Today’s business structure is diverse, ranging from enterprises and SMEs to companies with a less conventional form such as SaaS. But for any company, there comes a time to centralize HR functions and reduce administrative costs. The best way to achieve this is through HR management (HRM). Choosing the right HR technology for the task can be daunting, but with our guidance, it becomes an easy and informative process.
Before choosing software, you need to know the answer to several questions. What exactly is HRM software? Does your organization need it? What benefits does HR management software bring to your organization? And finally, which HRM software package is the best for you? All these questions are answered in detail below, starting with definitions.
What Is HRM Software?
Defining HRM software can be difficult as it fills many different functions, and HRI software can confuse definitions even further. We will begin by differentiating HRIS and HRMS.
HRIS vs. HRM software
Firstly, we must establish the difference between HRMS and HRIS (Human Resources Information System). Human resource management software covers every aspect of HR, whereas HRIS only caters to the information of employees stored on HR systems.
Therefore, HRM software is far broader than HRIS, which offers more basic functions. In addition, HRI software can be included within HRM software, reinforcing that HRMS is more of an umbrella term than HRIS.
HRM Software
HRM software collects together all of the HR management functions of an organization. Many different HR functions are filled by one HRM software package, making it easier for staff to ensure HR staff plan, record, and administer tasks effectively and securely.
HRM software supports HR staff to:
- Develop staff.
- Manage payroll.
- Talent management.
- Store employee data securely.
- Streamline core HR functions.
- Digitize the recruitment process.
- Employee life cycle management.
HRMS reduces the time taken to complete tasks such as payroll management and streamlines performance management systems. Reducing resources improves employee experience for both HR staff and non-HR staff members.
Is It Worth Investing In Human Resource Management Software?
Verified Market Research predicted that the HR management software market will achieve a figure of $33.6 billion by 2026. This figure places the importance of HRM software on the list of digital adoption priorities for companies of any size. But what functions of HRM software reinforce its importance by fulfilling specific business needs?
HRM Software Functions
HRM software falls into many different categories fulfilling a variety of other functions. We will begin with HRIS software.
HRIS Software
Human resources information software is a broad term that includes many different types of HR software and functions. The main uses of HRIS software are to manage employee payroll, store employee data, and support benefits administration. Another essential feature of HRIS is to keep HR staff updated on current regulatory and legal requirements.
Examples include ADP, Workday, and SAP Success Factors.
Performance Management Tools
Performance management tools are a large part of many HRM software packages. This feature is essential to allow HR teams to quickly and easily record and access employee data on performance management.
This action benefits administration staff by reducing costs, allowing them to focus on tasks that technology cannot automate. Performance management software also allows staff to access online HR software solutions to track their progress, improving employee engagement.
Examples include Saba, BambooHR, and UKG (Formerly Kronos)
Applicant Tracking Systems and Recruitment Process Software
A Gallup study conducted in March 2021 shows that 74% of departing staff said being actively disengaged was their reason for leaving. This statistic shows how short-term employee engagement has tremendous long-term outcomes.
Before HRM software, there was no centralization of different processes in HR departments. One strength of an Applicant Tracking System (ATS) is that it centralizes all the data such as role applied for, contact details, and resume. This centralization reduces the administrative time for HR staff, allowing them to focus on attracting the best talent to their organization.
ATS and recruiting software are very similar in purpose and only differ in staffing scales. Enterprise companies or large agencies use recruiting software constantly, needing large staff intakes. ATS software is more beneficial for smaller companies tracking employee lifecycle information like employment engagement modules. Interview details, onboarding features, job boards, and resume files are parts of any ATS software.
Examples include Jazz HR, BullHorn, and BreezyHR.
Learning Management Systems
Learning Management Systems (LMS) can also be called eLearning systems. These allow HR and employees to track all of their education with an organization, certifications, skills, and qualifications in one accessible place. They also guide employees to where they can access specific new learning and training software. ERP (Enterprise Resource Planning) and ATS can incorporate learning management systems.
Managers can use a standard LMS to confirm permissions for training, calendars, and budgets to track performance and appraisal metrics. LMS software allows HR staff to avoid data entry by manually inputting learning management data.
Larger companies may build their learning platform, but many opt for pre-made platforms. Although not explicitly designed for the organization’s unique workflows or operational processes, they still allow staff to improve performance and employee skills using expert-led training.
Examples include TalentLMS, SAP Litmos, and Cornerstone.
Employee Engagement Software
Performance management software supports HR staff with the beginning and end of an employee’s time at a company, while employee engagement software supports the middle section: during employment. This intermediate stage is the employee experience and is essential to keeping staff motivated and satisfied with their role and positive perceptions of their organization.
Feedback is requested weekly or daily to give HR staff their opinions on many subjects of their experience at the organization. HR staff collects the data using surveys, gamification, analytics, and follow-up workflows. Employees can give their views on work priorities, progress in attaining goals, and feelings about benefits and their role in general.
