Home > HR Pro Shop > Finding the Best HR Software
1 Benefits for HR Software
2 Essential HR Software Features
3 What experts look for in HR Software
4 HR Software Vendor Comparison
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What is HR Software?

Human resources (HR) software, also known as HRIS (Human Resources Information System), HRMS (Human Resources Management System), or HCM (Human Capital Management), is a powerful tool that streamlines and automates various employee-related processes within an organization.

It is a central repository of employee data, allowing HR professionals to efficiently manage and maintain employee information, such as personal details, job history, performance records, and benefits enrollment. Storing this information in HR databases makes it easily accessible and can be utilized for various HR responsibilities.

HR software covers many areas within HR, including core HR functions such as attendance tracking, employee scheduling, and compliance management. Many HR software systems include recruitment, onboarding, talent management, benefits administration, and employee engagement modules.

Additionally, HR software typically provides a self-service portal for employees, enabling them to access and update their information, request time off, manage benefits, and view company policies. Allowing team employees to self-serve reduces HR teams’ administrative burden by empowering them to handle specific tasks.

In this comprehensive guide to HR software, we’ll delve into how HR software helps organizations improve efficiency, accuracy, and compliance. We’ll also make clear how it provides valuable insights and analytics to support workforce planning and decision-making processes. And of course, explain why HR software is essential for managing the entire employee lifecycle and creating a positive employee experience.

Why is HR Software Important?

HR software is crucial for organizations of all sizes as it is vital in streamlining processes, reducing errors, and improving organizational efficiency. With tools like PrimePay HR, you can navigate core hiring challenges, improve retention, and break down siloes. Watch the video below to learn how two HR and Finance pros use HR Technology to solve critical business problems.

HR software provides several benefits to organizations, helping them streamline and optimize their HR processes. One of the primary benefits is increased efficiency. By automating various HR tasks, such as attendance tracking, employee scheduling, and benefits administration, HR software saves valuable time and eliminates manual errors.

Consistent compliance is another advantage of HR software. It helps organizations comply with employment regulations by providing tools to track and manage compliance requirements, such as tax filing and benefits enrollment. Being compliant reduces the risk of legal consequences and expensive penalties.

Deeper reporting capabilities are a crucial benefit of HR software. HR teams can generate comprehensive reports and analyze data to gain actionable insights. They can track employee performance, identify trends, and make data-driven decisions to improve overall HR strategies and policies.

Additionally, HR software reduces the time spent on administrative tasks.

Automating manual tasks like data entry, record keeping, and report generation frees HR professionals to focus on more strategic initiatives that drive employee engagement, improve employee retention, and increase organizational success.

In summary, the benefits of HR software include:

  • Increased efficiency.
  • Consistent compliance.
  • Deeper reporting capabilities.
  • Reduction in time spent on administration tasks.
  • The ability to focus on strategic responsibilities.

WATCH: Two Expert Discuss How they Use HR Software

HR software is crucial for organizations of all sizes as it is vital in streamlining processes, reducing errors, and improving organizational efficiency. With tools like PrimePay HR, you can navigate core hiring challenges, improve retention, and break down siloes.

Check out the following video, as an HR and Finance expert weigh-in on how they use HR Software to solve critical business problems.

What are the cons of HR software?

While HR software solutions offer numerous benefits, they also have potential drawbacks and limitations. One of the main drawbacks is the initial cost of implementing and maintaining the software. Organizations may need to invest in hardware, training, and customization to ensure a smooth implementation. Additionally, ongoing subscription fees and support costs can add up over time.

Another limitation is the potential for technical issues or system errors. If the software is not adequately maintained or updated, it can lead to disruptions in HR processes and data inaccuracies. This makes it essential to choose an organization with a strong history of technical uptime and excellent client support.

Organizational change management can also be a challenge when implementing HR software. Employees may resist the change or struggle to adapt to the new system, leading to decreased productivity and frustration. Proper training and communication are crucial to ensure a successful transition.

Security and data privacy concerns are another common challenge. HR software stores sensitive employee information, and organizations must ensure the software is secure and compliant with data protection regulations. Any breaches or data leaks can severely affect the organization and its employees.

