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TechnologyAdvice Human Resources Software Buyer's GuideUpdated: Feb. 18th, 2019
What is HR software?
The growing human resources (HR) software market is forecast to reach $10.9 billion by 2023. While most companies and individuals are somewhat familiar with an HR software, the landscape is rapidly changing with the addition of new best-of-breed apps and to keep pace with the ways changing technology affects how users want to interact with software.
Whereas in its inception as licensed on-premise software, HR software was restricted to employee records, payroll, and benefits, the market has expanded significantly due to automation and demand for cloud technology. These changes in customer expectations and the greater willingness of employees to use self-service models now mean HR tasks like payroll, time off requests, and benefits management take up less administrative time, which frees up HR professionals to focus their attentions on recruiting, employee performance, company culture and branding, and other tasks that now fall under the descriptor of talent management.
Names for HR Platforms
Due to the highly changeable nature of the HR software market, you’ll find that companies use many different names to describe their offerings:
Multi-tool on-premise or cloud solutions:
- Human Resources Management Systems (HRMS)
- Human Resources Information Systems (HRIS)
- Talent Management Systems
- Human Capital Management (HCM)
- Core HR
- HR Administration software
Best of breed SaaS categories within HR software:
- Applicant Tracking Software (ATS)
- Recruiting Software
- Employee Engagement Software
- Performance Management Software
- Learning Management Software (LMS)
- Time Clock Software
There has been little movement in traditional segments of the HR management software market since the first on-premise solutions were introduced in the late 1980s. Payroll, time and attendance, and benefits management are the staple HRMS products, which means market growth and consolidation is driven by emerging HR technology that makes the systems lighter and more available to SMBs as well as new trends in human capital management strategies like performance management. HR software giants invested in multi-tool HRM software like Oracle, SAP, and ADP have stayed competitive in the rapidly changing marketplace by acquiring successful startups and integrating those human resources tools into their current platforms. We can expect to see this trend continue, as startups have more flexibility to move quickly on emerging technologies and established core HR companies have the capital to acquire them.
Best HR Software (by Specialty)
|HRIS||Performance Management||ATS & Recruiting||Learning Management||Employee Engagement|
|SAP Successfactors||Saba||Bullhorn||Halogen Talentspace||Darwinbox|
Categories of HR Software Solutions
Human Resources Information Systems (HRIS)
Human Resources Information System (HRIS) software is an umbrella term that includes as many distinct types of software as there are HR software companies. These products are known by many different names, but the purpose of these multi-function systems is to store individual employee data, manage payroll and benefits administration, and manage the company’s regulatory and legal employment requirements.
Although the amount of time that HR managers reported working on manual data input has gone down, these managers still spend up to 50 percent of their time on manual tasks. This time suck is closely followed by manual adjustments (30.6 percent) and spending time shuttling information between non-standardized HR tools across the organization (27.4 percent).
HRIS systems are designed to streamline and automate the three traditional pillars of HRM: payroll, time and attendance, and benefits management. And modern solutions go a long way to reduce manual data entry. Companies searching for the right HRIS software can expect to see these features:
- Time tracking
- Employee scheduling
- Benefits management
- Self-service employee portal
Often included features in an HRIS:
- Applicant tracking
- Performance management
As late as November 2017, Josh Bersin for Deloitte and Forbes reported that only 40% of companies use a cloud Human Capital Management (HCM) solution, and the transition to the cloud in this sector is not expected to speed up any time soon as even cloud-based Core HR software is notoriously difficult to implement, sometimes taking 2-3 years. But not all is lost, because Bersin also sees many companies moving from these complicated systems to other solutions like individual integrated SaaS software and ERP software.
Leaders in the HRIS software space tend to be software giants that require significant onboarding but promise flexibility, accuracy, and data security. Because HR administration software stores and manages the personal identifying data, banking, and tax information of all employees, these human resource tools are subject to industry regulations and must stay current with state, local, and federal tax requirements.
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Applicant Tracking Systems and Recruiting Software
The rise of applicant tracking systems and recruiting software can be directly correlated with the increased automation of many of the traditional data-entry and administrative tasks that HR employees used to fill their days with. Now that HR departments don’t spend most of their time manually calculating time cards and payroll deductions, these employees can focus on attracting and hiring stellar employees.
Applicant tracking systems and recruiting software have very similar functions but often differ in scale. Recruiting software is most often employed by recruiting agencies and large enterprise companies with high job demands as they are built to handle bulk or ongoing recruiting efforts. Applicant tracking systems, on the other hand, are often employed by organizations that need employee lifecycle tracking, and can include performance management and engagement modules in addition to the traditional job board, resume, interview, and onboarding features.
Read the overview and detailed feature descriptions for standalone applicant tracking software or specialized recruiting software that fits your business. And our Technology Advisors are standing by to recommend the best tool for your needs. Call now for a free, 5-minute recommendation.
Learning Management Systems
Learning management systems (LMS), also known as elearning systems, track an employee’s education, certifications, qualifications, and skills, and house or connect the employee with materials or courses available to develop those skills. Some LMS may function as a part of an ATS or are included in an ERP software, but many standalone options are also available for businesses of all sizes.
Traditional LMS allow managers to approve training, budgets, and calendars alongside performance and appraisal metrics. Most LMS users create their own learning content that then gets hosted on an LMS server. These systems typically require in-house departmental experts and training coordinators or HR employees with training expertise to build extensive learning and assessment modules.
A popular option that many companies with the lack of time or resources to build their own elearning courses adopt is purchasing subscriptions to ready-made learning content platforms. While not tailored specifically to the company’s workflows or internal processes, learners can take advantage of expert industry and tool-specific courses that increase their productivity, engagement, and overall productivity. These platforms also provide data export or training records that individuals can port into the company’s HRIS, performance management, or employee engagement software.
