What is Human Resources Software?
Human resources (HR) software solutions--also called Human Resources Information Systems (HRIS), Human Resources Management Systems (HRMS) or Human Capital Management (HCM) software--make managing a large or growing workforce more efficient.
These solutions streamline the traditional HR functions of benefits administration, personnel tracking and payroll. But in addition to increasing your productivity by automating many of these administrative processes, HR software can also support you on a strategic level, by helping you to recruit, develop and manage your company’s most valuable resource: its people.
We created this guide to help you determine which HR applications are best for your organization. Here’s what we’ll cover:
Overview of HR Applications
Industry watchers break down the field of HR software into three main categories: Core HR, Workforce Management, and Strategic HR--also called Talent Management or Talent Administration software.
- Core HR encompasses the three traditional human resources management functions: benefits administration, personnel tracking and payroll. Every company will require these functions once it has reached a critical mass of employees. You need core HR functionality when, for instance, manually running payroll and managing employees with spreadsheets becomes too burdensome a task.
- Workforce Management, or Workforce Administration as it is also called, comprises the range of software solutions intended to effectively schedule and track your workforce. These solutions are ideal for organizations whose employees work in shifts, and include applications to track time and attendance, monitor compliance with labor laws, and usually include payroll functionality, or integrate well with other payroll software.
- Strategic HR involves growing your company by attracting and developing the best people, as well as better managing your workforce overall. Strategic HR applications generally provide some combination of applicant tracking and recruiting, learning management, as well as performance review functionality. This type of software streamlines these strategic processes to ensure that a company is using its staff as efficiently as possible, and also that employees are continuing to grow and develop--increasing employee satisfaction and retention rates.
HR Application Categories
|Benefits Administration||Manages employee benefits such as paid time off, medical/dental/life insurance policies and 401k participation. Example vendors: OmnipriseHRM, Epicor HR, Triton HR.|
|Personnel Tracking||Centralizes employee data, such as SSN, contact information, past employment and demographic information. Example vendors: Sage HRMS, Ascentis, Lawson HR.|
|Payroll||Tracks employee salaries, bonuses, 401k contributions, health and other deductions; calculates withholding for taxes; and cuts paychecks. Most solutions provide integration for direct deposit as well. Example vendors: Halogen, Vista HRMS, Tribe HR.|
|Time & attendance||Helps staff track employee attendance and absences, and enables employees to clock in and out. Many solutions also track accrual and usage of sick days and PTO. Rules-based engines provide alerts when employees miss or perform established amounts of work. Example vendors: TimeForge Labor Management, LaborVIEW, Kronos|
|Employee scheduling||Provides functionality for scheduling employee shifts and attendance to ensure compliance with staffing needs. Systems can schedule employees across departments, locations and projects, and provide alerts to employees when schedules change and when staffing levels are inadequate. Example vendors: Ascentis, Sage HRMS, UltiPro.|
|Applicant Tracking Systems (ATS)||Provides a centralized database that lets recruiters store applicant information and employment applications throughout the application process. Features include candidate tracking, applicant status monitoring, and direct integration with other HR applications. In addition, many vendors include on-boarding features, like the ability to perform background checks. Example vendors: iCIMS, MarketRate, NuViewHR.|
|Employee Evaluation||Also known as Performance Review software, these applications offer a centralized system where supervisors can conduct and track reviews with employees. Features performance measuring, tracking and goal management. Example vendors: Empower by ECI, Cornerstone CSB, People-Trak.|
|Learning & Development||Establishes a centralized hub to monitor new employee training and the ongoing skills development of existing employees. Features include content authoring and management, curriculum and certification path definition, testing and reporting. Example vendors: Prosperity LMS, Halogen Talent Management Suite, SmartTeam.|
HR Software Buyer ScenariosGiven the wide variety of software available, the task of choosing one solution is daunting. To help you narrow the field, below we present four common buyer goals. One or more of these goals might align with your needs.