Examples include 15Five, Kudos & Fortay
Your organization can use the above list of categories of HRM software as a guide and an example of the essential role of HRM software in business today. Looking more closely at what HRMS can achieve, we will now explore its benefits.
What Are The Benefits of HRIS and HR Management System Software?
The main benefits to HRMS are centralizing HR tasks and reducing administrative time spent on data entry. We will now explore the benefits of HRMS in more detail, looking at specific areas that this software can advantage your organization.
Hassle-free recruitment process
HRIS software stores all employee data, including general personal data, role and salary history, insurance plans and benefits administration data, banking details, and performance management information. Centralizing this information to one area helps HR make efficient use of their time when supporting staff.
Effective workforce management
It is crucial that companies not only attract but retain top talent. Effective workforce management helps to achieve this goal by tracking employees throughout their journey within an organization.
Employee management software (EMS) is an effective way to accomplish this. HR applications within HRMS like employee engagement, talent management, and an applicant tracking system support successfully achieving workforce management.
Unlimited file sharing
One of the best ways HRMS benefits administration staff in HR departments is through unlimited file sharing. This feature allows a streamlined way of sharing information between departments for quick and easy access in which paper information recording cannot compete.
Efficiency and productivity
Human error and the time it takes to input data are great reasons to adopt HRMS packages. There are also many other ways in which HR management software packages improve employee productivity and efficiency, allowing staff to focus on more complex tasks not possible to achieve via technology alone.
Cost savings
In the past, HR staff spent much time on manual data entry. The future of widespread HRMS use reduces costs as it is costly for the team to spend much time on repetitive manual tasks efficiently completed by a machine. Automating data entry is one of the most efficient ways of reducing these costs. Utilizing an employee self-service portal is another feature of HRMS which allows staff to support themselves, reducing HR staff time.
Reduced errors
Even the most experienced HR staff make errors during manual tasks, as this is part of being human. In busy periods, burnout can occur, or personal issues, oversight, and exhaustion can contribute to errors. Using automation to input data and other tasks can reduce human error by taking human staff out of the equation altogether. Data is input by digital HR tools, which do not make mistakes.
Regulatory compliance
Today, the legal consequences of not abiding by industry regulations are more significant than ever. HRMS allows up-to-date and accessible information on industry regulations allowing HR staff to ensure their organization is engaging in best practices within legal frameworks at all times.
Attendance monitoring
Attendance monitoring is not about punishing staff for not attending work regularly. Due to health or family reasons, staff can work from home in today’s hybrid-friendly business landscape. This feature allows HR staff to support employees in why they might struggle to get to work. Attendance monitoring can highlight such needs when staff does not do some forward with them themselves.
Simplified benefits administration
There are often many companies involved in the benefits for one member of staff and a variety of other uses for staff in various roles. Placing all these benefits in one HR management software package allows HR staff to quickly adjust and keep track of benefits to ensure the team gets the most of them, improving employee engagement and retention.
Data security
Employee data is the basis for most core hr functions and processes, and HRMS stores employee data in a detailed and comprehensive manner. However, this is not without its vulnerabilities. UKG became the victim of ransomware in 2021, highlighting the importance of data security. This breach compromised the bank details of hundreds of sands of employees.
It is costly and embarrassing for organizations if this information is stolen or misplaced. Investment is always justified when storing employee data, as organizations must achieve employee data recording safely, minimizing risks with relevant security software.
Improved decision-making
HR departments store and collect information. Surveys are one means of asking staff their views on many aspects of their progress toward goals, benefits, whether the company cares about them, and other factors. HR staff can then use these data to improve HR processes, company image, or performance management processes, fusing efficiency and productivity with staff engagement.
Metrics
HRIS software stores all the essential information about employees. HR staff uses this data to formulate key workforce metrics to inform significant company-wide business decisions. This data includes general information, recruiting data, performance statistics, and many other data types.
How Does HR Management software support the employee lifecycle?
The employee lifecycle involves every part of an employee’s time in an organization from beginning to end. HR managers must be mindful of the employee lifecycle to maximize the efficiency and productivity of specific staff members and team engagement. This engagement is crucial as it determines the quality of employee feedback used for company-wide decisions to improve practices and processes.
What is the employee lifecycle?
The employee lifecycle is a model to separate and analyze the different parts of the process by which employees fit into their company and engage in different ways. The model contains six stages.
- Attraction
The attraction stage begins when an employee first experiences the company brand. Outstanding HR managers ensure that the best company culture is established, maintained, and showcased to new employees.
It is well known that solid company culture is composed of excellent benefits. If you are unsure what kind of culture you have in your workplace, many different models within the organizational development (OD) conceptual framework can help you do this. Looking at OD models helps HR managers analyze how the staff interacts with each other to promote positive interactions and collaboration to improve outcomes.
Also, consider:
Most staff will know that job and employer review sites such as Indeed or Vault are helpful, but they only scratch the surface.
New staff will scrutinize equality and diversity policies, mental health support, overtime, sick pay, and work-life balance. The organization will reassure new staff members if these policies and protocols are generous and transparent. Clear and supportive policies and benefits create a positive employee engagement experience straight from the onboarding stage.
