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HR software first cropped up in the 1970s when companies needed to store employee data on large mainframe computers to help meet regulatory standards. 

These were the first human resource information systems (HRIS) which, with the significant advancements in computing, are much more powerful today.

The size of the HR software market is now huge and is expected to grow significantly, with new solutions continuously cropping up.

What Is HR Software?

HR software refers to any software application that supports key HR functions within an organization. Organizations use HR software to make HR processes more efficient and improve the workplace for both HR and non-HR staff.

HR software often includes a robust HR database platform for storing and retrieving employee data efficiently.

Who Uses HR Software?

There are lists of different HR software nowadays, and it isn't just used by members of your HR department. 

All team members will interact with your HR software to some degree, whether it’s accessing their pay statements through the employee self-service module, submitting a time-off request, or participating in a performance review.

Additionally, you'll see HR software designed for large companies as well as small business HR tools that are more accessible.

As we’ll go into, the multi-user factor is important to remember when choosing the appropriate tool for your organization.

Benefits Of HR Software

As you’ve probably come to realize, HR software can benefit individuals and teams across your business in numerous ways. Many companies opt for free HR platforms to access software benefits without committing to paid solutions. 

How HR Software Benefits HR Departments

At the heart of modern HR software is the adoption of cloud-based HR systems, which simplify complex HR tasks. Here's how HR software benefits HR departments in numerous ways:

  • Automation of administrative tasks: HR software automates routine tasks such as employee data management, attendance tracking, and payroll processing. This reduces manual workload, minimizes errors, and gifts HR staff time to focus on more strategic tasks.
  • Enhanced recruitment process: Platforms such as ATSs and recruitment CRMs, help in managing job postings, screening resumes, and communicating with candidates. This can speed up the recruitment process, provide a better candidate experience, and improve the quality of hires.
  • Improved employee onboarding: HR software can streamline the onboarding process by automating aspects like document submissions, training schedules, and initial assessments.
  • Learning and development: Tools like learning management systems help to design training programs, provide easy access to training materials, and measure the effectiveness of L&D programs. 
  • Employee self-service portals: Many HR systems offer self-service portals that allow employees to manage their own personal information, benefits, and other HR-related tasks. This empowers employees and reduces the administrative burden on the HR department.
  • Data management and analytics: Tools such as HR analytics software helps HR departments get insights into workforce trends, performance metrics, and compliance issues. This data can be crucial for strategic planning and decision-making.
  • Legal compliance: Keeping up with labor laws and regulations can be challenging. HR software helps ensure compliance by updating systems in accordance with new laws and by maintaining proper records for audit trails.
  • Improved communication: These systems often include tools that facilitate communication between employees and HR staff, such as information repositories, messaging platforms, and feedback tools. This can ensure that HR issues are resolved more promptly and increase engagement.
  • Performance management: HR software typically includes features for tracking employee performance, setting goals, and conducting reviews. This can help in managing employee development more effectively and aligning individual goals with business objectives.

By adopting enterprise-grade HR tools, organizations can ensure seamless integration of payroll, benefits, and compliance.

How HR Software Benefits Your Employees

Since much of HR’s work is focused on supporting employees, it makes sense that HR software should benefit employees too. 

Here’s how HR software enhances the overall workplace experience:

  • Improved HR products and services: HR and People Ops teams have more time and can leverage software to collect data and feedback and use it to create better products and services that improve the workplace experience.
  • Easy access to information: HR software typically includes employee self-service portals that allow individuals to easily access and manage their personal information. It often encompasses various HR information system capabilities for employee info like payroll, benefits, time tracking, performance management, and even L&D information.
  • Efficient onboarding: For new hires, HR software streamlines the onboarding process, making it quicker and more structured. Employees can access necessary documents, training materials, and schedules through the system, helping them to settle into their new roles more comfortably and efficiently.
  • Improved communication: Many HR systems facilitate better communication within the organization through integrated messaging systems, announcements, and updates. This helps in keeping employees informed and engaged with the company’s happenings.
  • Better performance management: Tools such as performance management software help employees set goals, track performance, and receive regular feedback from their managers. This can enhance personal growth and career development, making it easier for employees to meet their professional objectives.
  • Time management: With features like time tracking and leave management, employees can easily apply for time off, track their work hours, and manage their schedules.
  • Better training and development: Team members can use the aforementioned learning management systems to create career maps and tailor their learning and development journeys.

Understanding HR software is crucial, and leading HRIS certification programs help bridge knowledge gaps effectively.

How HR Software Benefits Organizations

Of course, the main goal of HR teams is to contribute to organizational success and so by extension HR software does as well.

HR software supports organizational success by:

  • Increased efficiency: By automating routine administrative tasks, HR software reduces the workload on HR staff and generally leads to lower operational costs.
  • Data-driven decision making: Advanced analytics capabilities of HR software enable organizations to collect and analyze data on employee performance, engagement, turnover rates, and more. This wealth of data can be used to make informed decisions about hiring, training, promotions, and other critical aspects of HR management.
  • Scalability: HR software is designed to scale with the growth of an organization. Whether it's managing a larger workforce or adapting to new business models, HR systems can adjust and evolve according to the needs of the business.
  • Improved regulatory compliance: Keeping up with employment laws and regulations is critical for any organization. HR software helps manage compliance with these laws by automating updates and reporting, reducing the risk of legal issues and potential fines.
  • Employee satisfaction and retention: As discussed above, HR software contributes to more engaged employees that while likely stick around longer.
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Types of HR software

We’ve already name-dropped a few above, but here are some of the most common types of HR software and what they do:

Human resource information system (HRIS) 

An HRIS (or human resources information system) is a type of HR software that organizes your employee data. The main purpose is to integrate core HR functions into one interconnected piece of software. 

