Key takeaways:
- There are many different types of HR software platforms on the market, but the right solution will depend on your business’s goals and the unique needs of your HR team.
- A comprehensive core HR platform works well for some companies, while others find the right solution by integrating several standalone platforms.
- A structured HR software selection process will increase the odds that you choose the right option for your business now and in the future.
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How to choose HR software
Ready to find your next HR software platform? Follow these nine steps to help you make the right selection for your team:
- Evaluate your existing HR tools
- Identify must-have features
- Assemble a team of decision-makers
- Establish your budget
- Explore HR suites vs. standalone tools
- Conduct preliminary research
- Create a shortlist
- Test drive your top contenders
- Make a final selection
1. Evaluate your existing HR tools
If you consistently run into roadblocks with your current HR system, it’s likely time to consider an upgrade. Before digging into the selection process, make a list of challenges in your current processes and workflows.
Top considerations may include things like information siloes, repetitive manual tasks, or ineffective customer support. Being clear about your needs upfront will increase the chances that your new software will accomplish your goals.
2. Identify must-have features
A wishlist of features is helpful for identifying the limitations of your current HR toolkit, but it’s unlikely that the software you choose will check every box. To prioritize, make one list of your must-have HR system features and a second list of nice-to-have capabilities.
Use these two lists to narrow down your options as you move forward in the HR software selection process. Eliminate products that don’t meet your minimum requirements, and use the secondary list to pick the solution that will make the biggest impact.
3. Assemble a team of decision-makers
No one should be responsible for choosing a new HR platform alone, and there will almost certainly be multiple stakeholders to consult as part of the SaaS buying process. In fact, G2’s 2022 Software Buyer Behavior Report found that 80% of companies make purchasing decisions through committees that include as many as 22 distinct roles.
At a minimum, your team of decision-makers will probably include leaders from HR and IT departments, and possibly other teams such as finance and operations. Depending on your company structure, you might also need to get the leadership team involved or at least get final approval from the C-suite.
4. Establish your budget
The cost of HR software ranges dramatically depending on the size of your business’s workforce and the technical capabilities your team needs. To keep your expectations realistic, create a budget at the outset that indicates how much you are willing to pay for the new software.
Be sure to include implementation and migration costs as well as the platform subscription in your estimate. While these fees are typically one-time rather than annually recurring, they can significantly add to the upfront cost of the new HR software.
Also read: Paid vs Free HR Software: Which is Right for You?
5. Explore HR suites vs. standalone tools
All-in-one HR software suites are incredibly convenient, hosting all HR functions in a single place with one login. However, general HR platforms might not be complex to meet all of your business needs. In some cases, you might be better served by choosing standalone products such as an applicant tracking system or payroll software and weaving them together via integration.
6. Conduct preliminary research
Once you have decided what type of HR system you want, you are ready to start investigating potential platforms. Begin by seeking out recommendations from people in your network and reading unbiased reviews from customers like you. Compile a list of potential platforms and narrow it down as you learn more about the features each solution offers.
7. Create a shortlist
Once you have a long list of potential HR software, you need to narrow it down by comparing it to your list of must-have and nice-to-have features. We typically recommend whittling it down to your top 3-5 options before moving onto the product demo stage. If budget is an important criterion, asking the HR software vendors for pricing quotes may make the decision easier.
8. Test drive the top contenders
Once you have finalized your shortlist, take advantage of HR software demos and free trials so that you can see your top choices in action. User reviews and product screenshots are helpful to reference early in the selection process, but your team should get some hands-on experience with the software before committing. If you’re not impressed by any of the initial demos, return to the previous step to see if there is any promising software on your long list that you might have overlooked.
9. Make a final selection
Ideally, the product demos and free trial periods should make it clear which HR software is the right choice for your needs. Once you have made your final selection, sign the contract and prepare for implementation.
What are the types of HR software?
Your business may need a combination of the following types of HR software:
- Core HR software
- Recruitment software
- Performance management software
- Learning management systems
- Employee engagement software
Core HR software
Human resources information system (HRIS), human resources management system (HRMS), and human capital management (HCM) software are the three main umbrella terms in the HR software category.
HRIS systems store key employee data and ensure compliance with all necessary laws. HRMS platforms focus on process optimization and cost efficiency, centralizing information and automating tasks. HCM covers both HRIS and HRMS functionality as well as additional features such as recruiting and performance management.
Read more about the differences: HRIS vs HRMS vs HCM: What Is the Difference in 2023?
Recruitment software
Recruitment software includes various talent acquisition functions, including applicant tracking, pre-employment screening, and onboarding. Hiring teams use recruitment software to post job openings, source candidates, screen applicants, conduct interviews, and more. Recruitment software makes it easier and faster to fill open roles with qualified candidates.
Performance management software
Performance management software helps supervisors and employees set goals and track progress over time. The software supports managers in coaching employees, encouraging growth, and supporting promotions.
Learning management systems
A learning management system (LMS) helps the HR team design, implement, and administer training programs and educational modules. These training programs ensure compliance with laws, help employees stay current with certifications, and support professional development goals.
Employment engagement software
Employment engagement software helps companies gather employee sentiment through surveys and questionnaires, which are often anonymous. Insights from this data can be used to make actionable changes that improve employee retention.
Also read: The 5 Main Types of Human Resources Information Systems (HRIS)
What should you prioritize in the HR software selection process?
The process of choosing the right platform — or combination of platforms — can be daunting.
In some instances, it may be best to choose one software platform that incorporates all HR functions. Other circumstances may warrant a strategic web of integrated tools that address each need individually. By including the right decision-makers and prioritizing your team’s most important needs, you can feel confident that the solution you choose will set your business up for success now and in the future.
Need help getting started with your search for the perfect HR software? Check our HR Software Guide.
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