A Buyer's Guide to HR Software [2024 Updated]

This quick guide covers all the essential information you need to know before buying HR software for your business.

Running an organization smoothly is no small feat. To keep everything on track and grow, you need the right technology and software by your side. But with so many providers out there, how do you know which is the right one for you?

To help you make a wise choice, Springworks has created “A Buyer’s Guide to HR Software.”

Here’s the information we’ll be covering:

Table of Contents

What Is Human Resources Software?

A human resources software is a management system that helps provide a digital solution to the day-to-day HR activities and takes over the department goals.

An ideal HR software makes the job of your human resource team convenient and better by allocating the necessary time and resources for a more productive environment.

Most organizations deploy human resource software that helps them automate manual tasks, keep the employee data centralized, impart necessary information within the organization promptly, and create reports whenever required.

Additionally, HR software keeps the employees informed and helps in managing their performance and satisfaction. While there are different kinds of HR management tools, picking the right tool usually depends on your organization’s requirements.

Different Types of HR Software

These names all mean more or less the same thing – however, not all HR software are the same.

Some HR systems will help you with the simple administrative side of HR. Whereas others will help you with the more strategic side of HR.

Companies invest in Human Resources Software because it makes employee management and administration much easier when compared to manual modes like physical documents or spreadsheets.

Recruiting Focused Software

A recruiting-focused HR software helps make the entire process of finding, managing, and hiring employees seamlessly.

It streamlines the whole process from the beginning to the end: from storing data, enabling easier sorting to screening applicants for potential matches as per the job descriptions.

Typical Functionality Examples:

Applicant Tracking Systems
Job boards

Strategic HR Software

An organization must make sure that they manage their employee’s performance adequately and plan out training and development programs. With strategic HR software, organizations can ease the stress of planning and progressing with these activities.

From collecting feedback to tracking employee performance, reporting crucial metrics, and analyzing the training program’s reach, strategic HR software helps your company grow.

Typical Functionality Examples:

Performance Management
Training & Development
Developing Company Culture

Administrative HR Software

The administration is one of the most critical tasks in the human resource profile, so it should be carried out with utmost diligence.

An administrative HR software helps maintain important data, including records, payroll, benefits, and compensation for your employee’s well-being and adequate functioning of the organization.

Besides storing the time and date, this type of administrative software helps generate reports and empowers the employees to stay on top of their work shifts and schedules.

Typical Functionality Examples:

Employee Records
Payroll
Employee Benefits and Compensation

Workforce Management Software

Tracking attendance is crucial for releasing employee compensation every month. With a smart workforce management software for your human resource department, this job can become easy, and employee scheduling can be performed quite easily.

Additionally, you can also view reports and check for any issues about workforce management in a team or the entire organization.

Typical Functionality Examples:

Attendance Tracking
Holiday Planning
Employee Scheduling
Employee Engagement

Top Features Every HR Software Must Have

This feature checklist will help you understand the range of features offered by different hr software providers.

It might help if you save this chart, print it off, and then mark the features that would be useful for your company. Use this as an HR software feature checklist when comparing providers.

1. Hiring & Recruitment

The technology may automate and optimize a data analysis of peer roles and propose the appropriate salary. With easy-to-prepare templates and recruiting follow-ups, HR software automated recruitment modules speed up the hiring process.

2. Portal for Employee

Financial data can be organized and stored using the Employee Portal HR software. Such a portal allows authorized users to access their information in real-time. It is a time-saver for HR as it eliminates the need to supervise such activities.

3. Payroll

Payroll’s main job is to compute and pay salaries using billing software, withhold the necessary taxes/deductions, and coordinate the printing and distribution of paychecks.

4. Workflows

Workflows enable firms to automate the repetitive routine procedures that stifle HR management productivity. For example, to keep all participants informed, the software allows automated notifications.

5. Time Tracking and Entitlement to Leave

Applicant Tracking System is replacing the huge folders where hundreds of resumes are filed. It automates the process of finding people, enables assessing the efficiency of various recruiting channels, and determines what works well enough and what doesn’t.

6. Evaluation of Performance

By holding KPAs and KRAs accountable, HR software streamlines the evaluation process. It provides a more transparent and fair output of each employee’s attendance and punctuality.

