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Put simply, HR software is designed to help HR professionals manage all elements of the human resource function in their organization. It can improve the efficiency and effectiveness of your HR team by organizing employee information, automating time-consuming tasks, and supporting better data-driven decision-making.

But, as we’ll see, it’s not just HR teams that benefit. Staff at all levels of your organization — including employees, managers, and your HR professionals — will ultimately benefit from a streamlined HR function that creates a better employee experience.

In this article, we’ll explore the most common uses, benefits, and types of HR software to help you figure out which type of HR software will be most beneficial for your company.

What is HR Software?

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

The software can assist with a broad range of HR tasks, from maintaining employee records to managing payroll, assisting with benefits administration, improving your hiring process, to monitoring your levels of employee engagement and satisfaction, and more.

Another benefit of digitizing your core HR functions is the rich HR data your software will collect. You can use this data to track key metrics, make better data-driven decisions, and get to the root of workforce management issues that need to be solved — something that's far more challenging when you're managing your core tasks out of spreadsheets.

Who Uses HR Software?

HR software isn't just used by members of your HR department. All your staff, no matter what their role is, will interact with your HR software to some degree, whether that's to access their pay statements through the employee self-service module, to submit a time-off request, or to participate in a performance review. This is an important fact to remember when choosing the appropriate option for your organization.

Organizations of all shapes, sizes, and industries use HR software in its various manifestations. There are HR platforms that cater to small businesses, plus those targeting midsize businesses, and enterprise organizations.

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.

Unlocking the Key Functions and Capabilities of HR Software

The HR software space is extremely broad, and there are numerous sub-types of HR software solutions out there to assist you. The right HR system for you will depend on the specific needs of your organization and where your current pain points are.

Remember that the goal of HR software is to improve the efficiency of HR administrative processes and provide data-driven insights to improve the employee experience.

HR software comes in many different flavors, from vast enterprise-level human resource management systems (HRMS) to fun little virtual water coolers. Here are some of the most popular core functions to consider:

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Streamline Payroll Processes

Paying your employees correctly and on time is arguably the most important function of many HR software systems — especially when you consider it from your employee's perspective.

Processing payroll correctly requires tracking and integrating lots of employee data, including their personal details (e.g., name, address, bank account, and social security number), as well as other HR details such as their salary or hourly rate, the number of hours they worked in each pay period, and the exact monthly cost of any employee benefit programs they're enrolled in.

Investing in HR software that has these crucial functions — payroll software, time-tracking, and benefits administration — integrated into one system will save you hours upon hours of time-consuming manual reconciliations between software systems.

Modernize Your Hiring Process

When it comes to hiring, you can use HR software to create job postings and distribute them online to job boards and other networks where your potential recruits are hanging out. Or you can be a little more proactive and utilize it for candidate sourcing.

HR software can also improve your recruitment process through tools like an applicant tracking system (ATS), which tracks where each candidate is within your hiring process, or resume parsing tools that automatically compare resumes against your job descriptions to find the best skill match in the stack. 

Boost Employee Retention

Many HR management systems include tools to monitor employee engagement and collect feedback from employees. Your HR team can then leverage this data to address problematic areas and improve the employee experience, making a positive impact on your retention rates. 

Further, you can also analyze your HR data to uncover trends and gain actionable insights, so you can plan accordingly. For example, if your HR metrics suggest your employees are most likely to leave after two years, you can put new HR processes in place to address that issue specifically.

Improve Onboarding

As one of the first steps in your employee lifecycle, employee onboarding matters a lot more than many organizations realize. Taking the time to craft a thorough and engaging onboarding experience, including a 30-60-90 day plan, goes a long way to setting new hires up for success.

Specially designed onboarding software — either standalone or as part of another application — will help your HR professionals, managers, and teams ensure your new employee starts their employee experience off on the right foot.

Empower Employee Training and Development

When it comes to training and development, you can use HR software for everything from tracking attendance at training sessions to creating employee profiles containing information such as qualifications, certifications, or interests.

Some solutions, like learning management systems for example, offer user-friendly tools team members can use to tailor and track their own development and learn new skills through online courses. More advanced HR software even includes mobile apps for completing training and learning on the go.

