HR Software Basics: What Businesses Need to Know

Andrea Palumbo

, Director of HR Operations and Payroll at Access

Advances in HR software technology are changing the way departments operate.

Human resources software streamlines and simplifies processes, allowing companies to more effectively manage and engage with employees, increase productivity and ultimately boost the bottom line.

According to the Sierra-Cedar 2017–2018 HR Systems Survey , 38% of organizations plan to increase their spending on HR technology. And there’s no shortage of applications to choose from—the HR software market is expected to reach $10 billion by 2022.

So, where to start? Before investing in human resources software, it’s important to understand the basics.

What is HR Software?

Human resources software assists with managing people, information and processes.

Used by businesses of all sizes, HR software is designed to help both managers and employees work more efficiently while reducing errors, ensuring compliance and increasing productivity.

Almost every business uses some type of HR software, whether it’s a simple payroll application or a more sophisticated suite of technologies that integrates the entire employee experience, from onboarding to benefits administration to employee document management.

HR Software: Why Companies Need It

As the way we work evolves, so must the way companies manage their workforces. To meet the needs of a modern workplace and to attract the highest caliber talent, companies must invest in new technology to both improve the employee experience and increase the bottom line.

By automating tasks and managing data, human resources software saves valuable time and reduces cumbersome paperwork. When an HR team has all the information they need at the click of a button, errors are reduced, compliance risks go down and policies are more consistently enforced.

By reducing paperwork and streamlining processes, organizations can transform the role of both managers and employees to be more strategic and engaging. HR software allows employees to focus on more high-level tasks, resulting in better planning, more strategic decision making and greater job satisfaction.

Types of HR Software

There are a variety of applications to meet the many workforce management needs of modern companies. The following are some of the most common types of HR software:

Human Resources Information Systems (HRIS)

A Human Resources Information System (HRIS) is a software application for the data entry, data tracking and data management needs of an HR department. Common features of HRIS software include:

  • An employee profile database where managers can easily access contact, salary and performance information
  • An employee self-service portal where employees can manage their own information, view payroll documents and request time off
  • Benefits portals where employees can enroll in and manage their healthcare benefits
  • Recruiting management tools
  • Time and attendance tracking
  • Payroll functionality
  • Learning and Development

Human Resources Management Systems (HRMS)

The term Human Resources Management System (HRMS) is often used interchangeably with HRIS. Technically speaking, an HRIS is a type of HRMS. In the early stages of HR software, HRMS was used for systems that offered more data analytics and forecasting options than a standard HRIS. Today, however, the terms are generally synonymous.

Human Capital Management (HCM)

Whereas HRIS and HRMS software tends to focus on the day-to-day management of employees, Human Capital Management (HCM) software typically includes more specialized tools for workforce planning and analysis. In addition to HRIS/HRMS software features, an HCM system will offer functions such as reporting and data visualization features, as well as predictive HR analytics to assist in planning for future challenges.

Employee Document Management Software

An employee document management system seamlessly manages all aspects of employee files and adds critical security and compliance functionality that is missing in most HRISs or HCMs. This software automates time-consuming paper processes, allowing HR managers to classify, file and route documents with the touch of a button.

Systems integrate with a company’s HRIS or HCM and store all documents in the cloud, making it easy to access files anytime, anywhere. As telecommuting becomes more popular, and employers must maintain compliance across multiple states or countries, an employee document management system is critical to maintaining centralized, audit-ready files.

Applicant Tracking Systems (ATS)

An applicant tracking system (ATS) is a type of specialized software that assists HR managers in recruiting and hiring. Large companies typically use an ATS to assist in collecting and sorting large volumes of resumes. Instead of reviewing each resume, recruiters and hiring managers can search submissions using keywords, as well as automatically filter and rank resumes using certain criteria. Additionally, an ATS can assist with job postings and track candidates throughout the hiring process.

Payroll Software

Payroll software automates the compensation process. These applications generate employee checks, initiate direct deposits, calculate taxes, make deductions and maintain payment records. Most programs also incorporate functions that allow management to monitor attendance, time and pay structure.

Benefits of HR Software

By automating tasks and autonomously managing data, human resources software allows companies to meet the needs of the dynamic, quickly evolving modern workplace. HR software benefits include the following:

Reduced Administrative Tasks

When processes are efficiently automated, your HR team can spend less time on administrative tasks and devote more energy to high-priority projects and company initiatives. With reduced paperwork and streamlined procedures, HR professionals can focus on doing what they do best: recruiting top talent, developing training programs and improving company culture.

Improved Compliance

Even the most organized, vigilant HR department can find compliance challenging. With ever-changing state and federal regulations, maintaining pristine paperwork is nearly impossible. From I-9 forms to healthcare documents, HR software allows employers to easily store, share and manage important employee files. Built-in tools effortlessly monitor soon-to-expire documents and certifications, meaning you’re always audit-ready and one step ahead of compliance requirements.

Secured Data

Human resources departments are responsible for an incredible amount of highly sensitive employee data. For this reason, it’s critical to implement data protection policies. HR software maximizes security, allowing companies to securely share documents and control who has access to files. With an audited trail of all actions on each document, HR managers can be confident that data—and in turn, their employees—are protected at each and every step.

Tips for Choosing an HR Software Provider

Given the importance of HR software, it’s critical to choose a provider that aligns with your company’s current needs and future goals. To ensure a successful partnership, consider the following questions:

  • What are your goals? Before shopping, understand what you want from your HR software. Identify shortcomings in your current system, and meet with hiring managers and employees across all departments to discuss experiences that need improvement.
  • What tasks do you want to support? After defining your larger strategy, identify the individual tasks you would like your HR software to support. With so many options on the market, it’s important that the system suits your company’s unique needs now and in the future.
  • How will the partnership work? As with any new software, there will be a learning curve, and likely some troubleshooting. Not to mention, as your company evolves, so will your technology needs. Select a provider who is prepared to be a partner in your company’s success and growth, not someone who simply makes the sale and moves on.

As the world and workplace changes, HR departments must also adapt the latest technologies to serve the needs of employees and organizations. By selecting the right HR software, companies can help ensure that they remain nimble and profitable in a competitive, evolving market.

Andrea Palumbo has over 20 years of experience in the HR and Payroll industry as both an HRIS client and vendor. Her teams are responsible for implementing and maintaining critical HR technology, data and timely processing of payroll for over 1300 employees globally. Andrea’s in-depth knowledge of HR Technology and sensitive employee data allow her to convey the benefits of having a robust HRIS and data management systems working together side by side.

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