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HR Software Requirements

HR leaders know that there’s a lot of employee data to manage within a company. And with more and more employees moving to hybrid work and being hired on a contract basis, things like employee engagement and scheduling require more flexibility than ever.

To cope with these changing demands, human resource software is growing too. It’s not just for managing payroll anymore—though that’s still an important core function. Today more than ever, implementing HR software is important in making sure your company remains a competitive employer in the changing workforce.

Key requirements of HR software solutions

Every company will have unique needs for the functions and features of an HR solution. However, there are some commonalities when it comes to ensuring that the HR software you choose will increase productivity and satisfaction throughout your company.

The most important qualities in HR software

No matter what type of HR management software you need, you should look for these high-level considerations:

  1. Will it be easy for both you and employees to use?
  2. Can it be integrated with existing systems?
  3. Is it flexible and scalable?
  4. Does it have good security?

Once these requirements are met, you can begin to look at individual features.

The most useful features of HR software

HR software is highly customizable, with plenty of different options out there to fit your company’s specific needs. But there are some features we think are beneficial to just about any case.

  • Employee portal. Giving employees direct access to review important documents, see their schedule, request time off, and track training means they’ll only be coming to you with the serious stuff.
  • Analysis and reporting. HR software collects a lot of data, so you don’t want to have to export it to another system to find out what it means. The best HR software will be able to go through the whole process.
  • Time management. Automated time management can improve workflow, especially when employees have direct access. Especially look for software that can let teams share a calendar and that provides attendance alerts so that the effect of absences can be minimized.
  • Learning opportunities. In a study by Quantum Workplace, employees named growth opportunities as one of the top reasons for employee engagement. Consider an HR solution that has integrated learning modules for employees to take advantage of.

Key requirements of different types of HR software

Though you might only be seeking a management solution for issues in one of these areas, core HR software covers three basic categories: 

  • Finance and accounting software
  • Hiring and onboarding software
  • Employee performance data software

Each type of software has different requirements. But what are the requirements of each, and what should you look for when choosing your HR software solution?

Key requirements of human resource management software

Human resource management software (HRMS) is a suite of applications that manage various HR processes, including hiring, performance review, maintenance of employee information, and many other tasks. HRMS software solutions vary widely, from basic HRMS software to highly advanced and complex solutions. 

Because HRMS software is so varied, before you can evaluate it, you need to know what your company requires from it. Common HMRS software features include the following:

  • Payroll and benefits
  • Recruitment and hiring tools
  • Onboarding, training, and development
  • Storage of employee data
  • Attendance records
  • Analytics.

First, look at your company priorities and objectives. Where is your company most efficient? And where does it struggle to achieve efficiency? Focus on the places where you need help, and make a checklist of features you need most. 

Next, look at your company’s technical requirements. How many employee records will have to be stored? And how many users will your HR software have? If you need your HRMS software to support certain languages or help you with particular regulatory issues, that should go on your checklist too.  

Not all HRMS software solutions include features such as payroll management or benefits administration as part of their basic service, so if those are necessary, add them to your list.

Key requirements of recruitment software 

Recruitment software includes applicant tracking system (ATS), candidate relationship management, and interviewing software. Common features of this type of software include automatically posting job listings to websites and social media, allowing you to accept resumes online, and filtering out unqualified candidates. 

According to Business News Daily, companies should seek recruitment software that fulfills the following requirements:

  • Can post to specific job boards
  • Has a mobile-friendly interface
  • Features flexible pricing
  • Has a fast application process
  • Ensures compliance with hiring laws.

Key requirements of payroll and benefits software

Payroll and benefits software helps you process payroll, calculate and file payroll taxes, and manage related financial tasks. With this type of software, the following questions will help you determine your company’s requirements:

  • How many employees do you have?
  • Do you have seasonal or temporary employees? 
  • Do you offer benefits?
  • How experienced is your payroll administrator?
  • What legislation do you need to comply with?
  • What kind of analytics do you need?
  • Do you pay sales rewards or bonuses? 

Companies commonly require a payroll and benefits software that provides the following:

  • Integration with existing employee databases
  • Tax compliance support
  • Tracking of vacation and sick time
  • Self-service employee access to pay stubs and tax forms.

Key requirements of performance management software

Performance management software helps businesses better understand employee performance. It allows company leaders to track and analyze employee data and evaluate individual employees. 