Enhance the Employee Experience

Recently, especially since the COVID-19 pandemic, HR departments and organizations as a whole have become much more intentional with their approach to talent management. This is characterized by activities such as employee journey mapping and collecting feedback through regular employee surveys.

The best HR software can help with this by providing digital methods of collecting anonymous feedback on everything from engagement to stress levels to benefits packages. In short, it helps HR departments put together business cases for new products and initiatives.

From an employee perspective, it’s also nice to be able to book a vacation and update details and benefits without having to send off a load of emails!

Related read: HR Software Requirements

Benefits of HR Software

As you’ve probably come to realize, HR software can benefit individuals and teams across your business in numerous ways.

How HR Software Benefits Your HR Department

One of the greatest features of modern HR software is that all employee information is held in one centralized database where it can be easily accessed, updated, and analyzed. This applies to all types of human resources management systems, whether they are a true HRMS, a human capital management (HCM) system, a human resources information system (HRIS), or any other type of cloud-based HR software.

HR software can help everyone within your HR department by digitizing workflows and streamlining common tasks, helping them work more efficiently.

Your core HR functions can be broken down into three distinct parts, all of which benefit from HR software, including:

  • HR admininistration - keeping track of employee data, payroll, compliance, hiring, resourcing, etc.
  • People operations - the ‘product’ that employees subscribe to when they join a business (e.g., company culture, training and development, opportunities, and employee perks).
  • Human operations - being a coach, listening, supporting, showing empathy, and making strong positions for a business’s ethics and values.

HR software helps HR administrators pay all employees correctly, track important information, and monitor employee performance.

People operations specialists use HR software to gather employee feedback/data via pulse surveys to monitor the success of new HR initiatives.

Human operations isn’t really a function per se and can’t be automated, though there are HR solutions out there that can help, including mentoring software. Even still, by allowing HR team members to work more efficiently, HR software affords more time for listening and empathy.

How HR Software Empowers Your Employees

Since HR is squarely focused on helping employees, it makes sense that HR software should benefit employees too. In addition to helping HR and managers to better serve the workforce, employees can directly benefit from employee self-service features, such as the ability to update their personal information or book time off.

Many HR systems also empower employees to take control of their own learning and development, access online resources, find a mentor, submit feedback, or become involved in projects of interest. All of these capabilities work together to create a positive employee experience where your staff feel supported and know where to find the information they need.

How HR Software Unlocks Business Advantages

HR software can help you hire, manage, develop, and retain your top talent more effectively and efficiently. Making use of the HR tools and data analytics offered by the myriad of solutions available will help you build happier, healthier, more engaged teams that are motivated to work.

Of course, the automation of manual, time-consuming processes will save the business money. Some solutions will also help you stay on the right side of compliance, too.

Selecting the Ideal HR Software for You

With so many options to choose from, it’s worth taking time to research the market and find the right solution, or combination of solutions, that works for your organization.

For example, one system alone might not have all the features your team needs or, conversely, too many you don’t.

Ultimately it’s up to you and your stakeholders to decide: Is it worth the cost?

Expert Tips for Selecting HR Software

Now that you're ready to invest in a new HR software solution, the next step is finding the right fit. Here are some important factors to consider as you start researching all your options:

  • Usability: Is it easy to learn and master? Does the company offer good tech support, user support, tutorials, and training?
  • Scalability and flexibility: Is the software equipped to grow and expand with you as your company and HR needs change over time?
  • Reporting and analytics: Does the software offer real-time and actionable insights from your HR data? Are reports customizable, easily exportable, and otherwise flexible?
  • Software integrations: Is it easy to connect with other tools? Are there any pre-built integrations? Is an API available if custom integrations are needed?
  • Value for Price: How appropriate is the price for the features, capabilities, and use case? Is pricing clear, transparent, and flexible?

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.

Navigating the Next Steps

HR software isn't a magic bullet, but it can certainly improve your data management processes and make your HR 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 resources are here to help you discover and assess new HR technology.

Good luck with your next steps! And, if you'd like more support, feel free to join our community for HR leaders to connect and share insight with industry peers and thought leaders.

By 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.