used interchangeably, it is important to note that the scope of recruiting software extends beyond just ATS functions – they also provide tools specifically designed for each step in the selection process.
Hiring (or recruiting) software can provide a range of benefits to assist in the process of hiring qualified candidates:
- They often include features for sourcing, engagement, selection, and hiring
- Sourcing helps uncover potential applicants who may not have seen job postings while engaging with them ensures they remain informed throughout the process
- Selection capabilities help narrow down the list of candidates based on assessments or evaluations
- Some platforms manage the actual step of hiring as well as provide an interface between candidate and employee experience
Related: What is HR software?
Here’s how HR recruitment software works
Through the company portal, hiring managers and recruiters can create job postings, view all relevant job applications, update information as candidates are interviewed, send out job offers, handle paperwork related to onboarding the new employee, and generate reports relating to the hiring process.
This powerful tool organizes and streamlines the entire hiring journey for everyone involved – freeing up more time for additional tasks that need to be accomplished.
The cost of HR software
The cost of an average HR software package typically starts from $3 to $1,200 per month per user, depending on the number of personnel involved. This is how pricing typically works – you get more features as the price increases. The basic plan covers only essential functions, while a higher-priced product will include additional tools for supporting larger organizations or teams.
Choosing the right HR software for you
When choosing the right HR software for your business, start by focusing on what processes you wish would be simplified and which features are most essential. This will help you zero in on the perfect fit and narrow down your selection.
- What to look for: Try to select a program that includes all the Human Resources Information System (HRIS) requirements within its base price; otherwise, acquiring extras could lead to overspending your assigned budget.
- What to be wary of: When selecting a software package, you must be aware of which features are included in the standard version and any extra elements that may require an additional cost.
If you are working with a service provider directly, ensure you secure a service contract providing ongoing maintenance, updates to address changing compliance needs, and software updates to ensure compatibility with other software packages.
Steps to take when choosing HR software
Step 1: Make an initial assessment
Determine if the process will be carried out by internal HR auditors or a consultant that may have the time, data-gathering and evaluation skills your organization lacks.
Step 2: Assess organizational needs
Look beyond the HR department’s needs and consider the organization’s and other department’s strategic plans. This will guide you on the features and modules you require. For example, if you’re a tech startup, consult our SaaS HR software guide.
Step 3: Determine needs vs. wants
Consider how the HR software could improve current procedures, such as new-hire processing. The more value it offers your organization, the higher it will rank as needed.
Step 4: Assess the project parameters
Once you have a list of minimum requirements and additional features you require, see how they hold up against your current infrastructure, for example:
- Budgetary constraints: what are the price points you can afford?
- Technological limitations: do you have the necessary server space and infrastructure in place?
Time constraints – what lead time do you need to complete the request for proposal (RFP), technology selection and review, and implementation processes?
Step 5: Assemble a project committee
This should include IT, payroll, finance, accounting, HR, performance management, operations, training, and recruitment.
Investing in HR software should not be a knee-jerk decision. Taking the necessary steps to ensure you pick the right package and that it can grow alongside your business will also save you time and money in the long term.
HR software: do your homework
For a human resources administrator or executive, having access to good software can make all their complex daily tasks much easier. With modern technology, many of their frequent, time-consuming activities can be automated so that they can spend more time focusing on what’s truly important – their employees.
You now should understand what HR software is, why your company might require it, the available types of HR software, and the features that all HR software should have.
What’s next? Put your assessment process into practice and start weighing up your options. It’s always a good idea to do your homework when investing in new software.
Frequently asked questions
- What is HR software, and why do companies need it?
- HR software refers to digital technology for businesses that streamlines human resource processes. It allows HR professionals to automate repetitive tasks and refocus on the aspects of their organization that deserve more attention. Companies need HR software to remain competitive, achieve optimal results from their teams, and foster dynamic and successful teams in an ever-evolving working environment.
- What are the three major types of HR software, and how do they differ?
- The three major types of HR software are HRIS, HCM, and HRMS. HRIS provides a centralized database for all personnel data, making it easier for HR teams to manage employee records. HCM, on the other hand, integrates HRIS features and adds a focus on talent management and optimizing employee lifecycles and career paths. HRMS combines the best of both with additional functions related to administrative processes and an automated payroll system.
- How can HR software save businesses money?
- HR software can save businesses money by streamlining HR administrative work, ensuring a smoother onboarding for new employees, and allowing for greater employee self-service in HR processes. It can also reduce costs related to outsourced HR tasks, minimizes human error, ensures compliance in reporting and regulatory deadlines, and supports remote work by reducing the need for expensive office infrastructure and related overhead expenses.
- What are the essential features of HR software for SMBs?
- Some essential features of HR software for SMBs include personnel tracking, employee information management, wage and benefits administration, and people analytics. Other beneficial features can include employee management, managing compensation, centralized candidate and employee databases, and uniform learning & development programs.
- What steps should companies take when choosing the right HR software for their business?
- Companies should start by focusing on what processes they wish to simplify and which features are most essential. They should determine their organizational needs, consider how the HR software could improve current procedures, assess their project parameters, and assemble a project committee. Additionally, they should do their homework and take the necessary steps to ensure they pick the right package that can grow alongside their business.