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The right HR software can greatly impact an organization’s efficiency and ability to recruit and retain top talent.

But, with so many options to choose from, how do you decide what’s best for your org?

Here, I’ll look at the different types of human resource software and share my step-by-step guide to the software selection process.

What Is HR software?   

HR software refers to the broad array of tools used by human resources professionals to manage and automate HR processes. These include:

  • Recruitment software
  • Talent management
  • Onboarding
  • Benefits administration
  • Payroll
  • Time and attendance tracking
  • Performance management
  • Employee engagement
  • Succession planning
  • Document management for regulatory compliance. 

While HR technology is primarily used within the HR department to manage administrative processes, it is increasingly being applied to distribute some of the HR admin load across the rest of the organization. 

With features like electronic forms, automated prompts and reminders, and employee self-service portals; it’s possible to streamline tasks like capturing and updating employee data, generating reports, and communicating with employees.

HR software can help companies reduce manual tasks, cut labor costs, make HR departments more effective, and improve employee productivity and performance.

Types Of HR Software

There are a variety of different types of HR technology that address different HR needs throughout the employee life cycle

While some tools are specialized for a specific purpose, such as recruitment or learning and development, others are more holistic and seek to consolidate all human resources operations in one platform or suite of products. 

It’s worth keeping in mind that, while it may seem like a great idea to pick one enterprise tool that can handle every HR process, within these systems some modules or functions are typically better than others. Specialization can have its benefits. 

Here’s a quick breakdown of each of the main types of HR software:

Core HR software

Core HR software generally refers to systems used to store and manage employee information in a centralized HR database

This information includes employee profiles, contact details, employee benefits and payroll data, leave or paid-time-off (PTO) balances, and other employee data, as well as employee documents like contracts and tax forms. 

Core HR software encompasses both human resource management systems (HRMS software) and human resource information systems (HRIS software) and is also sometimes referred to as human capital management (HCM) software.

Payroll software is a subset of core HR software.

Recruitment software

Recruitment software, such as an applicant tracking system (ATS), helps companies to manage the hiring process from candidate sourcing to onboarding. 

The tools typically offer features that facilitate job listing creation, help distribute the job post, parse, manage and track job applicants, organize and filter applicant data, communicate with applicants, and schedule interviews. 

Recruiting software helps to automate the hiring process by allowing recruiters and hiring teams to pre-screen candidates as well as automatically reject or follow up with applicants using preconfigured response templates. 

Using artificial intelligence, ATS tools can identify top talent by scanning resumes and cover letters for specific keywords, skills, education, or other relevant factors. 

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Onboarding software

Onboarding software serves to streamline and improve the employee onboarding experience by consolidating the entire onboarding process in one place. 

This includes collecting employee data and completing important forms pertaining to tax information and benefits, as well as granting new hires access to details about their role, team, and managers, information about workflows, processes, and company policies, as well as key training materials. 

Good onboarding software enables new hires to hit the ground running and spend their first days on the job getting to know the company and forming connections, instead of being bogged down by paperwork.

Performance management software

Performance management software helps companies to plan and implement employee performance evaluations. This, in turn, makes it easier to identify which employees are top performers and which ones need a little help to maximize their potential. 

Most performance management solutions offer features that help managers to translate company strategy into measurable objectives or key performance indicators (KPIs) for individual employees—and to gauge how well the employee’s performance aligns with these objectives. 

A performance management platform makes it easy to create and schedule performance reviews and assessments and send automated reminders so that everyone’s on the same page.

Most also offer dashboards that give management an overview of performance in individual teams as well as throughout the organization. 

Learning and development software

Learning and development software is designed to facilitate employee training and development, empowering employees by building their knowledge and skills. 

Whether you develop your employee training materials in-house or outsource them to an eLearning company, you’ll need a learning management system (LMS) on which to host and organize your training materials, as well as document, track, and report on your educational initiatives.

An LMS enables you to create and deliver a wide range of educational courses and training programs using a multitude of different learning methodologies, media types, and assessment frameworks.  

Related: Learning Management Systems (LMS) for Small Businesses

Jargon-busting

Jargon is just the worst, and it’s pretty much unavoidable when buying software. 

Below, we’ve rounded up some of the more common jargon terms and acronyms you might encounter and provided a brief definition.

  • UI – User interface. This refers to the look and feel of the part of the software users interact with. 
  • UX – User experience. This refers to the software’s intuitiveness or ease of use.
  • SaaS – Software-as-a-Service. This refers to software for which you pay a subscription instead of purchasing it outright. It gets serviced and updated and typically comes with technical support included. 
  • AI – Artificial intelligence. This refers to advanced computer algorithms that use data analytics to recognize patterns and perform decision-making functions in a similar way to a human. 
  • RFI – Request for information. In the procurement process, this refers to the practice of asking a vendor for product details and specifications that can be used to make more accurate comparisons. 
  • RFP – Request for proposal. This is like an RFI, except that the vendor is given more information about your organization’s needs and asked to submit a proposal explaining why their product is the best solution.
  • Employee self-service. This simply means that the software has a portal that allows employees to sign in and do things like update their employee data, review their benefits, or submit a paid time request themselves, without needing to ask an HR professional for help.

HR Software Selection In 5 Easy Steps

The HR software selection process needn’t be complicated but it should be thorough. Below, I’ve broken it down into five steps.

Step one: Identify needs

Before diving into vendor research, take time to understand the specific needs of your stakeholders e.g. HR team members, leaders, and regular employees.