- Recruitment
Whether an HR department achieves recruitment with or without recruiting software tools is a critical stage in the employee lifecycle.
A company’s reputation is determined by how it recruits staff because it shows a lot about how an organization values the staff they bring into their team. Even if an HR team recruits staff in large numbers at once, they can take steps to convey a positive message to the business world about how much an organization will value new staff.
Also, consider:
It’s essential to use multiple platforms when recruiting new staff. Multiple platforms allow your organization to attract different types of staff from various areas of the country, different levels of the market, and across different types of markets. Recruiting from multiple platforms encourages innovation and fresh new ideas.
Detail is also essential in recruitment advertisements. Potential new staff will not know about your generous benefits unless HR staff describes them using the relevant information.
- Onboarding
There is enormous potential to make the experience of new staff joining your organization an exciting, fun experience with little effort.
When any staff member begins a new role, they will likely look forward to their new duties as they learn and adapt to a new team and set of tasks. Capitalizing on this can be hugely advantageous in creating an image of your company being an enjoyable place to work in an empowering way.
Also, consider:
Frequently scheduled appraisals give staff continuity. Team managers or HR staff should explain the appraisal system to new employees early in their onboarding to make them aware that reviews are taken seriously in their new organization.
Appraisals also show staff that even if they struggle with certain areas, managers and the HR department will support them to achieve their potential for themselves and their organization. This action creates an open feedback culture, allowing the company to resolve problems early, improve productivity, and streamline HR processes.
Supporting staff to achieve their potential during the onboarding process helps them develop their path to success. This process allows staff to see strengths and weaknesses to reach their potential in the future. This action also helps align company goals to personal staff goals.
Sharing company values early in the onboarding process helps staff to embed themselves into new teams as they practice the shared values of their new organization.
- Retention
The most significant risk with staff that has been in a role for an extended period is that their organization no longer values them.
All staff leaves at some point, whether this is through transitioning to a new organization, termination, or retirement. However, established team members often get ignored as HR departments focus on recruiting new talent.
While new staff brings innovative perspectives, the existing team holds high-level skills and outwardly maintains shared values. Rewarding and recognizing the positive contributions of existing staff is essential to employee retention. It’s also vital to ensure new team members know what to expect from HR when they achieve beyond the basic standards and how HR records it.
Also, consider:
Employee feedback is essential to building a system of employee retention. Feedback allows HR managers to constantly consider whether they need to review retention programs to improve and boost retention.
- Development
Today, the only viable approach to learning is Continuous Professional Development (CPD). All employers today require awareness of CPD from their employees.
Organizations must make it clear to new employees that they are aware of the importance of CPD in today’s rapidly changing market. The benefits to both employees and the organization are great, and HR departments can easily incentivize the advantages to employees.
Also, consider:
Promoting a mentor system is an effective and efficient way of sharing information between staff to nurture a culture of collaboration. Reminding all staff that there is no such thing as an embarrassing or poorly judged question is an excellent way to ensure a learning culture thrives. Employers agree, with 47% of businesses using the buddy system in onboarding.
Encouraging staff to learn at every stage of their time in your organization is imperative to promoting CPD from the moment they walk through the door for onboarding. The introduction of CPD on onboarding sets the tone for continuous learning in all activities and feeds into the mentor system as teachers are also effective learners.
Covering costs of extra learning courses is also a practical part of CPD for many reasons. While staff becomes upskilled in specific areas, benefitting the organization, they also have a chance to show willingness, enthusiasm, and autonomy for their learning, role-modeling these qualities to fellow staff.
- Separation
Saying farewell on their final day is as essential as greeting an employee on their first day. There are many factors to the separation stage of the employee lifecycle involving not just the departing staff member but all the remaining staff.
The separation stage is where departing staff are likely to be the most honest about the company, and a robust offboarding process ensures HR staff record feedback properly. Acting on this feedback maintains a positive image for the company and increases retention as the remaining staff sees positive changes within a dynamic, caring approach toward talent management.
Also, consider:
Staff leaving a company can test how a company maintains its outward ability to support its team. The remaining staff must feel they won’t be negatively impacted by departing employees. If practicable, allowing them to engage in the offboarding process can ease the discomfort of seeing a former colleague leave.
In every sense, it’s best to see the separation stage as an opportunity, not a loss, for the company and the remaining staff. Departing staff leaves with their perceptions of the company they are exiting from, which can be as positive or negative as the former company allows.
When HR staff conduct offboarding correctly, departing staff are more likely to become brand advocates, speaking highly of their former organization.
A way to maintain a link with former staff is to invite them to certain annual parties. This gesture makes them feel continuously valued despite having left and creates a sense of a postgraduate group of former colleagues whose existing staff will never forget for their contribution. This action may also lead to staff returning if they don’t feel satisfied with their new role elsewhere.
How can HR management software reinforce the employee lifecycle?
The employee lifecycle is at the heart of every aspect of employee management.