Here are some essential elements to look out for when it comes to assessing the security and data privacy of an HR software provider:

  • Make sure the system is sophisticated & accurate
  • Make sure it provides a single system of record
  • Make sure it reduces API & software connections

While HR software can significantly improve HR processes, organizations must carefully consider and address these drawbacks, challenges, and concerns before implementing and using such solutions.

Choosing the proper human capital management (HCM) software is crucial for the smooth functioning of any organization, regardless of its size. HCM software automates many administrative tasks, streamlines core HR functions and provides a wide range of features to support the entire employee lifecycle. 

HCM software simplifies and improves processes from recruitment and onboarding to benefits administration and employee records. Some must-have features include employee self-service portals, attendance tracking, talent management, compliance management, and predictive analytics. Cloud-based software solutions offer flexibility and accessibility, allowing remote teams to access HR information easily.

Here are the top features you should look for:

 

Onboarding

Onboarding features are a valuable tool for streamlining the employee onboarding process and ensuring a smooth transition for new hires. Generally, these features offer a range of benefits and features that make the onboarding experience more personalized and efficient.

One of the key advantages of onboarding software is the ability to automate various onboarding tasks, reducing the need for manual work and streamlining administrative processes. This automation includes features like electronic signatures for important documents, eliminating the need for printing and signing physical papers. Additionally, software solutions often include pre-boarding checklists and employee questionnaires, allowing organizations to collect essential information from new hires and ensure all necessary tasks are completed.

Some onboarding software goes further by dynamically adjusting based on the employee’s country. This means that the software can accurately account for country-specific compliance requirements and ensure all necessary safeguards are in place. This is particularly important for businesses operating across multiple countries, as compliance regulations vary significantly.

Employee Experience & Performance

Employee experience and performance are vital aspects of any organization, and HR software plays a crucial role in managing and enhancing both. By utilizing the right HR software, businesses can effectively track and manage employee performance, provide continuous feedback, and ultimately improve overall employee engagement.

One of the key features of HR software that enhances employee experience and performance is goal setting and tracking. This feature allows employees to set clear objectives and track their progress toward achieving those goals. With a visual representation of their progress, employees stay motivated and focused, leading to improved performance.

Another important aspect is performance reviews. HR software enables organizations to conduct regular and structured performance evaluations. This helps identify strengths and areas for development, leading to targeted training and development opportunities. By providing employees with clear feedback on their performance, HR software contributes to their growth and enhances their overall experience.

Additionally, employee recognition programs integrated into HR software are extremely beneficial. These programs provide a platform for acknowledging and rewarding outstanding employee performance. By recognizing their achievements, employees feel valued and appreciated. This boosts morale, motivation, and ultimately enhances performance.

And finally, integrating a learning management system with HR can help get your new hires quickly up to speed as it relates to training and development. 

As you may see, HR software plays a critical role in managing employee experience and performance. Features like goal setting and tracking, performance reviews, and employee recognition programs contribute to creating a positive work environment, encouraging employee growth, and improving overall engagement.

Reporting

One of the standout features of HR software is its robust reporting capabilities. HR software allows organizations to generate data-filled reports that provide valuable insights into various aspects of their workforce. These reports cover different HR functions, including recruitment, employee engagement, performance, diversity, and attendance tracking.

With HR software, organizations can track analytics and better understand trends and patterns within their workforce. These analytics help identify areas of improvement and track the effectiveness of HR initiatives. Organizations can make informed decisions and strategize their approach to employee development by analyzing data.

Moreover, HR software often incorporates advanced tools like predictive analytics and natural language processing. These tools provide organizations with actionable insights and forecast future trends based on historical data.

Performance management

Performance management software is valuable for organizations to track and improve employee performance effectively. It offers a range of essential features that enhance the entire performance management process.

One key feature is the ability to assign and track goals easily. With this software, managers can set clear and measurable employee goals and track their progress in real time. This ensures that employees have clear expectations and stay on track toward achieving their goals.

Feedback and coaching mechanisms are also essential components of performance management software. Managers can provide employees with regular feedback and constructive coaching, helping them improve their skills and performance. This promotes a culture of continuous development and growth within the organization.