For this type of software, key requirements include the following:

  • Ease of use
  • Ability to set goals
  • Progress-tracking capabilities
  • Capacity to provide continuous feedback
  • Automatic reminders for employees
  • Easy communication between employees and managers.

Of course, you’ll also want your performance management software to be flexible, adaptable, compatible with your other systems, and friendly to your budget. The same holds true with every kind of HR software solution! So next, this post will explore those requirements and how to evaluate them.

How to evaluate HR software

How can you evaluate an HR solution for flexibility and adaptability? And what should you consider when determining the overall cost of an HR solution? Let’s dive in.

Compatibility with existing systems

Implementing an HR management solution will likely mean integrating it with other systems currently in place, such as ERP, financial management, and CRM software. Doing so will allow you to share information more efficiently and see a much more complete picture of your business’s analytics.

A vendor should be able to tell you whether its software is compatible with the other systems you use and allow you to test it before committing to a purchase. You will also want to confirm that the vendor will provide ongoing support and updates to ensure compatibility with systems you might implement in the future. 

Flexibility and adaptability

Businesses aren’t stationary, so your HR software can’t be stationary either. It needs to grow (or shrink) with your needs. When searching for an HR solution, consider what features and scope you expect to need in the future. If the software does have the additional features you want, how much will it cost to implement them when the time comes? 

Overall cost

The cost of HR software can be calculated in different ways, and it’s important to keep this in mind while shopping. For many types of software, businesses pay per user or per employee on top of implementation fees.

Solutions aimed at larger businesses are more likely to ask for a one-time purchase for a set price, often based on company size. Also keep in mind that increasing storage capacity, implementing additional features, and accessing vendor support will all likely come with additional costs.

Smaller businesses might find that free or open-source software is a better fit, but there will be limitations. Open-source software gives you access only to the software code, so you will need someone with programming knowledge to turn it into a usable solution. Some software may be offered free and ready to go, but only for the most basic model, and added features will have a price point. 

For a deep dive into the costs of HR technology, see our article "Is Your Organization Ready for HR Technology?"

How to introduce HR software into your company

Introducing new software is hard. In fact, a McKinsey report found that only 16 percent of respondents thought their companies’ digital transformations were successful. But a successful software launch brings great rewards. HR software can increase efficiency, lower costs, and improve employee satisfaction and retention. To gain these benefits, it’s crucial to have a solid plan.

Implementing your HR software

Once you’ve chosen your HR software, it’s time to implement it. PeopleGoal recommends a six-week implementation cycle. This includes time for account configuration and pilot team testing before you launch your software to the whole company. By following a well-planned process and documenting each step, you can ensure that you encounter as few hiccups as possible. 

A pilot team consisting of members from every level of the company and with different levels of technical know-how will help you troubleshoot the launch. Different types of employees will have different requirements for your HR software and different pain points when it comes to using it. Taking their feedback into account will help make your digital transformation a success.

Introducing HR software to your team

Once you’ve set up your software, tested it, and dealt with any issues raised by your pilot team, it’s time to introduce it to the rest of the company. In this process, good communication is vital to create a positive employee experience. Make sure your employees are aware of the launch details and know where to go for support in using your HR solution.

Your team should feel excited about the benefits your new HR software offers. Will it help them easily request holidays? Or will it help keep their sensitive employee information safe? Will it ensure that they receive regularly scheduled coaching, thus improving their career development? If your employees feel there’s something in it for them, you’ll have higher employee engagement and better buy-in from the company as a whole.

In particular, it’s important for employee satisfaction that your employees know that you’re listening to them. If an employee feels they don’t have the skills necessary for the new software, make sure they have training opportunities suited to them. Or if an employee has had a poor experience with previous software launches, listen to their concerns and address them. Each employee who’s satisfied with your HR solution will influence others, contributing to employee satisfaction as a whole.

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By Tim Reitsma

Tim is the co-founder and General Manager of People Managing People, an online publication focused on building a better world of work. He is experienced with people & culture, leadership, business strategy and operations with a focus on building great teams who are excited about their craft and their organization. With over 15 years of leadership experience, Tim has always been guided by his core values: faith, family, curiosity, and fun. He is a coach, mentor, speaker, advisor, and an active volunteer in his community. Tim loves spending time outdoors with his wife and two kids as well as mountain biking in the north shore mountains.

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