This list includes:
- Employee attraction
- Employee recruitment
- Employee development
- Employee retention
HRMS helps structure how HR teams capture feedback, allowing them to use these essential data effectively. Centralizing these data to one package of software streamlines this process, making it easy for HR staff to collate and present the data to senior HR staff and managers from different departments.
Employee feedback is the key to effectively managing the employee lifecycle and can reduce departures and increase retention.
HR Systems: On-Premise Multi-Tool, Or The Cloud?
The two main HR system types are on-premise and the cloud (also known as Software as a Service/ SaaS). Usually, large organizations utilize on-premise HR systems, and small or medium enterprises (SME) companies use the cloud for their HR functions.
On-Premise HR Systems
On-premise HR systems run on physical hardware, making them finite in their scope. Because HR teams store employee data on physical machines, it is held more safely than in the cloud. Onsite teams can conduct maintenance, allowing updates at convenient times. On-premise HR systems support multi-tool functionality, enabling HR teams to use several software applications in one system. These systems are highly customizable, and companies can customize them to their needs by selecting required software modules.
The disadvantages of on-premise systems are long setup times when installing the software on every employee’s computer and extended periods to train staff to use the system. The initial setup can also be costly and time-consuming, as physical infrastructure must be purchased and installed.
Cloud HR Solution
Cloud solutions are perfect for less experienced, smaller companies for many reasons. Firstly, set up is instant, so staff can begin using it immediately, and the training time is almost zero, improving accessibility for users. Cloud HR systems can be of any size and have potentially infinite scalability, with the scalability of price reflecting this.
The drawbacks of cloud HR solutions are minor compared to the disadvantages of on-premise. Cloud solutions include a team for support which comes with the monthly fee, scaled as per the company’s need. The biggest concern is safety, as employee information is stored by the cloud provider, not on machines owned by the company. However, today security has become such a high priority that software is robust for dealing with this issue. That said, safety is lower with a cloud HR solution when compared to on-premise.
SaaS Solutions With Integrated HR Management Software
Many SaaS solutions integrate HR management software to give a seamless experience for HR staff managing employees. The intelligent HR software solution is one example of this.
The SaaS solution has many advantages, such as instant scalability of scope and cost. Smart HR is the name given to SaaS solutions that include HRMS.
The advantages of smart HR management software are:
- Quick to set up – Cloud solutions need no extra physical machines to function, so HR teams can begin using them hours after registration.
- Integrated agility – Cloud solutions are agile, allowing the quick addition or removal of employees and scaling up to the international level as part of a streamlined process.
- Efficient time usage – No training and barely any setup time allows HR departments to use SaaS HRMS to make the best use of time.
- Avoids downtime – No manual updates
- Automatic updates – All updates are automated, so there is no need to have manual updates on individual systems. Automatic updates mean every HR employee always uses the same SaaS HRMS version.
- High accessibility – It is easy for any staff member to use SaaS HRMS quickly due to the software being ergonomic.
- Faster ROI – Cloud solutions are charged monthly in smaller amounts than on-premise HRMS solutions, meaning a faster return on investment.
These reasons quickly lead to SaaS HRMS becoming a popular solution for HR needs.
Human Resources Information Systems
Human Resources Information Systems (HRIS) is the previous term for HRMS. HRIS packages dealt mainly with core HR functions, workforce management, payroll management, and benefits administration.
The advantage of this type of HR software solution was that it connected many different types of employee data for easy access and alteration where needed. HRIS and HRMS are sometimes used by HR teams interchangeably, but HRMS is more advanced, providing more extensive features.
Applicant Tracking Systems & Recruiting Software
Recruitment requires vast administration, yet it is an essential part of the basic functionality of large enterprises and SMEs. There are slight differences between recruitment software and applicant tracking systems, but this primarily involves the scale for which HR teams need them.
Recruiting software is better suited to recording hundreds or even thousands of applicants in one period and supporting recruitment as a constant need. Larger enterprise organizations most commonly utilize this software. On the other hand, smaller companies use applicant tracking systems more frequently that have to use the employee lifecycle to monitor performance and CPD.
Whichever type of software a company chooses, deciding on the right recruitment software or applicant tracking system is key to streamlining the recruitment process. When manual tasks such as data entry are automated, HR staff can spend more time recruiting the best talent.
Trends In HR Information Systems For 2022
HR management software is changing, and organizations and companies of all sizes need to remain agile amidst the disruptions these new technologies will bring in the coming years.
HR software solutions
Human Capital Management (HCM) is the term used to describe fully comprehensive cloud HR management software that a business of any size can use due to unlimited scalability. The use of the cloud is likely to become more prevalent in the coming decade. The cloud will likely become more commonplace in HR solutions as the need for scalability increases.
Machine learning and Artificial Intelligence
Machine learning and AI are part of every aspect of a business’s future, including software. AI software is currently developing to assist HR teams in recruiting, onboarding, and managing CPD and offboard staff more quickly and effectively than before AI became integrated into such processes. AI can also automate the frequency and methods the HR team uses to gather feedback using AI-controlled pulse surveys. All of these advantages help HR teams to move from a paper to a digital workflow.