7. Employee Education

Every employee must upgrade their skill sets as technology and processes evolve. An HR software assists in identifying skill gaps, managing employees’ training needs, and keeps track of the considerable costs associated with training and development.

8. Administration of Employee Benefits

HR specialists can use the system to create programs, set eligibility conditions, manage employee remuneration, promotions, and make payments to employees on top of their earnings. It also includes self-service open enrollment and accounting integration for compensation expenditures.

9. Retention

HR software aids in the development of staff retention and recruitment strategies. If an organization’s attrition rate is high, HR software will provide the HR Manager with essential analytics to help them overcome the problem.

10. Data Management and Analytics

Analytics and document management allow real-time analysis of data and making better decisions. A good HR software solution includes secure transmission and SSL protocols encrypting data as it travels over the Internet.

11. Onboarding

Interacting with management is frightening for most new hires. This might leave a new employee perplexed about the new company. The HR Software assists staff and new hires become familiar with all the onboarding requirements and access all necessary employer/organization information on one platform.

12. Performance Management

When it comes to overall efficiency, it’s critical to keep track of each employee’s performance. Therefore, organizations should have HR software that keeps track of individual performance data.

13. Administration

The Administration HR Software keeps track of all employee benefits, such as healthcare, welfare, tax breaks, and other financial alternatives.

14. Workforce Management

This has a significant impact on the organization’s schedules. This module cannot function independently and must be linked to a separate system. When CRM (Customer Relationship Management) and ERP (Enterprise Resource Planning) are integrated into the software, it makes more sense.

15. Leave and Absence

The HR software is designed to work in accordance with the company’s policies. The module can be used to automate leave scheduling. It’s simple to schedule, track, and approve time off from work.

16. HR Analytics

HR Analytics generates reports by integrating with other HR software and other systems modules. These reports provide a comprehensive view of overall performance. Thus it paves the way to appropriate initiatives for improvements.

17. Self-Service for Employees

Employees may examine and update their personal information using key elements of HR software, which relieves HR professionals of a significant administrative burden. Moreover, when employees are given control over their own information, it can increase their sense of empowerment and engagement.

18. Dashboard

Employees’ names, email addresses, status, leave notifications, birthdays, events, and holiday calendars are available online and offline. You can receive all the information you need just by looking at the dashboard.

19. Safety Management

The program is well protected; The software follows a security process, produces codes and passwords with great precision, encrypts the data to be transmitted, and updates the system regularly to ensure zero threats to the system.

20. Development and Learning

The HR software, which works in tandem with the performance management software, serves as a hub for personalized training, bookings, requirements, and feedback. The HR software also simplifies allocating budgets and tracking training costs.

HR Software that Leverages GenAI/AI for Talent Sourcing

Now is the time to start using AI for all your talent management and acquisition needs. Artificial Intelligence can help unlock a person’s potential and ultimately transform how companies hire, manage, and develop their people and address the HR challenges.

Selecting an HR software that leverages GenAI/AI for talent sourcing can significantly enhance your recruitment processes. Here are some key factors to consider when choosing an HR software with AI capabilities for talent sourcing:

Fun Fact: Only 50% of companies are satisfied with trust and safety from their AI vendor, according to Aptitude Research.

AI Capabilities:

Look for HR software solutions that specifically mention AI or machine learning capabilities for talent sourcing. Ensure that the software offers advanced algorithms and data analytics to enhance the efficiency of the sourcing process.

Natural Language Processing (NLP):

NLP is a crucial aspect of AI-driven talent sourcing. The software should be capable of understanding and interpreting natural language, enabling it to analyze resumes, job descriptions, and other textual data effectively.

Resume Parsing and Matching:

The HR software should include features for parsing resumes and matching candidates with job requirements based on skills, experience, and qualifications. Look for systems that can automatically screen and rank resumes using AI algorithms.

Predictive Analytics:

Choose a software solution that utilizes predictive analytics to forecast candidate success and job fit. This can help you identify high-potential candidates and make data-driven hiring decisions.

Automated Sourcing:

Effective HR software should automate the sourcing process by proactively identifying potential candidates from various sources, including job boards, social media, and professional networks.

