Choosing the Best HR Software for Your Small Business

HR software is an extremely hot topic right now. The concept of using software to digitize and automate some of the core HR activities has been around for quite some time. However, more recently, organizations have begun to benefit from a multitude of software options available on the market. Many of these programs offer flexible and customizable solutions for all businesses – no matter their budget.

So what exactly is HR software? It is a digital platform that allows businesses to manage certain aspects and processes relating to managing their employees such as tracking time and processing payroll. It supports your teams in carrying out these HR activities and adds automation to tasks that are otherwise labor-intensive and time-consuming. Typically these tasks involve paperwork and manual record-keeping.

HR software enables HR processes that are typically manual to be automated. This allows them to be conducted more accurately, quickly, and consistently. Many companies, whether big or small, are beginning to see the benefits that an HR solution brings to their organization.

HR Software Features to Look For

Before you choose an HR software for your business, you must ask yourself the following questions.

  • Does the software fit within my budget?
  • Will the software offer features that can fix current problems and improve efficiencies across HR?
  • Does the HR software have customizable reporting capabilities?
  • Can the HR system grow alongside my business, i.e., scalable functions?
  • Does the HR solution provide customer support?
  • Does the system have self-service options that allow me to move accountability from my HR team where necessary?
Management reviewing the different features and functionalities of HR systems on a computer.

HR systems offer many different features and functionalities. Some have add-on options available so you can craft a solution that meets your needs.

HR Software Functionality

Each HR system provides different features and functionalities. It’s important to find the best solution to meet your business needs.

The HR software that your business chooses will vary in the features and functionalities from others on the market. This is why you need to carefully look at all the options available before you invest. There are many key functions that the majority of solutions offer to a lesser or greater extent as follows:

1. Recruitment

Keeping track of each step of the recruitment and hiring process can be messy and time-consuming. With the help of HR software, you can quickly create job ads, simplify your shortlisting’s, and track applicants. You can also send automated interview invitations by email, log interview notes, and generate employee records before starting the onboarding process.

2. Onboarding

Once you have hired a new employee, it is vital to coordinate the tasks that need to be carried out across all departments to ensure that new hires have an enjoyable start to their employment with you. HR software allows you to automate the onboarding process and seamlessly create new employee records as well as generate a contract and letter templates with a single click.

You can also arrange new employee training courses, order any equipment they will need and even automatically send them a welcome email on their first day of work.

3. Leave Management

One great benefit that comes with HR software is that it allows your employees to request leave online and have managers digitally authorized it. This massively speeds up what can otherwise be a manual and extremely labor-intensive process for all parties

4. Time Management

With an HR system, you can easily coordinate working schedules within each department – working with your organization’s rules to automatically calculate overtime. By taking advantage of this automated process, you can ensure adequate staff coverage weeks in advance, which will ultimately lead to fewer staff shortages and higher productivity.

5. Performance Management

HR software allows you to set up performance review reminders for employees and managers, so they don’t miss these vitally important meetings. Additionally, the software allows you to automatically collect feedback and objective scores as well as report on team performance quickly and easily.

6. Employee Exits

You can automate the exit process by automatically archiving and storing employee records and creating templated letters and forms to aid in the exit processes. You can also manage and report on any key trends gained from exit interviews to address critical areas of employee dissatisfaction, which will help reduce staff turnover.

Hand holding connected people to represent the HR team.

There are three main different types of HR systems – This includes HR Workflow Software, Human Resources Management Software and Human Resource Information Software/Human Capital Management Software.

Types of HR Software

There are several different types of HR systems – each with its own benefits.

With the advances that are being seen in cloud-based HR solutions, there not only seems to be an overwhelming list of companies offering such software but multiple different styles of systems as well. By conducting a simple internet search, you will find a vast amount of varying HR software solutions, which are each offering different benefits to your company.

It can be challenging to understand what each system offers, so here is a simple summary of the three main types available to get you started.

  1. HR Workflow Software
  2. Human Resources Management Software
  3. Human Resource Information Software & Human Capital Management Software

1. HR Workflow Software

HR workflow software typically focuses on adding automation to your business processes in the hopes of simplifying existing your manual procedures. Some of the more common workflows that such software focus on are hiring and recruitment, onboarding, leave and time management as well as performance management.

Most systems offer a standard system that comes with options to add customization so that the workflows you set up are in sync with your existing HR processes in your business. It is typically also possible to pay to add on extra modules so that you are only using the workflow processes that benefit your business

2. Human Resource Management Software (HRMS)

Human Resources Management Software is similar to workflow software, But it generally also includes managing time, payroll as well as attendance. These features are usually offered as add on options as they are typically a little more challenging to run as part of HR software. They also generally require more detailed customization to ensure that they line up with your organization’s rules and processes.

3. Human Resource Information Software (HRIS) & Human Capital Management Software (HCM)

Human Resource Information Software and Human Capital Management Software are similar in the fact that they both deal with the automation of HR processes. They both also have templated documents as well as forms and so on. However, HCM typically provides an additional element to this functionality by focusing on helping your organization to achieve its goals through workforce management.

Workforce management refers to the way that your business manages the productivity and efficiency of your staff. The processes that form workforce management include forecasting employment, talent, and succession management as well as ensuring that your business aligns it’s human resources efforts with your organization’s overall business strategy.

Group of employees sitting around a table smiling and happy.

Many benefits come with using an HR system – including increased productivity and overall employee happiness.

Benefits of HR Software

There are many different benefits that come from using HR software from improved payroll accuracy to more refined hiring and recruiting.

Not only is it a good idea to understand the different types of HR software that are available, but it is also beneficial to know how HR software can make your life, and the lives of your employees easier.

While many benefits come with using HR software, some will resonate more deeply with you and better align with the style of your business. Here are some of the more common benefits.

1. Increase accuracy

Being that HR software allows processes to be carried out automatically following predetermined rules and workflows, fewer errors are likely to occur compared to if the same tests were being done manually. A reduction in the overall error rate of your HR department can have many additional benefits.

For example, a more accurate payroll process can lead to hire employee happiness or a less cumbersome recruitment process can entice people to work for your company. And of course, fewer errors also means fewer costs to correct them.

2. More reliable HR data

With an HR system, you can run reports with the click of a button. You can get specific employee data in regards to different areas of your business –  from recruitment lead time to employee turnover rate and more.

3. Less paperwork and a freed HR team

Since HR solutions automate a lot of the tedious administrative tasks that were traditionally performed by HR teams, employees can focus on tasks that provide higher value to your business, such as supporting and coaching your employees.

4. Chances to future-proof your business

Since your organization is likely to grow in the future, you will encounter great opportunities but also some challenges in regards to the administration of HR procedures and more complex payroll rules.

An HR system is meant to grow alongside your business, allowing you to add additional features that you may have not previously needed. It will also help you to improve upon existing workflows and increase your employee data capacity, which allows you to manage this challenging but exciting time better.

5. Improve employee morale

Piggybacking on the concept of fewer errors, HR solutions can create smooth and streamlined processes that can have a significant impact on the morale of your employees. If an employee knows that your company is working on improving processes so that they can get their overtime payments more quickly and that they are accurate, they are likely to become more motivated and invested in your business.


HR software offers many benefits to all businesses – no matter big or small. This valuable software can automate HR processes, saving you valuable time and resources, and can contribute towards your overall business success by providing meaningful data. This data can be used by leadership to address weaknesses and strengths within the people function of your business.

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