Team management set against talent management
There are massive shifts in the way that teams are perceived. Personalization in team management is becoming more prevalent. However, more companies are also accepting the benefits of shared goals for entire teams and how this can improve outcomes.
Employee engagement is affected dramatically by this approach, as managers and employees interact using different styles of communication and how HR perceives performance management. A Gallup study found that 51% of managers were not engaged. HRMS can help capture such data and improve it.
HR consultancies
Due to their small size, SMEs do not always focus enough on their HR departments to meet their staff’s needs. This deficit can lead to issues with recruiting new staff or even essential HR functions such as compensation management or annual leave recording. Online HR software companies fulfill this need, which can also provide HR services as part of the software package.
HR software vendors become external HR departments for companies, enabling companies to outsource core HR functions. The price is much lower than hiring an HR team, which would be unnecessary for smaller companies, maximizing profits better spent elsewhere to improve efficiency and optimize other processes.
Integrated systems or best of breed?
Most companies are now moving to the cloud or SaaS HR management software. This move can involve using many different HR platforms to support the entire employee lifecycle instead of one comprehensive HRIS package. The higher cost of a complete HRMS package is often an influencing factor, but other considerations lead to using multiple HR platforms.
Installing the HRIS is costly and time-consuming as staff needs to complete training to use it, which can take months or years. But when it is ready for operation, HRIS can centralize all employee information in one accessible digital storage area.
Examples of these types of data include:
- Time tracking
- LMS and eLearning
- Benefits management
- Employee engagement
- Succession management
- Performance management
- Payroll management software
The SaaS subscription model gives much flexibility to organizations that choose it within separate software packages. The flexibility allows changing software providers and using specific software when needed.
Aside from SaaS or complete HRIS packages, companies can utilize an Enterprise Resource Planning (ERP) system. ERP software is often more complex but offers extra features that HRIS does not, such as financial systems and supply chain management.
Branding and company culture
Every one of the six points of the employee lifecycle is affected by a company’s brand and culture. When a company presents a recruitment campaign as a marketing advertisement, and when they present their physical and mental health support programs, recruitment success increases.
Such actions ensure that the HR team presents an image of positive company culture to potential new candidates as part of company branding. Such mental health support programs also reduce the costs of mental health-related illness and sickness leave.
As a result of increasing benefits standards, HR departments and existing and potential new candidates can expect many more positive, wellbeing promoting practices. These practices will reduce harmful workplace practices, wellness benefits, eLearning, and CPD support.
HRMS GovernanceÂ
Governance is a huge part of the HR process as it ensures that practices achieve company results while benefitting as many stakeholders as possible. In business, this involves shareholders, staff, and customers, and HR departments formulate policies to develop policies to define roles and responsibilities for each position in the company.
The best way to see how HRMS can support HR governance is to split the governance process into its four areas of policy, practice, review, and expertise.
Policy
HR policies are recorded clearly in documentation once senior managers and the board of directors have approved them. Policies must fit in with local laws for labor, ethics, and business practices. HRMS packages often have supporting document management for HR governance policies and an online self-service portal for employees to access documents and record confirmation they have read and understand them as part of onboarding.
Practice
HRMS supports best practice documents with unlimited file sharing and settings where HR teams can set alerts to trigger regularly, ensuring documents are current. HR teams must establish best practice guidelines before they are needed. Often, companies neglect best practice guidelines until they need them during harassment allegations, such as wrongful dismissal. At this point, they realize they did not update them for several years.
Review
Policies must be periodically reviewed or audited to keep them up to date with local laws and transitioning company values. Review can be built into any company culture to ensure documentation and best practices follow current research. ‘HR managers can use environmental scans’ to glance at the current state of HR policies regularly, for example, once a month, to ensure they achieve their aims.
HRMS can assist with regular review needs by using AI for scheduling, allowing HR managers to choose when to schedule an environmental scan or a full review. AI scheduling can help collaborate with the board of directors, senior managers, and departmental managers of relevant departments to discuss changes at every level.
Expertise
The board of directors is the key to ensuring processes operate smoothly in HR governance. The board exists to use the expertise in their field to support staff at different levels to achieve company-wide goals. For this reason, the board should be composed of a diverse team of individuals from different specialisms.
Choosing an HRMS in 2022
Today there are many HRMS options. Researching the best HR software vendors is essential before selecting the right HRMS for your organization. There are a few steps to ensure that the ROI will be quick and that you are selecting the right HRSM for your organization’s needs.
What size is your company?
How many staff does your company employ? Company size is one of the first considerations when choosing an HRMS. A small company can be one to five staff, for which a cloud HRMS with fewer modules and a software vendor-supplied HR service may be best.
When staff in smaller teams complete HR tasks, it usually means one person dealing with all HR tasks alongside tasks for another role. This role allocation can be stressful and reduce employee performance, so outsourcing HR to an external team allows all staff at smaller companies to achieve a higher output in their specialism, increasing employee engagement and improving their experience.
