Software Needs Cycle for HR: Determining HRIS Needs by Business Size

As businesses grow and change, so do their HR software needs. Spreadsheets and emails will suffice to stay on top of most processes when you have 10 employees. 10,000 though? Good luck.

The problem lies in knowing when to make this transition from manual methods to dedicated software.

  • Adopt too early and you’re looking at a substantial investment in a system that doesn’t provide its full return.
  • Adopt too late and you face a massive missed opportunity while your competitors streamline and get ahead.

That’s why we decided to take a look at Software Advice data to create the first ever Needs Cycle for HR Software.

In this helpful tool for software buyers, we’re looking at nine applications from our HR software page and listing them in order by those you need when you start, when you grow and later as you optimize your business.

hr needs cycle
Methodology: To create this Needs Cycle, we looked at a random sample of 200 Software Advice interactions with HR software buyers from the last 12 months for eight different business sizes (determined by number of employees). From these interactions, we calculated the most requested HR software applications in each of these business sizes to see the size at which different applications reach peak adoption.

3 HR Applications You Need to Start

This section is for businesses who are just starting out or those with a relatively small number of employees (one to 250).

1. Payroll

What it does: Payroll software allows businesses to track employee wage and salary rates and accurately compensate workers. Once set up and integrated with a payroll processor, you can calculate total payroll, debit the company bank account for the correct amount and transfer funds to workers.

Learn more about payroll software in our Buyer’s Guide.

Why you need it to start: Even if you only have one employee besides yourself, that employee must be paid accurately and on-time. Period. The negative effects on employee happiness and retention from late paychecks or underpaying workers can quickly sink any business.

Payroll also represents a significant administrative burden. According to a National Small Business Association survey, one in three small businesses spends 80 hours or more per year calculating and filing federal taxes.

Payroll software vendors know this, which is why many products cater to even the tiniest businesses with a focus on ease of use and affordability (as low as $5 to $10 a month).

Key considerations:

  • Because payroll data is so sensitive, be sure to consider security capabilities when evaluating different systems. This is an area that is often overlooked.
  • Looking at a random sample of our data from this past year, the highest percentage (42 percent) of HR software buyers requesting payroll software came from companies with one to 50 employees, suggesting this is the best size range to purchase.

Buyers Requesting Payroll Software, by Number of Employees

number of employees requesting payroll software
Head here to begin your payroll software search.

2. Time and Attendance

What it does: If you’re tired of manually tracking employee hours, keeping accurate counts of allotted vacation days and even scheduling shifts by hand, it’s time to invest in time and attendance software.

Besides managing employee time and generating reports, these systems empower workers to clock in and out of shifts, view schedules and request time off without needing a supervisor.

Learn more about time and attendance software in our Buyer’s Guide.

Why you need it to start: If you work in a predominantly shift-based industry such as retail or food and beverage, dedicated software for creating and sharing shift schedules is a must, no matter your size. Too often with whiteboards or paper schedules, communication can break down, causing confusion and missed shifts.

Even if your workforce is comprised of “9-to-5″ employees though, time and attendance software can prove extremely beneficial. Integrating time and attendance software with your payroll system (see above) means worker hours can be ported over to calculate payroll automatically, saving valuable time.

Key considerations:

  • If you’re worried workers are cutting out early, many time and attendance systems allow users to implement rules to prevent costly time theft.
  • According to our data, there’s a slight uptick in time and attendance software purchases in the one to 100 employee size range. Beyond 100 employees, it becomes a significant burden to track employee hours and PTO manually.

Buyers Requesting Time and Attendance Software, by Number of Employees

number of employees want time and attendance software
Head here to begin your time and attendance software search.

3. Personnel Tracking

What it does: Every worker generates a massive amount of data, from their name and address to their job title and boss and even their work history and certifications. Personnel tracking software allows you to log all of this and more in a secure and easily manageable digital database.

Learn more about personnel tracking software in our Buyer’s Guide.

Why you need it to start: Entering or updating just one piece of data for 100 employees in a spreadsheet can be time consuming and error prone. Before you hit your growth stage where you’re going to add a lot of personnel, it’s wise to invest in a dedicated system with preset fields for all the information you need to track.

Pretty soon, it will get to a point where it isn’t immediately clear who is whose boss and who’s in what department. Personnel tracking software can provide a centralized place to look up this information.

The migration to software also offers your company a good opportunity to clean up any errors and formalize department structures and hierarchy, if it hasn’t already.