Questions to help you identify your needs:

  • What are the most common challenges faced by the human resources department?
  • How could new software help make the HR function more impactful e.g. be more data-driven?
  • What are the biggest obstacles you face in cultivating an exceptional employee experience?
  • How will each stakeholder use the new software?
  • How is the current HR system or process falling short (process mapping can help here)?
  • What are the most frequent HR-admin-related employee complaints?
  • Which HR processes are the most time-consuming? Could they be streamlined with the right software capabilities?
  • How will any new software you purchase fit into your HR tech stack?
  • What are your company’s policies and regulatory requirements regarding data security, supplier diversity, vendor contracts, etc.?
  • How tech-savvy is your team? The software you select shouldn’t be more complex to set up and use than your team can manage.
  • What is your budget?
  • What kind of return on investment (ROI) would you expect to see?
  • Based on your needs, which type of HR software is likely to be the one you’re looking for?

Asking these questions will help you determine what exactly it is you need from your HR software.

For example, if you’d like to gather more data to track HR metrics and improve processes, a good analytics and reporting feature will be high on the list.

Get input from your stakeholders (IT and finance are always useful) and use their feedback to write use cases and build a matrix comparing what’s important to each stakeholder group.

You’ll now be able to lead the conversation with vendors and give them a list of need-to-have and nice-to-have features for each user.

Step two: Research vendors

It’s time to do some market research and familiarize yourself with the leading HR software solutions for your use case.

Luckily, the web is full of informative websites (like this one) comparing HR software tools to one another. Reading a handful of these is a good way to get an overview of your options.

Take the time to study their websites and take notes of any questions that arise. Are there case studies and reviews that demonstrate the tool's main USPs?

You can also join HR communities or tap into your network for recommendations. 

Some vendor-specific questions to ask:

  • Who are the top vendors for your use case?
  • Which are the best-rated in their category?
  • What is each tool’s top-rated feature?
  • Does the tool cater to small and medium-sized businesses or is it more suited for enterprise use?
  • What do customer reviews and testimonials have to say? What are the most commonly reported benefits and drawbacks?
  • What kind of onboarding, training, support, and other resources does the vendor offer?
  • Is robust documentation available?
  • Do the tool’s features meet your needs?
  • Does the software integrate with the HR tools you’re already using?
  • User interface: is it visually appealing?
  • User experience: is it intuitive to navigate and easy to use?
  • Is this tool simple or complex enough for your human resource management needs? 
  • Does it offer the flexibility or customizability you need?
  • Does it offer robust security standards and comply with data privacy regulations and best practices? Is an on-premise option available?
  • Does the pricing meet your budget? Is the pricing clear? Is the price warranted based on the software’s capabilities? Are certain key features only available in more expensive pricing tiers? 
  • Does it offer a demo or free trial?

Step three: Make a shortlist and reach out

Now you’ve identified some likely vendors it’s time to go a bit deeper and book some demo calls.

  1. Send each vendor a request for information (RFI) so you can compare your options point for point
  2. If you want to be really thorough, send each of your shortlisted vendors a request for proposal (RFP). This will include key information about your company, your specific needs, a vendor questionnaire, and any specific proposal submission rules they should follow, such as submission deadlines.
  3. Schedule a meeting with their sales rep and go through your questions.

These calls, which should ideally include demonstrations of the product in action, will also help you get a feel for the vendor and whether you can form a good partnership.

To help compare vendors, use this handy evaluation template.

Step four: Make the business case

With all the above data gathered, it's time to put together your business case. This doesn't have to be a 10-page document, it can be as simple as a one-page memo (because who has time to read 10 pages anyway).

 Decision-makers are looking for answers to the following questions:

  • How much does it cost? 
  • What pain points will the software solve?
  • If we didn’t invest in the software, then what?
  • How long will it take to implement?
  • Why do we need to invest now?
  • What is the ROI of implementing HR software?

You may not know the answers to the cost question; however, seeking approval at this stage will set you up for success.

Here's a business case template you can use for HR Software

  • Executive Summary: Brief overview of the proposal, key benefits, and conclusions.
  • Current Situation and Problem Statement: Description of the current state and specific challenges or problems being addressed.
  • Proposed Solution and Benefits: Detailed description of the proposed solution and its expected benefits, including a cost-benefit analysis.
  • Implementation Plan and Risk Assessment: Step-by-step implementation strategy, timeframe, and a summary of potential risks with mitigation plans.
  • Conclusion and Recommendations: A concise summary of the business case with final recommendations for decision-makers.

Step five: Implement and onboard

Make sure stakeholders are aware of your new solution and feel confident using it. 

The main reason companies fail to see ROI on software purchases is failing to follow through on implementation and properly integrate their shiny new tool into day-to-day operations.

Effective change management is crucial. For employees to use your new software, they need to understand how it benefits them (e.g. it saves them time/their PTO requests get approved faster) and know how to use it. 

Here are some tips to help with this.

  • Clearly communicate that you’re adopting new HR software and what this will mean for employees. Invite employees to come forward with questions.
  • Take advantage of any onboarding and training offered by the vendor and make it mandatory for employees to complete this training within a realistic timeframe.
  • Charge someone with the responsibility of spearheading implementation and being a point of contact for any questions (and feedback) employees might have.
  • Make employees aware of any self-service resources available and make sure they know how to log a support ticket if they run into difficulties.

Ready To Make Your HR Software Selection?

Feeling ready to go forth and make an informed software procurement decision?

For specific HR tech recommendations, check out our curated shortlist of the best HR software.

Need expert help selecting the right Human Resources (HR) Software?

If you’re struggling to choose the right software, let us help you. Just share your needs in the form below and you’ll get free access to our dedicated software advisors who match and connect you with the best vendors for your needs.

Tim Reitsma
By Tim Reitsma

Tim has deep experience in HR, 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.