If your organization is large, employing hundreds or thousands of staff, the benefits are greater to installing tailor-made multi-tool HRMS software on every computer. This higher level of HR management software allows the different management layers of large enterprise organizations to be simplified and centralized.
Large companies also need this software because the different staff in HR teams fill different skills and require cohesion via software. All HR professionals, including HR managers, assistants, and recruiters, use varying features of the same HRMS package that streamlines all HR processes, despite individuals holding different responsibilities.
What are the organizational responsibilities?
A small business has similar responsibilities in terms of the essential functions of the team. As a result, this small team dynamic can blur lines between roles as each staff member is often called upon to complete most of the different tasks needed within a multi-skilled workforce. Even if roles do not overlap between team members, each team member in a small team will have multiple roles as part of their established role. The HR manager may also be the finance manager. Or the HR manager may be the assistant to the CEO.
It is important to consider how much pressure is added to individual staff when HR responsibilities are added to their workload, mainly if team managers allocate multiple HR functions to one individual.
A dedicated HR team decides to implement an HRMS contrast starkly from that of a small company. In a larger organization, HR managers assign a team of staff with specialized HR roles. This arrangement can result in better support for HR staff as they work with many other individuals, often with much experience in their field—this configuration results in improvements to individual and team engagement, employee experience, and increasing output.
What resources do you manage?
Smaller companies have lower revenue and fewer resources than large enterprises. Lower revenue means fewer resources to spend on training and dedicated learning management systems. However, training still needs to occur. Managers must consider the employee lifecycle for CPD and individual growth but approach it differently.
A cloud HRMS with an outsourced HR support team available and paid for on demand is ideal for smaller teams to fulfill their needs without impacting too heavily on limited budgetary resources. There are also other ways smaller companies can develop staff on a smaller budget.
Mentors can improve morale and fill knowledge gaps in a personalized, face-to-face manner. Mentoring can also feel less formal and more person-centered than traditional training programs completed using technology. Mentors are usually low-cost, or managers can even source them voluntarily.
Larger enterprise companies have far greater resources than SMEs. However, despite resources existing for purchasing HRMS infrastructure, HR staff needs to calculate ROI so that decisions for HRMS always make sense and lead to long-term gain.
Time is another resource to consider for larger enterprises. How long will it take staff to learn how to use a custom-built HRMS installed on each computer compared to a cloud SaaS version? CEOs should not assume that larger companies need massive investment into the most expensive HRMS. Senior and HR managers should discuss competitors’ analytics and use them when considering the best HRMS for any sized company.
What are your company’s recruitment needs?
The size of your company will influence how you recruit staff. Larger companies might pay agencies or have dedicated recruiting software, whereas smaller companies are more likely to utilize social media to attract talent. The main differences are that HR teams are in-house in larger companies and may be external in SMEs. It is easier to recruit staff internally when you have a large population to work with, which is not a luxury afforded by SMEs.
Smaller companies may not need recruitment software, as there are many other ways of recruiting. LinkedIn and employee referrals are less expensive ways to recruit new employees. Larger enterprises may consider recruitment modules if opting for an extensive and comprehensive HRMS package.
How do all these questions translate into HRMS features?
When you have established your company’s size, resources, responsibilities, and recruitment needs, it is time to consider what features will be needed to fulfill your needs. The employee self-service portal feature is a significant draw for larger enterprises, but this may be entirely unnecessary for SMEs. A smaller company may favor mobile compatibility for cloud support, whereas a larger organization may benefit from on-premise HRMS.
It’s essential to consider which features are most important to achieve your daily KPIs, whatever your business needs.
Top Five HRM Vendors
Different vendors offer different features. Some HRM suites such as SAP have good functionality across ATS, recruiting, employee engagement, and payroll, and some specialize in one such as payroll for Oracle or Zenefits. We have provided a guide below to support you in selecting the best HRMS vendor for your company.
Workday
- Deployment: Cloud
- Company Size: Medium/ Large
- Features Offered: Employee lifecycle, benefits, payroll,
UKG Pro
- Deployment: Cloud/ On-premise
- Company Size: Medium/ Large
- Features: Payroll, benefits, recruiting, onboarding
Zoho People
- Deployment: Cloud
- Company Size: Small/ Medium/ Large
- Features: Performance management, time and attendance management, expense reporting.
Oracle
- Deployment: Cloud/ On-premise
- Company Size: Medium/ Large
- Features: Talent management, workforce management, AI
SAP SuccessFactors
- Deployment: Cloud
- Company Size: Medium/ Large
- Features: Basic HR functions, AI, machine learning, consulting services
There are over a hundred HRM software vendors today, so HR managers and senior managers must liaise to research the best hr software solutions for their company.
Metrics: The Key To HRMS Success
Much like any other aspect of business, HR teams measure success using metrics. HRM can calculate these metrics more easily, automating analytics processes via AI. HR teams can then use these to measure the successes or shortcomings of an HR department.