Want more information about learning management software and elearning systems? Visit our learning management software category for features to look for, benefits to expect, and advice on the best products. Click the banner at the top of the page to get free recommendations based on your technology needs.
Performance Management Software
Performance management software is a platform where HR professionals, managers, and employees can focus on assessing employee skills, set goals for performance, and track improvements over time.
Many companies use a performance management system to coach employees of all skill levels and tenures and to organize and track performance appraisals yearly, quarterly, or through weekly pulse updates. All of this information helps to give HR employees and managers a clear view of the employee’s maturation in a current role. This end-to-end view often helps the team with larger HR initiatives like succession planning and employment growth.
Performance management systems often include or are closely integrated with LMS and employee engagement software that gives teams a better understanding of individual and overall movement toward goals.
Want to learn more about performance management software features and benefits? Visit the performance management software category where you can check out top products and reviews, and receive recommendations based on your software needs.
Whereas performance management tools seek to build an integrated system from hiring to retiring, employee engagement software helps companies improve employee sentiment and increase individual and team engagement with everyday work priorities. Employee engagement software both measures current engagement levels and seeks to provide solid feedback and coaching to improve the employee’s level of involvement in daily tasks.
Employee engagement systems often use a combination of survey tools, follow up workflows, gamification, and analytics. Users are prompted daily or weekly to provide feedback on their current work priorities, progress towards goal, and feelings about their own work.
Employee engagement software is found either as a standalone system, a feature of an HRIS or ERP software, or as an integrated tool that works in tandem with a larger HRIS, ERP, performance management, or talent management system.
Visit the employee engagement software overview to learn more about this HR software, including major features and products. Or if you’re ready to look at employee engagement options, call a Technology Advisor today for free recommendations based on your current software needs.
As the human resources software market grows and changes, there are a few additional considerations to make when choosing a solution. Features such as analytics, social integration, and mobile capabilities are becoming standard issue for most platforms rather than innovative selling points.
Here are the most prominent and ongoing trends for some of the best HR software providers on the market today:
Artificial Intelligence (AI) and Machine Learning
The growth of AI and Machine Learning in the software space is undeniable, with nearly 50 percent of decision makers planning on expanding their budgets for AI by 2019. Currently AI companies are building tools that help HR professionals with recruiting and onboarding new employees, and some companies are using the technology to make more intelligent pulse surveys. Machine Learning can most often be found in the elearning fields and within LMS software to better understand what types of courses employees should take next and to offer new resources based on established learning patterns and behavior.
AI and Machine Learning are both still relatively new fields of technology that are just finding applications within HR software. Expect to see big strides within both of these fields over the coming years as the technology matures.
Team Management vs. Talent Management
As with any trend in HR, employee management styles go through swings along the personalization scale. As recently as 2016 organizations began to show a decided movement toward team focus, with only 38 percent of all companies basing their organization on functional divisions. And while greater personalization is a huge trend across both employee and consumer management, many companies find that managing teams of employees who share similar business outcome goals makes sense.
This trend has changed how management and employees communicate, how managers and HR professionals look at performance management, and how the whole company looks at employee engagement. Expect to see this trend play out in team goal-setting and business organizations. While perhaps not fully affecting recruiting yet, team management will have an effect on interviews as managers will need to ensure candidates can work well with their teams.
Movement to the cloud
While not entirely new (2012 was considered the year of SMAC: social, mobile, analytics, cloud), movement to cloud HR systems has developed a lot more slowly than originally expected. While many startups and small businesses formed since 2012 dove straight into the cloud for financial and usability reasons, older companies have had a harder time moving away from legacy and on-premise systems.
Cloud adoption’s slow growth is attributed primarily to the complexity of HR software. Because these systems house so much information in such complicated formats, a switch from one software to another can be lengthy and time-consuming, causing many companies to deal with what they have.
Best of Breed vs. Integrated Systems
Driven largely by the overall move to cloud software, many companies now choose to use several separate HR platforms to manage the entire employe life cycle rather than contract a fully featured HRIS. This choice is sometimes financially motivated, but there are many factors at play here.
HRIS can be difficult to implement at first, requiring several months or years of onboarding (depending on the size of the company), however once it’s in place, the HRIS can act as a central source of truth for all things employee related including:
- Time tracking
- Performance management
- Employee engagement
- LMS and elearning
- Succession management
Companies that choose to implement separate software for each of these items may find comfort in SaaS’s subscription model that gives them the freedom to switch providers at any time, or they may choose to only implement each software as it becomes necessary to the company’s growth.
A third option employed by many companies is to skip both HRIS and SaaS software and implement an ERP system instead. This software tends to be more complicated than HRIS systems, but can include vital features like supply chain management and financial systems.
Company Branding & Culture
Workplace culture and company branding has affected all points in the employee lifecycle. Recruitment strategies that look more like marketing and employee health and wellness programs help companies plan and involve employees in positive company cultures. These programs help companies avoid the rising cost of substance abuse and mental health issues that impact time loss and benefits coverage.
Companies can expect HR professionals and individual employees to push for professional development, elearning, wellness benefits, and greater attention to harmful workplace cultures than ever before. These priorities can be tracked and improved through the use of HR software including performance management, LMS, and recruiting systems.
Choosing the best HR software
Navigating the HR landscape doesn’t have to be complicated or frustrating, but don’t go it alone. TechnologyAdvice has recommendations, reviews, and expert advice on choosing the HR software that’s right for your business right now and as it grows.
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