Key considerations:

  • Employee access is going to be key with these systems so workers can update their details themselves. Evaluate this functionality carefully.
  • Personnel tracking is a popular HR application across business sizes because it’s already in the core functionality of many systems. However, we do see a peak in purchases at around 101 to 250 employees.

Buyers Requesting Personnel Tracking Software, by Number of Employees

number of employees want personnel tracking software
Head here to compare and filter personnel tracking software systems.

3 HR Applications You Need to Grow

This section is for businesses on a hiring boom or those with a more substantial headcount (anywhere from 251 to 2,500 employees).

4. Performance Management

What it does: Establish individual, team-wide and company-wide goals, track employee performance against those goals, provide constructive feedback for improvement—performance management software allows companies to do all of this and more.

Learn more about performance management software in our Buyer’s Guide.

Why you need it to grow: From improving productivity and retaining high performers to boosting sales, profit and engagement, formalized performance management provides almost too many benefits to growing businesses to count.

We’re not just talking about the dreaded annual performance review, either. Software vendors have upped their game in recent years to provide more flexibility and ways to deliver more continuous feedback.

Dedicated software offers a way to structure processes, archive heaps of employee performance data and more easily tie performance metrics to bonus compensation.

Key considerations:

  • While the bones of different performance management systems are largely similar, their analytics capabilities are not. Being able to dive into your performance metrics to pull out insights for improvement is vital, so make this a priority when evaluating software options.
  • According to our data, purchases of performance management software spike around the 251 to 500 employee mark. However, depending on how you prioritize employee development at your company, you may choose to invest sooner than that.

Buyers Requesting Performance Management Software, by Number of Employees

number of employees want performance management software
Head here to compare and filter performance management software systems.

5. Benefits Administration

What it does: Enrolling in benefits such as health insurance or a 401(k) and making any changes thereafter have historically been painstaking processes for employers and employees alike. Benefits administration software streamlines these processes and tracks data for cost and compliance purposes.

Learn more about benefits administration software in our Buyer’s Guide.

Why you need it to grow: It’s not enough to explain your attractive benefits package in a single pamphlet at this point. With insurance especially, the volume of information about different plans can easily confuse workers.

That leads to a lot of questions, which in turn takes up a lot of HR time to provide answers. That’s the last thing you want to deal with during a hiring boom.

Benefits administration software provides a self-service portal where employees can not only enroll in benefits or change options themselves (instead of filling out a form for HR to enter into their system manually), but also troubleshoot issues on their own.

Key considerations:

  • Because changes to government regulations such as COBRA and FMLA occur often, easy-to-use compliance management functionality should be a top priority when vetting systems.
  • Like performance management software (see above), benefits administration software sees peak purchases at the 251 to 500 employee size range.

Buyers Requesting Benefits Administration Software, by Number of Employees

number of employees want benefits administration software
Head here to learn more about different benefits administration software systems.

6. Applicant Tracking

What it does: Applicant tracking systems (ATSs) provide a centralized tool through which your recruiters can post job openings to job boards and social media, collect job applications, track workers through the hiring process, grade and rank candidates and, ultimately, extend a job offer.

Learn more about ATS software in our Buyer’s Guide.

Why you need it to grow: Besides providing a digital space to manage all those candidates (and all that paperwork), applicant tracking software is also a valuable weapon in the war for talent.

These systems can automate the process of blasting your job postings to as wide an audience as possible and increase the likelihood for an application through an improved online candidate experience.

When you’re doing a big hiring push, you’ll be wading through a lot of poor applicants to find the diamonds in the rough. The more criteria you can input to your ATS to eliminate obvious no-hires early on, the more time your team will have to assess the best candidates.

Key considerations:

  • If you’re an external recruiter or run a staffing agency, there are recruiting software systems designed to meet your specific needs.
  • According to our proprietary data, applicant tracking software is the most requested HR application for businesses with anywhere from 251 to 5,001+ employees. When you choose to adopt is going to depend entirely on your hiring needs, but we do see a peak at 1,001 to 5,000 employees.

Buyers Requesting Applicant Tracking Software, by Number of Employees

number of employees want applicant tracking software
Head here to compare top-rated applicant tracking systems.

3 HR Applications You Need to Optimize

This section is for firmly established businesses looking to optimize their HR operations or those with a very large number of employees (more than 2,500).