1. Streamline HR Administrative Tasks
If you’re a small to medium-sized company with no HR software, or you are using a few standalone solutions that you want to consolidate, you should consider an integrated HR suite. This will automate your more basic HR functions with a single system. Representative vendors: Sage HRMS, SAP - HR, Vista HRMS.
2. Boost Efficiency When Recruiting and Hiring Candidates
If you need to scale your workforce quickly, a best-of-breed recruiting and applicant tracking solution might be your best option. Many of these solutions can automatically post jobs to job boards and social media outlets, in addition to simplifying candidate tracking and on-boarding of new employees. With searchable databases of candidates and robust reporting capabilities, you can make the most of your current candidate pool, while expanding your talent base. Representative vendors: SuccessFactors, COMPAS, GoHire.
3. Manage a Large Pool of Employees Working in Shifts
If you are faced with the task of staffing a workday with multiple shifts to assign and time-off requests to approve--such as the shift-work found at hospitals, grocery stores, or restaurants--and need better tools to track your workforce, you need to build up the workforce administration pillar of your HRIS. Many solutions either feature a built-in payroll system to help when running massive payrolls, or integrate effectively with your current payroll software to ensure all hours worked by employees are compensated. Representative vendors: LaborView, TimeAttend, TimeForce.
4. Develop Your Workforce
You want to ensure that your best employees are recognized and rewarded so they stay with your company and continue to do great work. The broad category of talent management solutions help you do that, with functionality for everything from performance appraisals and gathering peer feedback to employee training and succession planning. Benefits include increased retention rates, higher morale and greater employee productivity. Representative vendors: Halogen Talent Management Suite, Kenexa2x, NuView HR.
Market Trends You Should UnderstandAs you evaluate a human resources management system, it is helpful to understand a few current trends in this industry.
Consolidation of Cloud-based HR Software Start-up Vendors. Recently, there has been a trend in the HR software world toward consolidating as many applications as possible under one vendor. As such, companies have focused on developing integrated suites that allow HR departments to track an employee’s entire lifecycle within an organization.
To that end, many best-of-breed providers have been acquired by larger vendors looking to extend the breadth of their integrated suite solutions. For instance, in 2012, SAP acquired SuccessFactors; Oracle bought Taleo (one of SuccessFactors’ competitors); and Salesforce.com completed its integration of Rypple, a social performance platform.
For buyers, this offers the opportunity to benefit from larger corporate resources, but it can also lead to disruptions as acquired companies are integrated and product offerings are rationalized. In anticipation, buyers should lock in rates and service/maintenance terms in their contract as this can save them a headache down the line.
Smaller Vendors Attract Venture Capital. Following on the heels of recent acquisitions by large software companies of smaller HR software vendors, venture capitalists are now pouring money into HR startups. In March 2013, PeopleMatter--an hourly worker management software solution--received $19 million in funding, while in January 2013 InternMatch--a solution focused on matching university students to employers--raised $1.2 million. Expect more companies to launch, and more product innovation in this market, in 2013.
Adoption of Software as a Service. HR software vendors have widely embraced the Software-as-a-Service (SaaS), or “Web-based,” deployment method. SaaS applications are easily implemented and updated, and can be accessed by HR staff and employees from almost any device with an Internet connection. Although most SaaS applications allow for some level of customization, it is important to realize that customization options to support your company’s unique needs can be somewhat limited.
Vendors such as TimeForce allow employees to request time-off through their Web-based system.
Consumerization of HR Software Technology. A major shift in the development of enterprise software has been the emergence of consumer markets as a primary source of technology innovation--a trend called consumerization. From social media as a recruiting tool to mobile apps for managing HR on the go, consumer technologies are changing the way HR technology is being used. Vendors are beefing up collaborative capabilities in their systems and developing more intuitive user interfaces. When selecting the human resources system that’s best for you, third-party reviews of product features are a great way to distinguish which vendors will deliver.
Vendors such as Bullhorn feature mobile accessibility.