Performance reviews are streamlined and made more efficient using performance management software. Managers can easily schedule and conduct regular performance reviews, enabling them to assess individual performance against set goals and provide valuable insights and recommendations for improvement.

Data integration and custom workflow design are crucial for an effective performance review process. The software should seamlessly integrate with existing HR systems, allowing for the easy transfer of data and ensuring accuracy. Customizable workflows enable organizations to tailor the performance review process to their specific needs, ensuring a smooth and efficient experience for managers and employees.

Payroll software

Payroll software plays a crucial role in managing the financial aspect of human resources management. It provides organizations with the tools necessary to accurately track expenses, taxes, payouts, and schedules related to employee compensation. By streamlining these processes, payroll software ensures compliance with labor and payroll regulations, minimizing the risk of errors and costly penalties.

One of the key features of payroll software is its ability to track and calculate employee wages and benefits accurately. This includes calculating regular and overtime hours, factoring in different pay rates and deductions, and managing paid-time-off balances. By automating these calculations, payroll software eliminates manual errors and saves valuable time for HR professionals.

Another important functionality is the ability to generate and distribute pay stubs and tax forms automatically. Payroll software can generate detailed pay stubs that outline the breakdown of employees’ earnings, deductions, and taxes. It also generates tax forms such as W-2s and 1099s, making tax reporting and compliance significantly easier for both organizations and employees.

In addition, payroll software helps organizations stay on top of important payment schedules. It can automatically schedule direct deposits or print physical checks, ensuring that employees are paid accurately and on time. This reduces the administrative burden of manual paycheck distributions and promotes employee satisfaction.

All in all, payroll software provides valuable insights by generating reports on payroll expenses and trends. HR professionals can analyze payroll data to make informed decisions regarding workforce costs, budgeting, and resource allocation. These analytics help organizations optimize their payroll processes and ensure financial stability.

Tax Functionality

Tax functionality is a crucial component of HR software that aids in managing tax-related tasks and compliance requirements. This feature encompasses several essential features such as tax calculations, tax filing, and tax reporting, which are necessary for accurate and efficient payroll processing.

Firstly, tax calculations allow HR professionals to accurately determine the amount of tax to be withheld from employees’ wages. The HR software automates this process, taking into account the latest tax laws and regulations. It ensures that the correct amounts are deducted for federal, state, and local taxes, as well as for other types of deductions such as Social Security and Medicare.

Secondly, HR software simplifies tax filing by generating the necessary tax forms for organizations and employees. It automatically prepares and populates forms such as W-2s and 1099s, reducing the manual effort required for tax reporting. This streamlines the tax filing process and ensures compliance with legal requirements.

Lastly, tax reporting features in HR software provide valuable insights into payroll expenses and tax compliance. HR professionals can generate reports that analyze tax withholdings, tax liabilities, and other tax-related data. This helps organizations stay informed about their tax obligations, make accurate financial projections, and ensure they meet compliance requirements.

Recruiting

Recruiting is an essential aspect of human resources software, as it is vital in managing the entire recruitment process. HR software streamlines and automates these tasks for improved efficiency and effectiveness, from sourcing and screening candidates to onboarding new employees.

One key feature of HR software is the Applicant Tracking System (ATS), which allows HR professionals to manage and track candidate applications throughout the hiring process. ATS organizes resumes, screens applications, and stores candidate information in a centralized database, making it easier to find qualified candidates and make data-driven hiring decisions.

Recruiting software also offers a range of tools to assist HR professionals in their hiring efforts. Workforce planning capabilities help organizations forecast future hiring needs and align recruiting strategies with business objectives. Diversity recruiting software enables companies to prioritize DEI (Diversity, Equity, and Inclusion) initiatives and ensure a more equitable hiring process.

Video interviewing platforms have become increasingly popular in HR software. These tools allow for remote interviews, facilitating the hiring process for geographically dispersed candidates and remote teams. Video interviews save time, reduce costs, and provide a more convenient and flexible experience for both candidates and recruiters.

