Most small business owners or startup founders can check on employees by looking across at them from their desks or walking down one short hallway a small office space to pass their desks. But as more staff is added and office space expands, even seemingly simple tasks get more complex. These tasks include adding new hires, keeping track of required forms, updating the employee directory, and tracking reviews.
That’s where human resources (HR) software and management systems step in. These cloud-based services help HR executives, HR information systems (HRIS) departments, and company owners track who’s who, where they’re based, what they’re doing, and how they’re doing—negating the need for separate spreadsheets for separate operations.
What Is HR Management Software?
HR software solutions cover a handful of basics including maintaining an employee database, archiving personnel records, and producing directories and organizational charts. In this way, they act as a company’s system of record for all things people-related. Because HR software is built on an integrated database of personnel information, the software also produces reports that HR departments or business owners can use to analyze vital workforce metrics such as staffing allocations, compensation costs, and turnover.
However, HR systems also cover a series of disciplines for which software makers have built individual solutions. That’s why in the features table above you can see several Editors’ Choice award winners. Be aware that, for this category of general-purpose HR management systems, the sole Editors’ Choice winner is BambooHR. Our other EC winners won their awards in other roundups of HR software that specialize in various subcategories described below.
These tools let you manage employee records from within a desktop app, a web browser, or even a smartphone app. Some offer you the ability to tie into applicant tracking (AT), benefits administration, and performance management tools so that you can follow your employee’s success from recruitment to retirement.
When selecting HR management software (HRMS), you’ll want to consider several key elements: Does its user interface (UI) offer an intuitive experience? Does the tool tie into your legacy software packages? Can it scale as your company grows? Does the vendor offer the kind of service you’ll need should the software fail at any point? Once you’ve determined your requirements and preferences, you’ll be able to approach any of these vendors with a wish list. Test the solutions that meet your needs and choose the one that fits your ideal combination of price and utility.
Key Features of HR Software
How your company manages HR can be highly individual, but there are certain key capabilities and features you should look for in any solution to make sure your pick can grow and change along with your organization’s needs. We’ve described key capabilities below, and they include:
- Applicant tracking, which includes the ability to manage job postings, applications, and even onboarding of new employees,
- Benefits administration, which is critical for most HR operations and what HRMS software makers offer here can vary from simply managing employee enrollment all the way to offering specific benefit plans to customers,
- Scheduling and Shift Planning, which are often dedicated tools though the capability can show up as part of larger HRMS platforms or those that focus on businesses where this capability is important,
- Performance management, which might be the ability to simply keep a record of employee goals or it can track goals down to the task level and tie success directly and automatically to compensation and payroll,
- Online learning can be another offshoot of performance management, allowing managers to provide the training employees need to achieve their goals and also keep the company in compliance if certifications are required for certain jobs, and
- eLearning authoring, which can let your company build its own training materials to be offered internally or on a publicly accessible learning hub.
Other key features to look for in any HRMS system regardless of its target audience, include:
- Integration. Most of these players (though not all of them even in 2017) offer either canned integrations or open APIs. Canned integrations is simply a list of partner apps with which the HRMS vendor has built direct integration capability that you can opt into by either paying extra or downloading a connector. Open APIs allow you to build your own integrations between whichever systems you like as long as they both support the API and you’ve got some programming talent in-house.
- Mobility. This still isn’t a must-have feature for a successful HRMS implementation, but it’s getting there. HR data tends to be data that employees need to access on-the-fly, especially things like benefits information and time off requests. Providing the ability to do that easily and securely on mobile devices means making sure the solution offers client software for both iOS and Android devices at a minimum.
- Security. Be sure to investigate how the solution protects customer data. Most of these systems are cloud-based, which means your employee data — including personal information and financial data — will wind up stored online somewhere, so ensuring that it’s adequately protected with role-based access controls and at least the option to encrypt data is critical.
This category is about making sure you don’t let your best candidates slip through your fingers because of mismanaged onboarding. The best AT tools let you follow your candidates from the first interaction until the day they leave your company. Before you choose a system, it’s important to consider your team’s specific needs. Do you want AT as part of a larger software ecosystem? Do you want something that can handle an unlimited number of users and job openings? How important is it to you that your system integrates well with your corporate website and email client?
Most of the AT systems we reviewed automatically post newly created jobs to free job websites and premium job websites for which you’ve paid a small fee. If you regularly hire people, then you’ll want to purchase a tool that ties back to your corporate careers page; this enables your system to automatically feed candidate data from the app page directly into the AT software. The best tools available, including Editors’ Choice winner Bullhorn Staffing and Recruiting$99.00 at Bullhorn offer social buttons that let you share postings on Facebook, LinkedIn, Twitter, and even Google+. Even the most barebones AT software comes with a robust reporting platform. Typical reports include hiring velocity, candidate sourcing, and pipeline reports. These reports are more valuable for staffing firms than for in-house recruiters, but it doesn’t hurt to find a system that provides ultra-detailed reporting on attractive dashboards.