Key features include centralized employee data management, payroll processing, benefits administration, attendance tracking, recruitment, performance evaluation, and self-service portals.

Check out our pick of the best human resource information systems to help you simplify your HR operations and manage your employee data efficiently.

Human resource management system (HRMS)

Similar to HRISs, HRMSs are advanced software solutions that encompass many of the core, strategic functions of human resource management. The capabilities of an HR management system define how effectively HR software can support your team’s objectives.

An HRMS encompasses employee data management, payroll and benefits administration, recruitment and onboarding, performance evaluation, time and attendance tracking, learning management, and HR analytics.

Check out our selection of the best human resource management systems for more info.

Applicant tracking system

ATSs help improve the recruitment process by tracking job applicants, posting job openings, and facilitating communication between hiring teams and candidates.

They typically include recruiting software features such as job posting, interview scheduling, CV screening software, and analytics.

For more, check out our pick of the best applicant tracking systems or our list of the best recruiting software designed for small businesses.

Payroll software 

Payroll software is used by HR and finance teams to track employee work hours, pay rates, vacation accruals, paid time-off, payroll taxes, payroll deductions (like federal and local taxes), and more.

These tools automate the majority of payroll processing, ensuring accurate and timely payment of wages, tax withholding, and compliance with employment laws.

Check out our pick of the best payroll software for a deeper dive.

Performance management software

Performance management is notoriously difficult to get right. Performance management software can help by digitizing the performance review process and help to set and track goals, analyze productivity, and record achievements.

They also incorporate modern elements like collecting 360-degree feedback from team members, continuous feedback loops, and one-on-one check-in tools. Additionally, they can also assist with succession planning by identifying skill gaps that need to be addressed for long-term strategic planning.

Check out our pick of the best peformance management software for a deeper dive.

Learning management system (LMS)

Learning and development, like performance management, is another one of those crucial functions that’s difficult to get right.

LMSs can help by providing a centralized space for creating, delivering, and tracking educational content and courses. 

They include tools for educators to manage course materials and for learners to access and engage with these resources. The purpose is to simplify the educational process, make it more accessible and effective, and support a diverse range of learning needs.

Check out our pick of the best learning management systems for more info.

Benefits administration software

Similar to payroll administration, anyone in charge of benefits administration in an org will be quite attached to their payroll administration software (unless it’s rubbish of course).

That’s because it helps benefits administrators manage ongoing tasks such as reconciling monthly costs with payroll, assisting staff with plan or dependent changes, and generating reports to ensure legal compliance.

They normally include employee self-service portals that simplify the enrollment process for new hires, walking them through all the options available to them. 

Check out our selection of the best benefits administration software for more deets.

Employee engagement software

Employee engagement, employee satisfaction, employee experience—it’s all the same thing really.

Anyway, employee engagement software focuses on improving employee satisfaction and engagement through features like feedback tools and employee recognition platforms.

Check out our pick of the best employee engagement software for a deeper dive.

How To Choose HR Software

OK, so you think upgrading HR software or investing in a new HR software solution might benefit your organization, the next step is finding the right fit. 

Here’s a step-by-step process for choosing the right HR software for you.

1. Business needs and vision

The first step is to write out the vision for HR and ensure it aligns with the business strategy, direction, and vision. 

The benefit of this is creating buy-in from the key stakeholders and decision-makers on your leadership team. List out your key needs and the reason why. 

2. Identify pain points

Pain points in this context refer to the specific difficulties and inefficiencies a company experiences in its current HR management processes, which HR software aims to address and alleviate. 

Common pain points to look out for include time spent on manual processes and data discrepancies. By identifying pain points, you can more accurately map out the requirements you have for HR software.

3. Current process steps

Current process steps are the ways you're currently doing things in your HR department. 

This should cover all your core HR tasks, such as how you handle employee records, leave requests, hiring, and onboarding.

Start by listing out the main processes, the steps for each process, who is responsible for each step, and the time each process takes you.

4. Define measures of success (ROI - return on investment)

This could be higher engagement, better retention rates, quicker turnaround on filling roles, or more bandwidth in the HR team for things like connection, training, and value-adding activities. 

If you can save time by implementing HR software, what would you be doing with that time?

5. Get initial buy-in and approval

Present your findings from the above steps to find out if you have buy-in from your HR leaders to continue or if you need to shut the process down. If you have verbal approval, keep going!

6. Gather requirements

Before contacting software providers, be clear on your requirements and have input from all your key stakeholders, including people who are responsible for different parts of your HR functions, since they will all have different needs.

7. Contact vendors

Shop around, request a few demos, and share your requirements in advance with each software provider you meet with. Doing so will help them demonstrate how their software can improve your HR function according to your needs.

If the platform you’re interested in doesn’t have all the features you need, how easy it would be to integrate with other HR systems? What are the total costs of the HR software vs the benefits?

8. Build the business case and get approval

Using the above data, it's time to write your business case. 

This doesn't have to be a 10-page document, it can be as simple as a one-page memo.

For a deeper dive, check out our article how to make a business case for HR software.

9. Make a decision

Congrats! You have the approval to go ahead with your vendor of choice. Next up is implementation of your HR software, onboarding, and training. Fun times!

Navigating the Next Steps

HR software isn't a magic bullet, but it can certainly improve your data management processes and make your human resources operations more efficient.

We encourage you to explore the world of human resources software further. Luckily for you, People Managing People has been reviewing different subsets of HR software for years, so we've done a lot of the leg work for you already. Our list of the best HR software is a great jumping-off point.

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.

Finn Bartram

Finn is an editor at People Managing People. He's passionate about growing organizations where people are empowered to continuously improve and genuinely enjoy coming to work. If not at his desk, you can find him playing sports or enjoying the great outdoors.