Benefits Administration

Benefits administration is a critical component of HR software that enhances employee satisfaction and retention. Allowing organizations to manage their employee benefits programs efficiently ensures that employees receive the perks they deserve, leading to higher job satisfaction and engagement.

A comprehensive benefits administration software should offer essential features to streamline and customize the benefits process. Customizable plans enable HR professionals to tailor benefit packages based on employees’ preferences and needs, promoting a sense of personalized care. Automated enrollment processes automate the often complicated task of enrolling employees in the various benefit programs, reducing administrative burdens and increasing efficiency.

Furthermore, a comprehensive benefits administration software should be capable of managing a wide range of benefits, including medical, dental, vision, life insurance, disability, payroll, retirement benefits, and additional perks. This ensures that employees have access to a comprehensive benefits package, which not only protects them and their families but also promotes their overall well-being.

By providing employees with easy access to their benefits information and enabling them to make informed decisions, benefits administration software promotes employee satisfaction and engagement. Additionally, it helps organizations attract and retain top talent by offering competitive benefit packages that meet the diverse needs of their workforce.

Integrations

Integrations are a crucial aspect of HR software that can greatly enhance productivity and efficiency. By seamlessly connecting with other software systems already in use, integrations eliminate the need for manual data entry and streamline workflows.

One of the key benefits of integrations is that they allow HR professionals to consolidate information from various sources into a single platform. For example, integrations with email providers enable HR teams to automatically sync employee data and communication history, eliminating the need for switching between multiple applications.

A great example of this is recruiting, as well as time and attendance integrations. These two critical aspects of HR management highlight the significance of seamless software integration. In the realm of recruiting, a well-integrated HR software system streamlines the entire recruitment process, from posting job openings to applicant tracking and onboarding. By eliminating manual data entry and reducing redundancies, organizations can save valuable time and resources while ensuring a consistent and efficient hiring experience for both candidates and HR personnel.

Customer Support

Customer support is crucial in ensuring the smooth implementation and usage of HR software. When investing in a software solution, choosing a provider that offers robust and responsive customer support is essential.

Key features of customer support in HR software include a dedicated support team that is readily available to assist with technical issues or questions that may arise. These representatives should be knowledgeable about the software’s functionalities and able to provide prompt and accurate solutions.

A responsive customer support team is vital for minimizing downtime and maximizing productivity. In case of any software glitches or hiccups, having a reliable support system ensures quick resolution, minimizing any disruptions to daily HR operations.

Additionally, customer support should provide comprehensive training and onboarding to help HR professionals effectively navigate and utilize the software’s features. This ensures a smooth transition and enables users to fully leverage the software’s capabilities.

In summary, customer support is a critical aspect of HR software. It ensures that technical issues are promptly addressed, questions are answered, and users receive the necessary guidance to make the most of the software’s functionality. Choosing a provider with excellent customer support can greatly enhance the overall user experience and maximize the benefits of HR software implementation.

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We recently polled the experts in HR and Finance to better understand what they look for in an HR software. Here is the list:

1) Competitive Compensation Features

 
Merit Matrix

The Merit Matrix feature enables HR professionals to analyze and reward employees’ performance with relevant compensation. It uses market data to ensure that rewards are aligned with industry standards.

Time to Hire

The Time to Hire functionality is crucial for gauging the efficiency of the recruitment process. By understanding how long it takes to hire, companies can measure their competitiveness in the labor market.

Median Gender Pay Gap 

With the Median Gender Pay Gap feature, organizations can gain valuable insights into the median pay difference between male and female employees. This information can be instrumental in promoting gender pay equity.

Salary Grades 

The Salary Grades option allows businesses to implement pre-set salary grades. These grades help maintain pay equity within management levels, ensuring that employees in similar roles are compensated fairly.

Payroll-Connected On-Demand Pay

The Payroll-Connected On-Demand Pay feature enhances a company’s competitiveness by allowing employees to receive their paychecks before payday. This innovative approach is offered at no extra cost and can be a strong incentive for employee satisfaction and retention.

2) Advanced Analytics Capabilities

 
Time Relation Model

The Time Relation Model is designed to manage data attributes over a span of time, facilitating easy analysis and decision-making. It assists HR professionals in comprehending trends and making data-driven choices.

