Key takeaways:

  • It might be time to upgrade your HR software if you’re spending a fortune on paper, manually handling your HR tasks, or experiencing compliance errors, turnover, and data silos.
  • Effective HR software gives companies a competitive edge by consolidating HR functions in one place, saving time and money through HR task automation, and providing actionable insights to improve personnel and company processes.

While human resources (HR) software programs can aid a business’s bottom line, ineffective HR software can drag down a company’s productivity, reduce efficiency, and frustrate management and employees. Considering the monetary cost of HR software, maintaining a system that results in unnecessary, extra work may be more trouble than it’s worth. 

However, with estimates indicating companies can reduce the time for manual processes by 40–60%, companies should not completely renounce the potential benefits of HR software. Instead, by recognizing the signs of subpar HR software, companies can refocus their energies on researching and implementing a solution that better serves their objectives.

With several solutions on the market today, check out our HR Software Guide for options to upgrade your current HR tech. 

6 signs you should upgrade your HR software

If businesses are experiencing bottlenecks in their HR software’s workflow processes, it may be time for an HR update. Evidence of inefficient HR software includes:

  1. Spending a fortune on paper.
  2. Manual processing of HR tasks.
  3. Consistent compliance errors.
  4. High turnover rates.
  5. Record-keeping silos.
  6. Lack of features to satisfy business goals.

1. You’re spending a fortune on paper

In the U.S., paper and paperboard material is still the largest component of municipal solid waste, according to data from the Environmental Protection Agency (EPA). Other sources indicate that as much as 3% of a company’s revenue is spent on paper, printer supplies, and the infrastructure to maintain these processes, like filing cabinets and copiers.  

Effective HR systems can be much more than personnel data storage lockers; they can create and share electronic company documents, such as company handbooks and onboarding paperwork, without the need to print and store the paperwork. This reduces the burnout HR teams experience with traditional administrative paper-pushing, such as the time to search for paper documents and the stress of losing or leaking sensitive data.

How new HR software can help: A new HR system can eliminate the direct and indirect costs of paper. BambooHR, for example, allows companies to ditch their filing cabinets for streamlined electronic document exchange and retention features. 

Additionally, BambooHR allows HR teams to customize electronic company onboarding, training, and disciplinary documents and send them to employees for e-signatures. In doing so, companies reduce their reliance on paper and the time and money it takes to complete their processes by hand.

BambooHR’s e-signature feature capabilities allow companies to collect the necessary information to complete core HR tasks without the need for paper. Source: BambooHR

BambooHR is one of the top HRIS solutions on the market today. Check out who else made our shortlist in our Top HRIS Systems and Best HR Software for Small Business.

2. You manually handle your HR tasks

Companies waste significant time performing manual HR tasks over and over again. The right HR software can prevent companies from importing timesheets to sync with payroll, engaging with employees in-person to collect onboarding documentation, and creating reports from scratch. 

If the company’s current HR software cannot configure automated tasks or leverage artificial intelligence (AI) to assist with recruitment or strategic workforce predictions, it may be time to switch. With a new platform handling the essential functions of HR, staffare free to focus their efforts on higher-priority work.

How new HR software can help: Most modern HR software comes standard with particular automations and AI capabilities.

For instance, companies can save significant time processing payroll using Gusto’s AutoPilot feature. This set-it-and-forget-it ability allows Gusto to run payroll automatically, with little input from the company outside of a last review before payroll finalization. 

Gusto’s automated payroll features can save HR teams up to 5 hours per month on processing payroll. Source: Gusto 

Check out our Top HR Management Systems Software for other top Gusto competitors. 

3. You’re experiencing compliance errors

With the pace at which governments release new legislation, it can be difficult for organizations to keep track of shifting reporting and employment law expectations. As a result, organizations could be at serious risk for labor law violations if the company’s current system makes new hire reporting tedious, fails to deduct employee garnishments accurately, or incorrectly tracks employee eligibility for qualifying Affordable Care Act (ACA) benefits.

Moreover, archaic HR systems are less secure and may have organizations using expired onboarding paperwork, like I-9 or W-4 forms. Older software may even obligate businesses to manually adjust yearly tax rates or complete and distribute year-end paperwork, such as W-2s, 1099s, and 1095-Cs. Not only is this inefficient, but it also leaves organizations prone to errors and exposing private employee data.

How new HR software can help: Luckily, most modern cloud-based HR software stay apprised of new regulations, so companies do not have to spend time researching and updating work processes to accommodate them.

