The Essential HR Features Your Small Business Needs

By: on August 15, 2017

Sometimes, businesses lack efficiency, flexibility and accountability in their processes. This results in delays, high costs and low productivity. In such cases, it’s easy for your employees to be dissatisfied with your business practices. Coupled with low engagement levels, this trend can be detrimental to the business.

This is why businesses should digitize their processes. With automation and smart machines, businesses can be more efficient. This will help employees be more productive and motivated, and you can turn this increased worker satisfaction into higher retention numbers through human resource management software.

In this article, we’ll show you the essential features of HR software that will help you be more efficient and improve your employees’ engagement levels.

This report is exclusively based on top-performing products in the FrontRunners for HRIS Management. However, in this article, we have researched further into the features of these HR systems and categorized them into two specific groups:

  • Essential-for-All Features: These are key and indispensable functionalities that small and midsize businesses (SMBs) must look for in an HR system.
  • Essential-for-Some Features: These functionalities become important as your business’s needs and revenue grow over time. That’s why it’s good to have at least one of these features in your HR system.

Here’s a graphical representation of all the important HR features:

essential hr software features
Read on for a deeper dive into the key features to look for in an HR system.

Essential-for-All HR Features

The basis of most HR software, these must-have features address basic employment management needs—storing employee information, organizing their benefits programs and mining insights from employee data. When your HR staff uses these features, the benefits trickle down to other employees, who can then better understand HR policies and procedures.

Personnel Tracking

Also known as personnel management, this feature centralizes employee information, such as their SSNs, contact information, previous employment details and demographic data. It helps businesses track work hours and employees’ physical locations (to track remote salespeople, for example). Managers can set timelines, plan for absentees, anticipate delays and re-assign resources to more immediate tasks.

UltiPro personnel tracking
Personnel tracking in Ultipro (Source: Software Advice)
Business value to SMBs: If your company continues to manually set employee schedules, personnel tracking will save you tons of time and effort. Once you automate the task of scheduling, it becomes easy to track and approve paid time-off requests, set backups and have a holistic view of the workforce.

Our recommendation: Personnel tracking is immensely helpful in managing daily schedules as well as peak and off-peak employment. For example, construction companies function better when they know where each employee is and doing which task. This helps analyze each project’s progress and identify the exact problem area throughout the life cycle.

Benefits Administration

This feature helps manage your company’s various benefits programs, such as paid time off, medical, dental and life insurance policies and 401k. It helps keep track of all your current vendors and existing plans. It also allows you to monitor expenses of these plans and understand which plans are preferred by your employees.

bamboo hr benefits adminstration

Benefits administration (Source: BambooHR)
Business value to SMBs: The software allows the HR staff to stop chasing after employees to sign paperwork; instead it lets employees manage their benefits on their own through an online portal. It’ll also automatically notify them about vendor upgrades or government regulations.

For example, if your company switches its dental coverage provider, the system could automatically transfer employee information to the new vendor database. You wouldn’t have to manually copy or re-enter all the information.

Our recommendation: Benefits aren’t easy to manage manually because of the complexities and costs of each vendor and plan. A few potential benefits administration software buyers told our experts that they would outsource this function if they could. Whether you outsource benefits administration or not, managing it digitally is easier than doing it using pen and paper.


HR collects and manages a lot of data, and reporting helps identify trends and action points within this data. For example, analyzing current employee types and skills can help you define your future hiring requirements. Similarly, the HR team can identify the root of common issues and use the software to identify the right resolution strategy.

Dayforce HCM reporting dashboard
Reporting dashboard in Dayforce HCM (Source: Software Advice)
Business value to SMBs: Adding reporting to HR functions will help you gain accurate insights on how to upgrade your business strategy. For example, a midsize engineering company with operations in three different countries might want to generate reports on their competencies. The business could also track employee data across all locations to measure performance accurately.

Our recommendation: This feature is essential to gain essential business insight from a variety of functions, most importantly, your employees. An important benefit of reporting feature is also staying compliant with local, state and federal regulations.

Based on Gartner’s “Market Guide for HCM Suite Applications” report (content available to Gartner clients), numerous chief HR officers and HR IT leaders prefer getting these core HR capabilities as a suite from a single vendor. This ensures seamless data transfer and ease of use for your employees.

However, some solutions offer an open API, which makes it easy to integrate with other software solutions. If you’re following a build-as-you-grow model, this approach may be preferable to you.