Position-Based Architecture

The Position-Based Architecture feature preserves vital historical information about positions and roles. This ensures that key insights across time are readily available, contributing to greater efficiency in understanding organizational dynamics.

Budget vs. Actual Planning

The Budget vs. Actual Planning functionality allows organizations to track real-time headcount against planned headcount. By doing so, it ensures alignment with budget constraints and provides essential oversight in human resource planning.

DEI Insights

DEI Insights offer quick and comprehensive glimpses into workforce diversity, including gender and ethnicity, and their relationship to turnover. This information is invaluable for creating and maintaining an inclusive work environment that reflects broader societal values.

Integrated Platform

The Integrated Platform is a unified source that caters to all business needs. By consolidating various functions into one solution, it effectively reduces the need for multiple, disparate tools, streamlining processes and increasing efficiency across the organization.

The HR dashboard became our go-to tool, providing valuable insights into turnover patterns and pay equity issues. This led to informed decision-making, like when we had to adjust compensation packages for our sales team based on data insights.

-Jamie Press, SVP of HR at PrimePay

3) Reduced Manual Task Features

 
Drag and Drop Org Chart

The Drag and Drop Org Chart feature allows HR professionals to easily understand employee roles, identify vacant positions, and visualize the reporting hierarchy. This interactive tool simplifies the process of viewing and managing organizational structure.

Streamline Recruiting

The Streamline Recruiting functionality enables companies to speed up their recruitment process by automating key processes from HR to payroll. This automation results in a more efficient and cohesive hiring experience, allowing businesses to acquire top talent faster.

Future Dated Activities

With the Future Dated Activities feature, users can effortlessly enter dates for activities that occurred in the past, are happening in the present, or are planned for the future. This flexibility in date entry ensures that all relevant timelines are accurately captured and managed.

Ease of Use

The Ease of Use aspect of the platform is an intuitive design aimed at fostering collaboration between HR and Finance teams. By simplifying the user experience, it helps diverse teams work together toward common goals, such as business growth and a rewarding employee culture.

 

4) Employee Self-Service Functions

 
Direct Deposit & Tax Withholding Changes

The feature for Direct Deposit & Tax Withholding Changes empowers employees to manage their own direct deposits and tax withholdings, providing them with more control over their financial arrangements.

Benefits Summary

The Benefits Summary option allows employees to easily view their selected benefits and paycheck deductions, offering transparency and a clear understanding of their compensation package.

Licenses & Certifications

The Licenses & Certifications functionality enables employees to add and track their professional licenses and certifications within the system. This helps keep credentials up-to-date and ensures compliance with industry standards.

Paystub Breakout

The Paystub Breakout feature allows employees to view detailed breakdowns of their compensation, including wages, bonuses, and deductions. This enhances transparency and aids employees in understanding exactly where their earnings are allocated.

Personal Profile Management

The Personal Profile Management capability gives employees control over their personal profiles, including contact information and preferences. By allowing them to manage these details, it enhances their employment experience and minimizes administrative errors.

 

5) A Dependable Partner

 
Experienced Team

Experienced teams form the backbone of a commitment to delivering top-notch HR software solutions. Experts look for HR technology companies that have years of collective industry knowledge, and a team composed of seasoned HR professionals, software developers, and implementation specialists who understand the intricate challenges businesses face.

Quick Start Set-Up

The Quick Start Set-Up feature ensures an efficient onboarding process that is tailored to your unique business needs, allowing you to get up and running in a streamlined and hassle-free manner.

Integrated Platform 

The Integrated Platform serves as a one-stop solution that eliminates the need for disjointed tools, providing a cohesive experience that unifies all necessary functionalities in one place.

 

These features collectively contribute to an HR software solution designed to meet various needs and challenges of the modern HR professional. Whether it’s competitive compensation strategies, intelligent analytics, reduced manual labor, empowering employees, or finding a dependable partner, the right HR software can be the key to unlocking potential and driving success within an organization.