HR teams use two terms to categorize HR analytics; people analytics and workforce analytics. People analytics are insights drawn from data about people who work in an organization, such as employees and customers. Workforce analytics include the people in an organization and all non-human factors contributing to company output. Examples are chatbots, automated process analysis, and third parties such as service providers.
How Are Metrics Used In HR?
HR teams need to align a company’s corporate strategy with HR indicators. Metrics collect data to draw insights (analytics) about the financial and the human staff as resources within a company and the impact of their psychology on the organization.
Metrics help senior managers to make decisions by measuring:
- Primary HR costs: recruitment costs, work absence %, and other factors that HR supports.
- Assess HR processes performance to maintain continuous improvement, such as employee experience
- Record ROI on HR processes such as training and follow-up procedures
HRM can help use metrics to draw analytics from them. HRM can also make all of these actions not only easier to conduct and easier to understand. This factor shows it is vital to find an HRM with suitable metrics tools and a UI that you find appealing and accessible to make sense of captured data.
What Are The Keys To Success When Using An HRM?
Indicators created from HR data captured using HRM software must be adapted and presented appropriately for different company departments. The board of directors, the CEO, senior managers, and team managers all require something different from these success indicators. This difference in needs is why these indicators must be produced with each staff type, ensuring the most efficient indicators.
A steering team must guide indicator creation using a range of skills, such as:
- HR competencies
- Statistical skills and data analysis
- Motivation and skills to acquire necessary business skills
- IT skills to appreciate where and how the HR team record data on systems.
- Skills for marketing, such as public speaking and presentation skills, to fully utilize the findings of the result.
HR staff and steering teams must take time and attention to ensure metrics are well crafted to obtain the most current and relevant data. The organization should also decide what metrics will be required and factor this into the choice of HRMS.
When to Purchase an HRMS
Companies of any size should consider purchasing an HRMS to safeguard themselves against future threats.
The first threat is the digital disruption caused by more companies investing in HRMS as part of their digital adoption strategies. Companies must ensure they have invested in HRMS to maintain digital resilience against competitors.
The second is that HRMS improves HR processes, speeding them up by automating data entry and freeing up staff for more demanding tasks. The third advantage of HRMS is that it can support HR governance, recording and regularly alerting staff to policy audits and providing updated policy information informed by local labor laws.
An HRMS should be purchased by senior and HR managers as soon as practicable for companies of any size as part of an enterprise transformation strategy. Whether this is a cloud HRMS for a small company or an on-premise multi-tool option for large enterprises, an HRM is essential for today’s HR needs. But HRMS contain huge amounts of employee information that needs to be stored securely. This stage is where managers need to consider HRMS security.
HRMS Security
Employee information is very sensitive and attracts criminals conducting ransomware operations. Ransomware is one of many threats to attack and steal employee information from HRM and HRIS systems. Security measures are needed to counter these threats.
Data Security and Privacy Controls
IT and HR managers need to take many security actions to boost HRIS and HRM security, such as encryption software, Virtual Private Networks (VPN), and hiring in-house cyber security staff or employing them temporarily for regular reviews. Today, 98% of staff use mobile devices daily for work, highlighting the need for mobile security provided by a VPN. For companies with smaller budgets, all staff can be made responsible for security using basic measures.
Managers can train staff to be aware of the dangers of cyber threats and the need to change passwords regularly and limit access to company intranets via the online HR software self-service portal. Managers can also emphasize the need to lock doors, windows, or rooms containing sensitive paper documents.
Security concerns vary between company size and type. Large companies can be more vulnerable as they are more well-known and visible, with more to lose in terms of financial assets and higher-paid staff. These companies may store more data on-premises in physical forms but also have a more extensive hybrid workforce, increasing vulnerabilities.Â
However, this is vulnerable to being physically stolen, so it can be secured to desks or cupboards when staff is not accessing computer equipment. Smaller companies are more likely to use the cloud for HRM solutions, which means entrusting their data to a third party. Therefore, for any company, there are always security risks and the need to protect information.
Employee Data Management
Extensive personal employee information, such as performance management data and bank details, is private and considered sensitive. Employers can avoid asking for specific information if an applicant has not yet been hired, such as social security details. Limiting information stored is a simple but effective way to prevent it from falling into criminal ownership.
Employee Self-Service Portal
Employees accessing HR online via a self-service portal from home can create a security risk if HR teams do not use VPN. HR teams must ensure all employees are aware of the need for a VPN, preferably an approved, paid version offered by the organization. Managers can present the incentive to use the VPN to staff as an action to protect their sensitive information such as address, income, and bank details.
Managing Payroll Data
Bank details are sensitive information. The organization must keep them safe and secure. HR teams must use up-to-date, best-in-class encryption software when storing payroll data, as the loss of this data can be catastrophic for the reputation and finances of any organization.
Price Guide
Prices can vary between HRMS, but vendors usually advertise them per employee or user. Larger companies are charged more due to a higher number of employees, but the upfront cost is not the only factor to consider. Cloud HRMS packages do not require extra servers and therefore do not increase running and maintenance costs like on-premise HRM packages. However, cloud options do not usually offer the same security or comprehensive functionality as on-premise options.