Candidate Relationship Management (CRM):

A CRM system integrated with AI can help in building and maintaining relationships with potential candidates. Look for features such as automated communication, personalized engagement, and targeted outreach.

Diversity and Inclusion Features:

Ensure that the HR software has features that support diversity and inclusion in talent sourcing. AI should be used to reduce bias and promote a more inclusive hiring process.

User-Friendly Interface:

The software should have an intuitive and user-friendly interface. AI-driven features should be seamlessly integrated into the platform, making it easy for HR professionals and recruiters to use them effectively.

Integration with Existing Systems:

Consider how well the HR software integrates with your existing HR systems, such as applicant tracking systems (ATS) and HRIS. Seamless integration can improve data flow and streamline your overall HR processes.

Vendor Reputation and Support:

Research the reputation of the software vendor. Look for reviews, testimonials, and case studies to understand how well the software has performed for other organizations. Additionally, ensure that the vendor provides reliable customer support and training.

Scalability:

Choose an HR software solution that can scale with the growth of your organization. The software should be able to handle increased data and user requirements without compromising performance.

Compliance and Security:

Verify that the HR software complies with data protection and privacy regulations. Security features should be robust to protect sensitive candidate information.

Before making a final decision, consider conducting a trial or requesting a demo to assess how well the HR software aligns with your specific talent sourcing needs.

Do You Need an HR Software?

Do you REALLY need HR Software? Answer to these common questions:

Are we too small to have our own system?

Many one-employee companies buy their own payroll software. However, most companies outsource their HR until they hit 20 employees. At this point, it typically becomes more cost-effective for growing companies to bring their HR needs in-house.

I already have different systems to manage all of the HR

As companies grow, they tend to consolidate their manual and vendor-supplied HR systems to provide better management with strategic visibility of their human capital. Most companies start with a core HRIS and add modules as their growth and strategic priorities dictate.

I currently outsource HR. Why should I invest in software?

Most growing companies return their investment on HR software in two to five months. How? They save time and money, but more importantly, they gain a system that helps organize, manage, and measure their most important asset – their people.

Can we save money doing our own payroll or benefits?

Yes. Many companies cut their costs by 30-50%! With the right software, you gain control, and flexibility and eliminate high fees from outsourcing.

Selecting the right HR software for your organization can have an immensely positive impact on your company’s strategic growth and the effectiveness of your people.

Questions to Ask a Potential HR Software Vendor

Don’t buy HR software. Instead, invest in a partner who will help you meet your HR goals using technology.

This means that you should be looking for a company that fits your culture, both today and in the next five years. That’s the true secret to maximizing the value of your HR software buying decision.

Before choosing any HR software vendor, you must ask the potential vendor a few questions. This will help you get an idea about their tool and make a wise choice.

What kind of training programs are available for understanding and getting on board with the new HR software?
How easy is it to access help or reach out to support teams in times of need?
Are there any other organizations in your industry that use the tool, and how has their experience been?
Can I speak to some of the HR teams already using the HR software?
What are the popular accreditations available for your software?
What is the fee, and how frequently am I supposed to pay for the software?
Who will deliver the training to the staff?
How will the vendor enable the transition from the current system to their new platform?
Does the tool integrate with some other platforms already existing in the organization?
What kind of support is available for remote workers?
How long does the software need to implement?
Where is the data stored?
How is my employee data protected?
Does the software training program require any additional charges?
What kind of technical support and response time is available?
Does the software have a test environment?
What will be the repercussions of the software on different teams in the organization?
How user-friendly is the new tool?
Is the HR software tool on-premise or cloud-based?
Can the system be customized for the precise needs of the organization?
How does the AI handle unstructured data?
How does the AI handle privacy and data protection?
Can the AI Integrate with External Databases and Systems?

Asking these tough (but important) questions now will help you choose the best system and partner for your organization.

We hope this guide has made you more confident and familiar with the process of buying HR software. Any questions or additions? Let me know in the comments below.

Want to learn more about HR software? Start with any of these great articles:

10 Best HR Talent Management Software: Reviews & Pricing Details Inside

10 Modern HR Software Solutions for Your Business

45 Best HR Tools Every HR Professional Should Know About

Top 15 AI-Powered Tools for HR Professionals in 2024

Last updated Jan 16 2024