Several types of HR software are available to assist organizations in effectively managing their human resources processes. Three commonly used types of HR software are:

  • Human Resources Management Systems (HRMS)
  • Human Resources Information Systems (HRIS)
  • Human Capital Management (HCM) software

HRMS software is a comprehensive solution that integrates various HR functions into a single system. It typically covers core HR functions such as payroll, benefits administration, employee onboarding, and employee records management. HRMS software helps organizations streamline their HR processes by automating tasks and providing a centralized platform for managing employee data.

HRIS software focuses on collecting, storing, and managing employee information. It typically includes features like employee records management, time and attendance tracking, and reporting capabilities. HRIS software helps HR professionals maintain accurate and up-to-date employee data, making accessing and analyzing essential HR information easier.

HCM software is designed to manage and optimize an organization’s workforce. It includes features beyond the scope of HRMS and HRIS, such as talent management, workforce planning, and performance management. HCM software allows organizations to align their HR strategies with their overall business goals, enabling effective talent acquisition, development, and retention.

Human Resources Management Systems (HRMS), Human Resources Information Systems (HRIS), and Human Capital Management (HCM) software are related terms that are often used interchangeably, but they have distinct focuses and functionalities in the realm of HR technology.

Choosing HR Software

Choosing HR software is a critical decision for businesses of all sizes. With the right software solution, companies can streamline their HR processes, automate administrative tasks, and improve overall efficiency. However, with so many options available in the market, it can be challenging to select the best fit for your organization. In this article, we will explore the key factors to consider when choosing HR software, including core features, scalability, integration capabilities, and user-friendliness. By evaluating these factors and understanding your organization’s specific needs, you can make an informed decision that aligns with your business goals and ultimately enhances your HR functions.

To help you even further, we’ve compiled a comparison of five popular payroll software providers, based on our research and the insights from our friends at G2.

 

PrimePay

Gusto

Paychex Flex

Bamboo

UKG Ready

Overall Score

4.6/5

4.4/5

4.2/5

4.5/5

4.0/5

Ease of Setup

9.8/10

9.0/10

8.4/10

8.9/10

6.6/10

Ease of Use

9.3/10

9.3/10

8.5/10

9.3/10

7.9/10

Good Partner in Doing Business

9.3/10

8.7/10

8.7/10

9.1/10

8.0/10

Summer 2023 Leader Badge

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x

x

x

x

*Note: The data in the above chart is subject to change based on G2 reviews.

*Chart Sources: G2 Comparison

*Note: The data in the above chart is subject to change based on G2 reviews.

Related: 10 Must-Have Payroll Software Features for Startups 

Do I really need HR software?

We know what you are thinking, “Do I really need HR Software?”

Determining whether HR software is necessary for a business requires careful consideration of several factors. Here are some factors to consider:

  1. Company size: HR software is particularly beneficial for midsize to larger businesses with a wide range of HR needs. Smaller businesses may find that manual HR processes suffice.
  2. Administrative tasks: If your HR team spends a significant amount of time on administrative tasks such as managing employee records, benefits administration, and tax filing, HR software can help streamline these processes.
  3. Employee experience: HR software can improve the employee experience by providing self-service portals for tasks like time-off requests, benefits enrollment, and accessing important information. This self-service functionality enhances convenience and engagement.
  4. Compliance management: For businesses operating in regulated industries, HR software can ensure compliance with labor laws and regulations, reducing the risk of potential penalties.
  5. Employee growth and recruitment: HR software can assist with the entire employee lifecycle, from job postings and applicant tracking to onboarding and talent management. It simplifies the recruitment process, ensuring efficient hiring and onboarding.

The potential benefits of HR software are significant. By streamlining administrative tasks, it allows HR teams to focus more on strategic initiatives such as workforce planning and employee development. Moreover, it enhances the employee experience by providing self-service capabilities and fostering continuous feedback. Overall, investing in HR software can boost productivity, improve employee satisfaction, and drive better business outcomes.

Explore the inner workings of the HR Software Implementation process.

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To learn more about PrimePay and its HR technologies, visit primepay.com/software/hr. You can also view the webinar recording here, or read the case study on technology usage shared by Jamie accompanied by PrimePay Chief Financial Officer (CFO), Michael Myshrall.

We look forward to the opportunity to serve you.