Choosing HR Software In 5 Easy Steps

Choosing HR software is an important process because the right HR software can have a big impact on a company's ability to attract and retain top talent.

A recent survey from PwC found that 36% of HR managers are likely to switch providers when their current HR software subscription expires.

The same study found that the biggest challenges HR managers face on technology projects are budget and integration with other tools.

Read on for an overview of the different types of HR software as well as a step-by-step guide to the software selection process.

What is HR software?

HR software refers to a wide range of tools used by HR managers to manage and automate HR processes. This includes:

Recruitment software
Talent management
Onboarding
Social benefits administration
Payroll
Time recording and attendance control
Performance management
Employee engagement
Succession planning
Document management for regulatory compliance.

While HR technology is primarily used in human resources to manage administrative processes, it is increasingly being used to distribute some of the HR administrative burden to the rest of the organization.

With features such as electronic forms, automated prompts and reminders, and employee self-service portals, tasks such as collecting and updating employee data, creating reports, and communicating with employees can be significantly streamlined.

HR software can help companies reduce manual tasks, reduce labor costs, make human resources 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 lifecycle.

While some tools are specialized for a specific purpose, such as: Others, such as recruiting or learning and development, are more holistic and seek to consolidate all HR operations into one platform or product suite.

While it may seem like a good idea to opt for a single business tool that can handle all HR processes, one should not forget that within these systems, some modules or functions are usually better than others. Specialization can definitely have its advantages.

Below is a brief overview of the main types of HR software:

HR core software

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

This information includes employee profiles, contact details, benefits and payroll data, vacation and time off balances and other employee data, as well as employee documents such as contracts and tax forms.

Core HR software includes both human resource management systems (HRMS software) and human resources information systems (HRIS software) and is 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 manage the hiring process from applicant search to onboarding.

The tools typically provide features that facilitate the creation of job offers, support the distribution of job offers, analyze, manage and track applicants, organize and filter applicant data, communicate with applicants and schedule interviews.

Recruiting software helps automate the hiring process by enabling recruiters and hiring teams to pre-screen and automatically reject applicants or follow up using pre-configured response templates.

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

Onboarding software

Onboarding software is designed to streamline and improve the employee onboarding process by bringing the entire onboarding process into one place.

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

With good onboarding software, new employees can get started right away and spend their first few days getting to know the company and making contacts instead of wasting time on paperwork.

Performance management software

Performance management software helps companies plan and conduct performance reviews for employees. This makes it easier to determine which employees are performing at their best and which need a little help to reach their full potential.

Most performance management solutions offer features that help managers translate company strategy into measurable goals or key performance indicators (KPIs) for individual employees - and assess how well the employee's performance aligns with those goals.

A performance management platform makes it easier to create and schedule employee meetings and reviews, as well as send automatic reminders so everyone involved is on the same page. Most also offer dashboards that give management an overview of the performance of individual teams and the entire company.

Learning and development software

Learning and development software is designed to facilitate the training and development of employees and to promote their knowledge and skills.

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

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

Eliminate technical terms

Jargon is the worst and is almost impossible to avoid when purchasing software.

Below, we've compiled and briefly defined some of the most common jargon terms and acronyms you might encounter.

UI - user interface. This refers to the look and feel of the part of the software that users interact with.
UX - user experience. This refers to the intuitiveness or ease of use of the software.
SaaS - Software as a Service. This refers to software for which you pay a subscription rather than purchasing it outright. It is maintained and updated and usually also includes technical support.
AI - Artificial Intelligence. This refers to advanced computer algorithms that use data analysis to recognize patterns and perform decision-making functions similar to a human.
RFI - Request for Information. In the procurement process, this is the practice of asking a vendor for product details and specifications that can be used for more accurate comparisons.
RFP - Request for Proposal. This is the same as an RFI, except the vendor is given more information about your company's needs and is 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 through which employees can log in and do things like updating their employee information, checking their benefits, or requesting paid time on their own, without having to ask an HR manager for help.

Choosing HR software in 5 easy steps

The HR software selection process doesn’t have to be complicated. Below we have broken it down into five steps.

Step one: identify needs

Before you begin selecting software, take the time to identify your company's specific needs.

Having a clear picture of your HR department's needs is essential to choosing the best HR software for your company.