A few pricing questions to ask yourself before deciding on an HRM are:
- Do you need a basic or advanced HRM, and how does this fit your budget?
- Do you need scalable or flexible software based on your organization’s future needs?
- How well will the new HRM work alongside any existing HR software?
- Have you included long-term costs of cloud versus on-premise HRMS into your budget?
Once you have answered these questions, you can research the best prices for what you need. Zenefits is priced from $8 per employee per month to $3,500, depending on the features you decide to use. Prices can vary for an HRMS.
HRM Pricing Ranges
HRM software usually involves a monthly fee rather than an annual license. There are three tiers of price measured per employee per month.
These tiers go from Basic to Premium and Advanced:
- Basic: $3-$1,239
- Premium: $293-$3,500
- Advanced: $688-$3,500+
Depending on the organization’s features, prices range from $3 per employee per month to more than $3,500.
Pricing Examples With Features
These breakdowns show the pricing tiers of five frequently used human resource management software examples. We have based this pricing on advertised prices from January 2022.
BambooHR
- Basic: $5-$495
- Premium: $834-$2,063
- Advanced: $2,063+
Eddy
- Basic: $57-$849
- Premium: $857-$2,049
- Advanced: $2,049
Employee Navigator
- Basic: $445
- Premium: $545
- Advanced: $755-$2,100+
Fingercheck
- Basic: $47-$839
- Premium: $847-$2,039
- Advanced: $2,039+
Gusto
- Basic: $51-$1,239
- Premium: $1.361-$3,039
- Advanced: $3,039+
Each of these HRM software vendors offers free quotes on their respective websites to give an idea of the features that vendors offer with each service tier. But aside from the HRM software fees, managers deciding on an HRMS must consider other costs before signing up for a monthly HRMS subscription.
Types Of License
HRM software vendors offer three different types of licenses, so organizations need to be aware of the differences to budget accordingly. The most common license that larger companies will encounter is the perpetual license.
Perpetual License
HRMS on-premise usually has a perpetual license because companies store their data on their physical server hardware. Organizations only need to pay for the cost of the software.
However, there may be an ongoing fee or annual support fees if this service is required, as well as costs for additional software modules which add features. Organizations should invest in perpetual license software after a free trial to confirm that the software is what the company needs.
If the size of your company exceeds 500 staff, it is a good idea to choose an annual plan as there are discounts for yearly payments.
Subscription License
The subscription license is also called SaaS and involves the vendor using the cloud to host the software and a company’s employee data on their servers. Subscription licenses usually require annual or, more commonly, monthly fees. Vendors design pricing as flexible as possible, whether the price for each period is monthly, twice-yearly, or annually. This flexibility allows quick and easy customization, adding or removing modules, or scaling up or down accordingly.
The difference between the user and employee price is highly significant for this license type. Vendors define the price per employee as the number of people using the software to carry out their daily HR tasks. Price per user includes any employees using the online self-service portal to access features of the HRM, adding to the cost. It is essential to be aware of this difference to avoid overlooked fees.
Free and Open Source License
Free and open source licenses are the least common as vendors cannot monetize them easily. These licenses are applied to free software, ideal for smaller businesses that do not need and may not be able to afford an HRMS with a perpetual or subscription license. Free and open source licensed HRMS offers basic functionality for free, with additional modules requiring payment.
Hidden Costs
HR managers and senior managers making decisions to purchase an HRMS must be aware of the four hidden costs that managers can easily miss.
- User onboarding
- Always confirm with a vendor if there are any software training costs.
- Organizations incur fees when training takes place at the vendor’s facility.
- IT support
- IT support is essential to ensure service delays do not occur.
- Double check what kind of IT support the vendor has included in your HRMS and if this fits your company’s needs.
- Data migration
- When organizations adopt a radical data storage transformation, from a legacy system to cloud storage, data migration can cost extra.
- Always ask the vendor about data migration fees before agreeing to a contract.
- Maintenance and upgrades
- Vendors include basic upgrades to the fundamental operation of the software in the license.
- Vendors often charge advanced maintenance and upgrades, so it’s helpful to find out as much as possible about these extra fees before purchase.
When companies know these hidden costs, it is easier to ensure questions are asked before purchase to ensure that adopting an HRMS doesn’t exceed the budget.
HRMS Is Essential In 2022
Different sized companies have varying needs, but one factor remains a high priority for the HR departments of organizations of any size; the need for centralization. This factor is the most prominent reason companies invest in human resource management software.
HR teams, senior managers, and board directors must decide methodically and consider all factors when selecting an HRM software. Finance or HR teams must ensure budgetary constraints align with required features and pricing considerations, including licensing and often overlooked costs.
When a company chooses the right human resource software, the benefits are far-reaching, affecting most if not all business processes. All HR processes can be improved with human resource software, as HRMS reduces data input times for recruitment and employee data, increases employee engagement, and streamlines all HR processes. For these reasons, the software quickly fulfills its ROI when your organization chooses the right HRMS.