Paycor, for instance, allows system administrators to customize their homepage with compliance alerts. By notifying companies of serious labor law violations — such as I-9 errors or missing hours in payroll — Paycor allows companies to address issues quickly and remain confident that they are in compliance.

Administrators can quickly take action to address any compliance errors directly from their Paycor homepage before risking a major employment law violation. Source: Paycor

4. Your turnover rate is higher than normal

Poor HR software can make understanding dissatisfaction among a company’s employees impossible. Without proper workforce analytics or employee engagement modules to measure employee sentiment and capture necessary feedback, employers lack adequate data to tackle employee concerns and improve the workplace. 

At the same time, older HR systems may lack processes to automate repetitive HR tasks, such as paystub requests, new hire onboarding, and benefits enrollment. As a result, HR teams cannot focus on bigger-picture priorities, like mitigating employee attrition and turnover. Outdated HR software can also contribute to inefficient team communication, resulting in delayed responses to employee concerns, complaints, or workplace safety issues.

How new HR software can help: New HR software, like Paylocity, includes self-service tools so employees can access pay and benefits information at their convenience while freeing up HR teams to focus on larger company goals.

Similarly, Paylocity allows employers to send surveys to employees and those outside the organization to obtain a 360-degree view of factors affecting discontent so companies can make meaningful changes.

Paylocity’s surveys can provide insights into employee sentiment and issues driving turnover so employers can begin to foster a more positive workplace. Source: Paylocity

5. You store your data in multiple locations

One of the main benefits of human resources software programs is assembling, sorting, and centralizing personnel data for companies to easily view and make changes in one place. However, if businesses are relegated to onboarding employees with physical files, tracking PTO accruals on spreadsheets, and manually importing timekeeping data for scheduling and payroll, then their current HR software is doing them a disservice.

How new HR software can help: HR software should house all employee data together by integrating disparate systems to streamline workflows. Workday HCM, for instance, stores all employee data in one place to prevent information silos.

As a result, data from every part of the employee life cycle — including recruiting, onboarding, performance management, and career development — are all connected. This makes it easy for employers to update information or change employee records without transferring or repeating the changes among several separate recordkeeping systems.

With Workday HCM’s analytics, companies can combine employee data from traditionally disparate systems to draw actionable insights regarding employee satisfaction and organizational health. Source: Workday

6. Your software doesn’t support your business objectives

If a company’s current HR software provides basic HR functionality, like payroll and records management, but lacks the option to add additional features to scale with the company, then it may be time for an upgrade.

As businesses become increasingly remote, many organizations seek HR tech to manage their deskless workforces through electronic onboarding, multi-state payroll capabilities, mobile timekeeping, or global payroll options. However, remaining committed to HR software without these abilities can stifle employer plans to expand or result in needless workarounds that may cost more time and money than they’re worth.

How new HR software can help: Many HR solutions today include subscription price tiers or add-on features so companies can adjust their HR software’s capabilities as their needs change.

For example, Rippling users can easily add global payroll onto Rippling’s core platform once they move into the international space. Rippling can even act as the company’s Employer of Record (EOR) until the company has enough financial resources to manage international employees in-house.

Rippling allows companies to expand into international markets through its global payroll feature. Source: Rippling

What to look for in a replacement HR software

Companies should look for a new HR system that provides them with the critical HR features their current software lacks, like integrated timekeeping or performance management capabilities. However, if the company has all the essential functions covered, the below features can take their HR processes to the next level:

  • Automations: Users can set specific processes, such as payroll, benefits, or performance review cadences, to run automatically, saving employers time from manually attending to each task. 
  • Employee self-service: HR teams can virtually eliminate the need to provide financial, benefits, or tax paperwork to employees by providing them access to online self-service portals, which allow employees to access this information at their convenience.
  • Reporting and analytics: By consolidating employee data in one place, HR software can provide employers with reports on workforce analytics to enact change in areas needing improvement. 
  • Integrations: Companies can integrate their HR software with the tools they use every day, from their accounting to Enterprise Resource Planning (ERP) software, streamlining their workflows among their company’s entire tech stack.
  • Scalability: Having scalable features means companies can remain with the HR platform they’re used to while adding or removing features and functions as their business priorities change.

How to upgrade your HR software

If it’s increasingly apparent that its time to upgrade your outdated HR software, take a look at the following to start your buying journey: 

With a breadth of solutions available for every business, upgrading your HR software to the latest model can provide employees with a better overall experience and ensure your company remains competitive in an ever-changing market.

However, if you’re unsure where to look for your next HR platform, check out our HR Software Guide for ideas to help kickstart your journey.

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