Here are some questions to get you started:

How is the HR system you currently use (if any) inadequate?
What are the most common pitfalls and challenges for HR?
What are the biggest obstacles you need to overcome in creating a positive employee experience?
Which HR processes take the most time? Could these be streamlined with the right software features?
Which HR software solution(s) do you already use? How does any new software you purchase fit into your larger HR system?
What are the most common complaints from employees related to human resources management?
What policies and regulations apply in your company regarding aspects such as data security, supplier diversity, supplier contracts, etc.?
How adept is your team in using technology? The software you choose shouldn't be more complicated to set up and use than your team can handle.
What is your budget? What kind of return on investment (ROI) do you expect?

Step two: vendor research

It's time to do your homework and familiarize yourself with the leading HR software solutions for your use case. Luckily, the internet is full of informative websites (like this one) that compare different HR software tools. Reading a handful of these websites is a good way to get an overview of your options.

As you research, look for the tools that perform well in all areas and consider which factors you are willing to compromise on and which are non-negotiable. This will be important for the next step (creating a shortlist).

Here are some questions to ask yourself:

Who are the top providers for your use case?
Which are the best rated in their category?
What is the best-rated feature of each tool?
What do the customer reviews and testimonials say? What are the most frequently cited advantages and disadvantages?
What type of onboarding, training, support, and other resources does the provider offer?
Is solid documentation available?
Do the tool's features meet your needs?
Can the software be integrated into the HR tools you already use?
User Interface: Is it visually appealing?
Ease of use: Is the software intuitive to use and easy to use?
Is the tool simple or complex enough for your HR management needs?
Does it offer the flexibility or adaptability you need as an HR manager?
Is it suitable for small and medium-sized businesses or is it more suitable for corporate use?
Does it offer robust security standards and comply with data protection regulations and best practices? Is an on-premise option available?
Does the pricing fit your budget? Is the pricing clear? Is the price justified in relation to the functions of the software? Are certain key features only available in more expensive price tiers?
Is a demo offered? A free trial?

Step three: Create a shortlist

Now it's time to narrow down your choices to a handful of the best human resources management software solutions. Over the course of your research, you've probably identified several providers that stand out.

Compare these top providers and find out which of them performs best.

Read comparison blogs and test sites
Look for case studies that demonstrate the ROI of each tool
Ask your HR employees for an assessment of which HR tool they think is best suited.
Take the time to study the providers' websites and note any questions that arise.
Send each provider a request for information (RFI) so you can compare your options item by item.
Arrange a meeting with the respective sales representative and go through your questions.
If you really want to be thorough, send each of the shortlisted vendors a request for proposal (RFP). This contains important information about your company, your specific requirements, a questionnaire for the provider and special rules for submitting offers, such as: Submission deadlines.

Step four: Test the shortlisted providers

Take advantage of all the free trials and demos available and play around with each tool to get a feel for its interface, UX, and capabilities. Implement and test the tool on a small scale, paying attention to any limitations or difficulties.

If possible, get feedback from as many employees as possible. Since they are the actual users, they can help you identify flaws that you may not have considered.

If your favorite software doesn't offer a free trial, consider trying it out on a monthly basis before committing to an annual billing cycle. Sure, it's generally cheaper to pay for software annually, but not if you chose the wrong software and end up having to buy a new one again!

Corporate customers, who have more negotiating leverage, can be quite demanding. If this applies to you, you should include a trial period and/or termination clause in your service agreement.

Step five: implementation and onboarding

Make sure your employees are familiar with your HR software and feel confident using it.

The main reason why purchasing software is not profitable is that companies do not complete the implementation and do not properly integrate their new tool into their daily operations.

Effective change management is crucial. In order for employees to use your new software, they need to understand how it will benefit them (e.g. saving time or approving time off requests faster) and they need to know how to use the software.

Here are some tips to help you.

Communicate clearly that you are introducing new HR software and what this will mean for employees. Encourage your employees to contact you with questions.
Take advantage of the induction and training measures offered by the provider and require employees to complete this training within a realistic time frame.
Assign one person to lead the implementation and be the point of contact for all employee questions (and feedback).
Make your employees aware of all available self-service resources and ensure they know how to raise a support ticket if they have any difficulties.

Do you need expert help choosing the right human resources (HR) software?

If you're having trouble choosing the right software, we can help. Simply let us know your requirements in the form below and receive free access to our software consultants who will match you with the best providers for your needs.

Choosing the right HR software is pivotal for attracting and retaining top talent. With challenges like budget constraints and tool integration, a step-by-step approach to selection ensures optimal alignment with organizational needs. IceHrm stands out as a versatile solution, offering customizable modules for recruitment, onboarding, performance management, and more, empowering businesses to streamline HR processes and enhance employee experiences.