This post has been updated for 2020.
The HR software market is growing fast. Vendors are turning out more solutions, and businesses are buying them. According to the 2019 KMPG Digital Trends Survey, “two-thirds of HR executives believe that HR has undergone or is undergoing a digital transformation.” But companies feel they’ll only succeed in driving digital transformation by making a large software purchase, which requires a reliable—and often large—budget.
Small businesses still need to streamline workflows and be efficient, especially when it comes to HR
What if you can’t afford to make a major technology purchase? What if you’re a small business or startup, and buying the latest incarnation of Peoplesoft sounds about as realistic gifting employees a total of $10 million for their Christmas bonus?
Despite tighter budgets and limited IT resources, small businesses need to centralize workflows and be efficient, especially when it comes to HR. In this article, we’ll take a look at some of the best HR software for small business—modern, cloud-based systems with industry-leading functionality at an affordable price point. If you’re ready to get personalized HR software recommendations for your business, use our Product Selection Tool, or click the banner below to get started.
Small business pain points
Villanova University cites change management, leadership development, and HR effectiveness measurement as some of the top challenges HR faces today.
Businesses of every size are impacted by the need for better leadership development and change management, and the software industry itself has evolved to meet these demands. At the industry level, things are looking up. But small businesses still face a number of more nuanced challenges:
No dedicated HR staff: Many small businesses either assign HR responsibilities to a cross-functional manager or to a single, in-house HR administrator. In either scenario, a single person handles payroll and benefits, time tracking, grievances/disciplinary action, hiring, promotions, and so forth.
Record-keeping and regulatory compliance: HR regulations are in a constant state of flux. Small businesses must balance record-keeping etiquette with healthcare reform, tax codes, and labor laws. Armed with only a file cabinet and the Sunday paper, this is sure to result in mistakes, processing delays, and in worst cases, legal fines.
Employee attrition: According to a TechnologyAdvice Employee Satisfaction and Loyalty study, 42.6 percent of employed workers are actively seeking or at least open to a new job. Without a strategy for investing in talent and building an attractive work culture, small businesses lose good employees to competitors that offer higher salaries and better benefits.
Performance gaps: On smaller teams, it becomes quickly apparent if certain employees aren’t pulling their weight. But without a formal performance management or training system in place, how do you orchestrate consistent improvement?
Key software features
The right HR software can help small businesses alleviate these pain points by automating administrative tasks, record-keeping, and compliance, and by giving HR coordinators tools to find and retain the best talent. In the current market, most solutions are moving toward mobile access, multi-channel talent management, internal collaboration models, and self-service access.
In order to get the highest return on your investment, it’s important to choose a solution that offers modern capabilities and intuitive access. Although solutions vary from vendor to vendor, a full-featured HR management platform will offer some combination of the following features:
- Employee self-service
- Applicant tracking and onboarding
- Compensation and succession planning
- Benefits administration
- Performance management
- Time/attendance tracking
- Social recruiting
- Collaboration tools (newsfeeds, internal messaging)
- Mobile access (through native app or web interface)
Types of systems
There are many different ways to package HR software. Most small business solutions are cloud-based, which saves upfront cost and eliminates the need for IT infrastructure. Beyond deployment models, there are three primary classes of HR software structured around use intent:
- Core HR: Core HR solutions help businesses perform the administrative functions of managing a workforce—payroll, benefits administration, time and attendance tracking, workforce planning, and regulatory compliance. The self-service portal—which lets employees access their work-related data and enter updates and requests—is also an integral feature for most core systems.
- Strategic HR: The primary focus of strategic HR solutions is to hire, retain, and develop the best employees, for which reason it’s often referred to as “talent management.” These solutions mostly address recruitment, performance management, training and development, and succession planning. Some may even be best-of-breed applications designed to address a specific aspect of talent management, such as the hiring process.
- Integrated HR suites: These solutions provide end-to-end functionality across most or all areas of HR management including administrative aspects as well as recruitment, talent management, and e-learning (or learning management systems). Some product suites are sold in modules, which can be purchased discretely, according to need.
7 top solutions for small business
Namely is a web-based platform specializing in core HR and talent management for growing companies. Their product covers payroll and benefits administration, time tracking, performance reviews, and of course, serves as a system of record for all of your employee data. Namely also offers a built-in social news feed and custom reports for individual and team metrics.
The system is designed to be adaptable and user-friendly, which makes it stand out against more complicated enterprise solutions. But Namely’s penchant for small and growing companies doesn’t mean they skimp on resources: business clients receive 24/7 customer service through a dedicated Namely account manager. Namely has been used by thousands of small businesses across the globe, as well as some larger brands like Kayak, Mashable, and Vimeo. Full disclosure: TechnologyAdvice currently uses namely for our HR needs.