 TOP PRODUCTS:  Based on their value scores in the FrontRunners matrix, the top-rated products offering these features are UltiPro, Dayforce HCM, BambooHR and Cornerstone OnDemand.

Essential-for-Some HR Features

The Software Advice Buyer’s Guide for HR software categorizes the following features into workforce management and strategic HR. They tend to be add-on features that you can adopt as your business grows.

Employee Management

This feature involves managing employee workload and compensation. Many companies manage compensation manually, but, it’s hard to do that when you factor in benefits, taxes, overtime and PTO. Also, manually calculating compensation for hourly or contract employees can be difficult.

When your employee size or benefits needs increase, payroll software integrated with the benefits administration feature can reduce the complexity. You can also integrate payroll with the employee scheduling feature in personnel tracking to calculate PTO and overtime.

namely payroll center dashboard
Payroll center (Source: Namely)
Most useful for: Businesses that manage numerous employee salaries, bonuses, 401k contributions, health coverage and other deductions.

This feature can also help calculate the withholding for tax and create paychecks. While payroll can be outsourced, software makes it easy to manage in-house, thus saving you additional costs.


This feature uses a centralized database for candidate information. Recruiters and managers refer to and update this database throughout the application process to make notes. It automates the time- and labor-intensive processes of job posting, resume browsing, candidate shortlisting, interviewing and tests, scheduling and even onboarding.

workday iphone screenshots
Recruiting (Source: Workday)
Most useful for: Recruiters and recruiting agencies.

Searching for the right candidates is burdensome if you do it one resume at a time. Software makes the whole process efficient, cost effective and easy to use for both HR and managers.

Benefits Management

The easiest way to manage benefits is by letting employees choose their preferences—via a self-service portal. As we’ve noted before, companies commonly use self-service portals to help employees select insurance options and check allotted PTO. These portals can enhance employee satisfaction in your organization.

manager self service portal in workday
Manager self-service portal (Source: Workday)
Most useful for: Businesses that are looking to remain relevant in a digital age when most people use a mobile device for many of their needs.

Gartner’s “Why You Need to Rethink Your Customer Self-Service Strategy” report (content available to Gartner clients) recommends that organizations should strive to offer self-service portals, which both better serve customers and save costs. You can also save your HR department’s time with self-service portals by using automated query resolution and a ticket system to resolve basic employee queries.

Learning and Development (L&D)

This category includes a wide gamut of features that link learning to performance review so that employees are encouraged to grow and are consistently provided the right resources. Learning management solutions (LMS) are essential to impart training across the organization in a uniform and organized manner.

Gartner’s “Overview on How to Plan, Recruit, Develop and Retain a Skilled Workforce in the GCC Region” report (content available to Gartner clients) found that the top reason for retention among IT professionals was a formal career development program. Such a program reduces the chance that your best talent will get poached.

learning management system in SAP SuccessFactors
Learning management system (Source: SAP SuccessFactors)

Most useful for: Businesses that constantly require employees to be certified as per market standards, such as in aviation and food preparation.

However, some small businesses may not be able to afford a system due to lack of budget. In that case, you can consider MOOCs (massive open online courses).

Some level of LMS is essential for all organizations. You should tie learning management to the evaluation process. This way, your employees and managers know exactly what areas to improve and what resources can help them do that.

 TOP PRODUCTS:  Based on their functionality breadth scores, some solutions you can consider are Namely, Workday, ADP Vantage HCM and SAP SuccessFactors.

What Solution Do I Choose?

While we’ve listed some of the most popular HR features and the possible benefits you can gain, your business likely has its own specific needs.

To get more guidance about where your business needs lie, give us a call at (844) 675-2849 for a free consultation with a software adviser.

Additionally, you can download a checklist of the above features to quickly understand if a vendor you’re considering offers these functionalities in their HR solution.

Important: How to use this checklist

  1. Download the checklist and send it to all vendors whose HR systems you are considering purchasing.
    1. Ask the vendors to add a “Yes” or “No” for each of the features on the list to indicate whether the tool offers that feature or not.
      1. Ask the vendor to add details about the feature in the “Comments” section.
        1. Once you receive the filled-in checklists back from the vendors, check the total score (generated automatically) for all HR products and make your buying decision based on your requirements.

        Additional Resources

        To further help you understand the landscape of HRM software, we have created a number of detailed buyer guides. Here’s a quick list you can choose to read from:

        By Application:

        By Specialty:

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