Benefits administration (BA) is a core element in any good HR organization. Some businesses may be satisfied with the features provided by some of the all-up HR management systems reviewed in this HRMS roundup, but others have more complex BA requirements and need software that specializes in BA. This is why we opted to devote a whole roundup to the category. Flush benefits packages are a major selling point in attracting top talent to your startup, small to midsize business (SMB), or enterprise business. But the ease and efficiency through which your business administers its various benefits packages is how you keep those employees happy and show them they’re valued.
BA software should do two things: it should make it easy for HR administrators to choose and customize plans, and it should make it even simpler for employees to register for those benefits via an automated enrollment process as well as easily access their benefits and insurance information. The standalone BA platform or BA capabilities you choose within your HR suite should be able to handle basic medical, dental, vision, life insurance, and disability, with customizable plans.
On top of that, leading all-in-one BA and HR platforms such as ZenefitsFree at YourPeople, Inc, the Editors’ Choice winner in this category, also add the ability to manage payroll and retirement benefits such as a 401k, plus additional perks for startups such as a stock option module. BA software should make everyone’s lives easier when enrolling in the plans that best suit their needs. It should also add enough bells and whistles via an intuitive interface to keep employees confident that their employer is taking good care of them.
Performance management is perhaps the one feature that’s most associated with HR management systems. But, because there are several popular methodologies for measuring employee performance, software makers have devoted entire packages specific to this process. The basic mission of performance tracking software is to ensure that employees are properly evaluated for bonuses and compensation, and are given proper credit for certifications and skill advancement.
Our Editors’ Choice winner in this category is SAP SuccessFactors Perform and Reward$8.00 at SuccessFactors, which did a great job of providing effective mechanisms for assigning and tracking goals, feedback, and coaching, and then examining those criteria during the performance review process. While it doesn’t have its own payroll module, it can effectively communicate employee performance results to your existing payroll system. Data integration should be a key feature no matter what system you wind up choosing, as is the ability to define your own custom workflow for the performance review process. This means the system can utilize email, document routing, and internal workflow routing to let you design an initial performance review, followed by the right number of subsequent approvals and evaluations necessary in your organization.
Online Learning Platforms for Business
A big part of helping employees do well on performance evaulations is to make sure their skills are up to par by using effective training. Enterprise online learning platforms for business typically fall into two distinct categories: tools designed for training companies that sell courses to third parties and tools designed for companies that conduct training with staff. How you plan to use your software will determine the type of solution you’ll need, how you’ll be charged, what integrations will be available, and your full list of functionality. Enterprise online learning platforms for training companies tend to offer more flexibility in terms of how much content you can store within the system, how many courses and quizzes you can create, how many separate portals (or dashboards) you can create, and how many people can access your content. Conversely, online learning platforms for enterprises and small businesses that conduct their own internal training tends to offer limited access.
Regardless of the kind of system you’ll use, though, for most companies we recommend our Editors’ Choice winner in this category, Docebo$230.00 at Docebo. With it, you’ll be able to add most content types via uploading and then develop quizzes based on the information delivered in your files. You can also use a Sharable Content Object Reference Model (SCORM) platform to create more interactive, dynamic courses that combine lessons and quizzes. Most novice technology users will be able to access, use, and master the systems we reviewed with no difficulty.
To deliver custom training content for use with your online learning and training platform, you’ll either need to hire an expert to create such courseware or do it yourself using eLearning authoring tools specific to the task. Before testing systems, you should determine how the content will be delivered to your employees or customers. For example, will your software be installed locally and run exclusively on a specific device? Or will the tool be a cloud-based managed service, making it accessible via a web browser? Cloud-based tools in this category tend to be less expensive and more flexible in terms of who uses the tool and where they’ll be using it. You should also set a palatable price. Tools in this field range from free and barebones to thousands of dollars a year for nearly limitless course creation functionality.
After that, it’s all about determining your must-have features. All of the tools we review in our roundup, including Editors’ Choice winners Articulate Storyline 2$1,398.00 at Articulate Global and Trivantis Lectora Inspire$2,174.00 at Trivantis, provide basic apps that you should consider must-haves for the eLearning authoring tool you ultimately choose. For example, the ability to include video in training content is a no-brainer. You should look for a tool with drag-and-drop functionality, and a What You See is What You Get (WYSIWYG) editing platform; both of these features improve the speed with which you can create courses.
Scheduling and Shift Planning
For operations dependent on managing multiple shifts of workers, scheduling and shift planning features are must-haves. While this is often done using dedicated applications separate from the HRMS suite, there are suites that include this capability as well. Whether you want to opt for one of those or a dedicated shift planning solution is dependent on the features you need and possibly on whether you can integrate a dedicated solution with your overall HR software platform.
In small operations, shift scheduling is often handled using just a grid built on a spreadsheet. But opting into a dedicated scheduling solution can give you much greater flexibility than any spreadsheet can provide. The ability to directly tie scheduling into both attendance and payroll is a basic benefit. But the ability to provide scheduling on across mobile platforms while allowing shift participants to pickup, drop, or swap shifts without manager or IT intervention is not only advanced, it’s something you should test to see if it really fits into your day to day workflow.