Unlike PeopleMatter and Namely, JazzHR is a best-of-breed HR solution, meaning it’s designed for specialized use—in this case, applicant tracking and interview management. JazzHR helps companies post jobs, screen applications, and manage the interview process through a centralized, real-time platform. Managers can create custom recruiting stages with automated to-dos (e.g. follow-up emails, reminders), and add stakeholders to the process as users with varying permissions and privacy levels.
Post directly to job search sites like indeed, Glassdoor, and CareerBuilder, and use built-in SEO tools to make sure you’ve chosen the right title and job description. JazzHR also offers social recruiting, employee referral programs, applicant screening, background checks, resume review, branded career sites, interview guides, recruitment calendars, and more.
Although it doesn’t have a native mobile app, career sites and interfaces are automatically optimized for the device in use. Along with 3,000 other businesses, TechnologyAdvice has used JazzHR to more than double our team—from 20 employees to over 50 since 2013.
Cezanne offers comprehensive HR management tools that are accessible to smaller companies but designed to scale with future growth and advancement. The system is cloud-based and priced on a monthly subscription according to modules implemented and number of users.
The core module, People Management, offers features for training and development, disciplinary actions and grievances, health and safety compliance, doc management, and reporting. Clients can choose to add on any or all additional modules, including absence management, time tracking, performance management, and applicant tracking. Unlike larger vendors with complicated pricing structures, Cezanne offers each module for the same flat rate per user, so you know exactly what you’ll pay ahead of time.
Beyond its primary features sets, Cezanne also provides workforce analytics tools and complementary solutions for payroll. The platform is accessible to employees and managers on the go through a native mobile app for Android and iOS devices.
BambooHR is a cloud-based core HR solution designed to meet small business administrative needs and give employees efficient self-service access. Although BambooHR doesn’t offer some of the robust features of its competitors, the price point is hard to beat, and the user experience is simple.
The web application serves as a central repository of employee information, such as job and salary history, benefits, and training. Employees can access company documents, request time off, as well as view and edit their personal data.
With varying levels of custom access, administrators can manage time-off requests, set accrual policies, and generate custom reports based on any data in the system. For expanded use, BambooHR integrates with many popular applications for applicant tracking, eSignatures, payroll, and performance management. The system is also accessible on mobile devices through native apps for iOS and Android.
Zenefits started out as a free, core HR solution, but their product (and company) has come a long way in recent years. Zenefits now offers built-in payroll, time tracking, native mobile apps, and impressive integrations in addition to the platform’s main functions: HR management and benefits administration.
Zenefits offers two tiers with a monthly subscription cost per employee plus add-on apps. What you pay will depend on which features you need, but in general, the cost is still much lower than solutions from the enterprise market. Zenefits boasted serving over 250,000 people across the U.S.
Zoho People is part of Zoho’s online suite of productivity apps for businesses. If you know anything about Zoho, you know they tend to play the less-expensive underdog role in a number of other software categories, and their human resource management is no exception.
People bills itself as a “complete online HR solution,” but if you look closer, it’s mostly an administrative HR tool with a basic performance appraisal feature. The good news is, if you need to expand your HR stack into recruiting/ATS, People integrates with Zoho Recruit (and for that matter, every other app in the Zoho universe). Other People features include time and attendance tracking, leave management, custom forms and permissions, and employee self-service.
Users can access the system online, or via native mobile apps for iOS and Android.
EffortlessHR is a Tucson-based provider of online HR software designed specifically for small and medium-sized companies. The platform itself covers personnel management, PTO and time tracking, and an employee self-service portal. Applicant tracking is available as an add-on.
While Effortless isn’t one of the more robust systems on this list, they are one of the more affordable—priced at a flat rate per month instead of charging for the number of employees. That gives you the flexibility to grow your team without upgrading pricing tiers every time you add a few more employees. Another nice feature is that Effortless comes out-of-the-box with over 100 HR form templates, so you won’t have to create common workflows and documents from scratch.
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Thanks to modern innovations like software-as-a-service (SaaS), the market is brimming with affordable solutions for businesses of every size. Even if all you need to do is track time off and digitize employee records, a centralized HR solution can help you do this more efficiently and accurately. With a little luck, your business will start to grow, and you’ll be glad when your HR infrastructure can grow with you.
Need help choosing the best solution for your business? Use our Product Selection Tool to get a personalized recommendation based on your industry, company size, and the features you value most.