Guide to Selecting HR Management Software

As your business grows, it’s easy for the company’s HR department to get overburdened with day-to-day activities. This can prevent HR staff from focusing on longer-term strategic projects for the company, which hurts productivity and decreases your HR’s overall job satisfaction. To help alleviate some of this burden, it’s important for any growing company to consider investing in HR management software.

What does HR management software do?

HR management software (HRMS) is a powerful tool that helps streamline your HR department. At a high level, the software serves as a one-stop shop for employees’ HR needs. In addition, it helps your HR department manage all of their functions electronically, which means that they’ll be able to handle administrative tasks faster, and more accurately.

What are the benefits of HR management software?

Using HR management software can offer your company many benefits, including:

Employee self-service portal

For employees, one of the most important benefits of HR software is the ability to access all HR-related information in one central location, at any time. If the employee has questions about the company’s benefits, or questions about payroll, they can simply login to the system and find the answer.

Employees can also request time off through the HR software system, rather than having to ask their manager directly. This can also save the manger time, since they can process all time off requests for all of their reports in the system. A nice additional benefit of HR software is that since all of this information is stored in the system, you can reduce your company’s paper usage.

Increased productivity for HR staff

HR software is not designed to replace a dedicated HR staff -- it’s meant to be a powerful tool to help HR professionals become more productive. Since many employee questions regarding payroll, benefits, and company policies can be answered simply by accessing the HR software system, your HR team can spend less time answering ad-hoc questions, and more time focusing on important, longer-term projects that are critical to the company. Not only can this help reduce staffing costs, but it can also help your HR department scale and increase their productivity as well as job satisfaction.

Compliance management

Many businesses require employees to complete annual compliance training. HR software can help remind employees that this needs to be done, by sending them notifications through the system to complete their training. Managers will also be notified if certain employees are overdue for their training, so that they can help push the employee to fulfill this requirement. This functionality can help ensure that all employees go through their necessary training, which thereby helps prevent any legal issues from arising down the line.

Performance reviews

Some HR systems can be used to manage performance reviews. Managers can request that employees fill out their self-evaluations, and request peer feedback for their direct reports. This helps streamline the process for managers who have many direct reports, since they can easily keep track of the team’s performance reviews, and identify employees who haven’t yet completed their evaluations. Another benefit of managing performance reviews through an HR system is that managers can also use the system to access each employee’s previous performance reviews. This is especially important if an employee transfers teams and is assigned a new manager.

How much does HR management software cost?

HR software prices can vary widely from system to system. Many systems these days charge per employee, so the overall cost will typically vary based on the size of your company. In addition, most systems do not publish their pricing structure, and typically require you to contact them in order to receive a quote. This often means that the price is negotiable, so we would highly recommend you walk into any sales conversation prepared to negotiate.

Certain systems come equipped with more functionality than others, so this is another reason why prices can vary from vendor to vendor. As you compare and contrast various options, you’ll want to make sure that you don’t pay for any additional functionality that you don’t need.

On the more affordable end of the spectrum, there are plenty of popular options that charge less than $10 per employee, per month.

Higher-end systems with more robust capabilities can cost tens of dollars per employee per month. If you’re going to pay for these systems, we highly recommend making sure that you’ll need all of the functionality that you’re going to be paying for -- otherwise you will be better off with a more lightweight HR software system.

Key questions to consider when selecting HR management software for your business

Here are some important questions to ask yourself prior to selecting your HR software system:

What functionality do you actually need?

Given the wide price range for HR software, it’s important to understand what features you’ll actually need, so that you can make sure you’re not paying for any extraneous capabilities. By making a list of "must-haves" and "nice-to-haves", you can help prioritize the features that you actually need, and select the product that most closely matches your requirements. By selecting the minimum viable product that meets your needs, you’ll help reduce the learning curve of the system, and increase the usability of the product.

Cloud-based or on-premise?

Though there are many benefits of cloud-based software, on-premise solutions may be suitable for some businesses. Cloud-based systems are typically faster to implement, and have lower upfront costs. They also include automatic software updates that happen seamlessly behind the scenes. On the other hand, on-premise implementations are usually more customizable, and your company will have control over the hardware and all of your data. This makes on-premise solutions more suitable for businesses who have strict compliance requirements, and for larger businesses with an in-house IT department.

Total cost of ownership

It’s important to consider that the total cost of owning an HR system extends beyond the per-employee charge. Internal labor for installation, as well as external labor in the form of consultants or project managers who will get the system up and running will also add to the TCO. Yearly maintenance and service contracts should be added to the total cost of ownership as well. If you select an on-premise solution, you should also factor in the cost of maintaining your servers, and the additional IT staff required to support the system. You’ll also want to factor in any additional training costs associated with helping users ramp up on the system.

Bottom line

HR management software provides a range of powerful capabilities that help rapidly growing companies streamline their HR processes. However, because the price of HR software can be fairly substantial, you’ll want to make sure that you don’t choose a system that includes robust features that you won’t actually need. Investing in the right HR software system can help you meet compliance requirements, increase the productivity and job satisfaction of your HR staff, and provide employees with a convenient way to find answers to questions about payroll or benefits. With the right HR system in place, your company will be able to lay a foundation for future growth, while also addressing existing employees’ HR needs more effectively and efficiently than ever before.

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