7. Onboarding

What it does: Onboarding software walks new hires through all the necessary steps to become full-fledged employees. Employees can read and digitally sign paperwork and complete any new hire training tasks. In addition, these platforms give newbies an early chance to interact with their manager and coworkers to be more productive on day one.

Learn more about onboarding software in our Buyer’s Guide.

Why you need it to optimize: A 2012 study found that, on average, it takes eight months for a new employee to become fully productive in their role. That’s an agonizing period to not be at full capacity, especially for a large company hiring fresh faces every week.

Onboarding software can cut this time down by automating tedious paperwork so workers can dive into the nitty gritty of their positions sooner—possibly even before their first day through an online portal.

These platforms also bridge the gap between applicant tracking and personnel tracking. Integrating these capabilities makes the administrative hassle of transitioning someone from applicant to new hire to employee much more seamless.

Key considerations:

  • If an onboarding application isn’t available in your existing HR or recruiting suite, consider investing in a new system with this functionality at the 2,501 to 5,000 employee mark.

Buyers Requesting Onboarding Software, by Number of Employees

number of employees want onboarding software
Head here to learn more about different onboarding software systems.

8. Compensation Management

What it does: Are you paying your workers the right amount relative to their expertise and performance? Is your compensation structure sustainable in times of hardship?

Compensation management software allows you to answer these important questions by diving deeper into internal factors (e.g., company revenue, comp budgets) as well as external ones (e.g., local job markets, currency fluctuations).

Learn more about compensation management software in our Buyer’s Guide.

Why you need it to optimize: At this point of complexity in your business, it pays to be specific when it comes to worker compensation. Every dollar or stock option that isn’t boosting talent attraction, performance or retention is a wasted opportunity.

Compensation management software can help you cut the fat in a number of ways. On an individual employee level, these platforms can pull performance grades from your performance management system to recommend bonus payouts based on desired outcomes.

On a macro level, this software can calculate compensation budgets for your entire global workforce and suggest payouts based on different scenarios of company performance.

Key considerations:

  • Compensation management systems with job market pricing can help you determine the right pay for unique roles in your organization that don’t exist anywhere else.
  • These systems definitely fall into the “nice to have” rather than the “need to have” category of software, as illustrated by the low percentage of buyers requesting this application below. Inquiries peak at 2,501 to 5,000 employees.

Buyers Requesting Compensation Management Software, by Number of Employees

number of employees want compensation management software
Head here to compare both best-of-breed and in-suite compensation management platforms.

9. Learning Management

What it does: Learning management software allows organizations to break employee training out of the classroom and into a more engaging and flexible online environment. Trainers can assemble digital training courses using different multimedia formats, administer courses to workers, test them on the knowledge they’ve retained and more.

Learn more about learning management software in our Buyer’s Guide.

Why you need it to optimize: Delivering ongoing training to every employee you have around the world is like running a large university at the same time as running a large business. Materials have to be updated as necessary, lagging workers need to be identified and brought up-to-speed and training courses have to somehow not be completely boring and tedious.

A learning management system (LMS) can help you tackle all of these problems head-on. As employee development takes on a higher priority in your organization, an LMS will become vital to staying on top of the sheer scale of your training operation.

Key considerations:

  • Unlike other HR applications that are typically priced based on the number of employees in your organization, LMSs are often priced based on the number of users or learners. Keep this in mind when budgeting for a system.
  • We categorize learning management software as its own market at Software Advice, separate from our other HR software applications. This requires a different approach to slicing the data, since 100 percent of buyers in this market are seeking an LMS.
    Breaking down all businesses looking for learning management software by size of business, we see nearly a quarter (23 percent) have between 1,001 and 2,500 employees. At the same time, we also see 9 percent of buyers have more than 10,000 employees—the highest concentration at this large size of any application in our Needs Cycle.

Buyers Requesting Learning Management Software, by Number of Employees

number of employees want learning management software
Head here to begin your search for learning management software.

Next Steps

You may choose to purchase best-of-breed versions of these applications one at a time, or you may decide to lump them all into one integrated suite, which you roll out as you’re ready. The likely outcome is somewhere in between these two extremes.

Knowing when to purchase this software is just one factor in determining the right system for your needs though. Here are some recommended next steps to continue your HR software search:

  • Go to our HR software page. There you can filter systems not only by required applications and how many employees you have, but a number of other criteria as well, such as price and user ratings.
  • Call 855-998-8505. Our HR software advisors will ask you a few questions about your business and actually recommend best-fit products based on your needs. It only takes a few minutes, and it’s a completely free service.

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