Beyond all these different disciplines, HR software vendors add their own secret sauce to spice up what they offer. Depending upon the vendor, those extras could include modules for posting job openings and tracking applicants, running payroll, managing time-off requests, administering or even providing benefits, and setting performance goals and reviews.
The best of the bunch, including Namely, SAP SuccessFactors, Zenefits, and Editors’ Choice, BambooHR, take some of the pain out of the process with easy-to-navigate user interfaces (UIs). However, in the case of the most configurable of these packages (for example, Namely), an easy UI is offset by significant setup and ongoing administrative complexity. A high degree of configurability lets both administrator-level users and employees set up rules, policies, or dashboards to their liking. But getting everyone to agree on exactly what needs to happen and how it needs to happen can turn a setup process into a lengthy series of user acceptance meetings.
Top platforms offer a surfeit of help, including setup wizards, video tutorials, 24/7 live chat, and phone support. Vendors catering to enterprise-level and midsize companies also walk customers through the implementation process (and charge extra for it). Some offer clients dedicated project managers, account executives, or support teams.
As cloud-based HR software became popular, it’s motivated more vendors to enter the business. That’s seen features, functions, and configurability that previously only appeared in platforms for larger companies trickle down to core HR software for small to midsize businesses (SMBs). Others have taken a page from consumer software and offered simple-to-use HR software that’s essentially free, including Zenefits, whose freemium business model revolutionized the category and attracted millions in venture capital (VC). Customers subsidize the platform’s costs by paying Zenefits fees to act as their employee benefits broker, as well as fees the company charges for ancillary services.
Zenefits competes head to head with vendors such as Cezanne OnDemand, Kronos, and SAP SuccessFactors Perform and Reward, all of which used years of selling on-premises HR software to midsize and large businesses to launch cloud-based services for smaller companies. Other competitors include long-time payroll processor APS OnLine, which expanded into offering a full-blown HR software solution. Another, BambooHR, started out in training and employee data management and grew into a full HR platform from there.
Choosing a HRMS for Your Business
Picking HR software that’s best for your small, midsize, or large business depends in part on your size, needs, and budget. Companies that are happy with existing setups for AT, onboarding, shift scheduling, or performance reviews might not want or need a core HR platform that includes those options. Other vendors target niche industries or company types. Zenefits’ platform, for example, is especially well-suited to fast-growing, venture capital (VC)-backed startups because of its built-in benefits modules, not only for health benefits but also for employee stock options and 401k retirement savings plans. Established companies that are happy with their existing payroll provider can sign up with Zenefits or BambooHR, which are set up to share payroll data with national processor.
Companies with a slightly larger workforce and not a lot of time to spend rolling out new software will appreciate the free data upload service Cezanne provides as part of getting started on its platform. Business owners who want a lot of handholding through the setup process can use the many tutorials, setup wizards, and other help functions offered by Cezanne, Fairsail, Namely, or SAP SuccessFactors Perform and Reward. If you’ve got employees or offices outside of the United States, then Cezanne OnDemand and Fairsail can be set up with multiple languages, currencies, and country-specific holidays.
Many HR software platforms have companion Android and iOS apps with a limited number of mobile-friendly functions, such as looking up a co-worker in the company directory or asking for or approving time off. Vendors such as Fairsail and Namely are upgrading their mobile apps to include all or almost all of the functions of their web-based services. A few still don’t have apps but are working on fixing that. If you’re doing a vendor bake-off and giving employees mobile access is important (and it is for many companies), check out a platform’s mobile apps before you commit.
They say a company is only as good as its people, and HR software takes advantage of the personnel data they store to let company owners, HR executives, or HRIS managers run myriad workforce reports. The best include standard reports on headcount, turnover, payroll costs, and staffing allocation. They also include options for creating custom reports that can saved or generated on a regular basis. BambooHR, for one, creates Equal Opportunity Employment (EOE) reports on job applicants by race, gender, and veteran status. Many platforms can turn report data into charts and graphs that can be printed, emailed,
Costs widely vary. At the bottom are free services such as those from Zenefits. Paid services typically charge per employee per month, and range from $2.00 per employee per month (Cezanne OnDemand’s plan) to $12 per employee per month (Namely’s basic plan). Many vendors charge extra for add-on modules for hiring, payroll and the like, as well as for implementation. Many also offer volume discounts and special packages to companies with larger workforces.
HR software specifically designed for small businesses tops out at 1,500 or 2,000 users, while software from vendors such as Deputy, Fairsail, and Namely can accommodate workforces of 3,000 to 10,000 or more. Grow bigger than the maximum and on most platforms you’ll have to migrate to an enterprise-level system. SAP SuccessFactors Perform and Reward is one exception; the division of HR tech giant SAP uses the same base software code for Perform and Reward as its enterprise-level software, so small businesses that outgrow it can switch up without needing to re-enter any data.
HR software and management systems are a welcome step up from the Microsoft Excel spreadsheets that many businesses—especially small ones—still rely on to store and analyze employee data. Many cloud-based services sweeten the pot by offering a lot of extras along with basic functions at starting prices that won’t break the bank. When it comes to picking the best one for your business, consider your budget, location, and what HR software you’re already using so you don’t pay for duplicate services.