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6-point Checklist for Choosing The Right HR Software

The wrong HR software can do more harm than good. Here’s a 6-point HR software checklist to choose an HR tool that contributes to your business success.

By Radhika Wangoo

21 Mar 2023 · 9 min read

6-point Checklist for Choosing The Right HR Software

It’s a general notion that an HR job is easy, which is far from reality because it involves a lot of planning and effort. An HR team does a lot, from nurturing and hiring a high-calibre and proficient workforce to managing existing resources to ensure they stay with the organisation and contribute long-term.

Dealing with all these things is only possible with HR software. If HR are consumed with routine HR activities, the efforts of the HR team become cluttered, and the team spends more time on operational tasks than contributing to the management of human resources strategically. That’s why investing in HR software can help your HR team organise their effort and effectively manage human resources is essential. 

In this blog, we’ll guide you on how HR software can contribute to your business success and what things you must remember to select the right HR software for your business. Let’s begin:

Why should I invest in HR software?

The idea of investing in HR software sounds tempting. However, it is a big decision. You would not want to put your money into HR software just because everyone’s buying it.

HR software for startups is especially a big decision because they have a limited budget to spare. That’s why it’s essential to weigh HR software’s business benefits before buying it.

Here are a few reasons to invest in HR software:

  • With HR software, you can automate mundane tasks like employee onboarding, payroll processing, time tracking, and benefits administration. This way can save a lot of time, reduce chances of error, and improve the efficiency of your HR team.
  • Having to maintain employee records manually can be tiring and time-consuming. With HR software, you can centralise employee data in one place, helping you access and manage HR data quickly and make more informed decisions.
  • With HR software, you can stay compliant with labour laws and regulations even if some frequently change.
  • HR software can also help you directly share important messages or announcements with employees, keeping them engaged even when they’re working remotely. 
  • You can also save time and money on administrative costs by reducing the need to maintain and update employee records manually. 

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6-point checklist to select the best HR software

Wondering what to look for in HR software? Here’s a 7-point checklist on how to select HR software for startups and large enterprises:

1. Identify your HR software needs

There are thousands of HR software options available in the market. How do you decide on the right one? You can’t if you don’t understand what you need from an HR tool. You may even choose a product that doesn’t serve your purpose. That’s why you should start by identifying your HR software needs.

Identifying your HR software requirement can also:

  • Save time and resources by quickly eliminating options that don’t fit your requirement criteria.
  • Help you make an informed decision and avoid buyer’s remorse by preventing you from making a wrong choice.

Here are the questions that you should ask yourself to identify your HR software needs:

  • What are the areas in which your HR team struggles?
  • Which HR tasks do you want to automate or streamline?
  • Do you have a remote or hybrid workforce to support?
  • Do you have existing tools you need to integrate with HR software?
  • What level of data security and privacy does your team need? 
  • What’s your budget, or what pricing model works best for you? 
  • Do you intend to scale your organisation’s operations in the future? In that case, you need scalable HR software based on your organisation’s evolving needs.

2. Consider the HR software’s compatibility

An HR system doesn’t work independently but collaborates with tools like an applicant tracking system, payroll software, or ERP software. Now, if the HR system is not compatible with these tools, you may not be able to integrate them with them – leading to silos and disjointed efforts. That’s why you must consider the HR software’s compatibility before you invest in it.

Choosing the correct HR software for your business can also help you:

  • Save time and effort for your HR team by eliminating the need to transfer data manually between systems. 
  • Offer a seamless user experience to your HR team by letting them seamlessly navigate between different applications – thus improving their overall experience.
  • Support your organisation’s future growth by integrating new systems.
  • Eliminate the cost of replacing existing systems with new ones because they’re incompatible with the HR software. 

Here are questions you must ask to find out whether the HR system is compatible or not:

  • What operating system or database does the HR software support? Is it compatible with your current database system?
  • Does the HR software use the same file formats you currently use?
  • Does the HR system support single sign-on (SSO) or other authentication methods where you can access all your data in one place?
  • Can you host the HR software on the premise, or do you need cloud hosting?
  • Do you need to install additional software or plugins to make the HR software compatible?

Last, you must ask if the HR system has any compatibility issues with other tools or software you currently use. If so, you must no longer consider the HR software.

3. Look for a user-friendly interface

When HR software has a simple and user-friendly interface, they have to spend time learning how to use it. As a result, they can complete all crucial tasks in the minimum possible time and maximise their efficiency. A user-friendly interface can also:

  • Help your team become more productive by letting them complete tasks easily and quickly.
  • Increase user engagement as HR professionals prefer using software that is used to intuitive and user-friendly.
  • Reduce the risks of error as HR professionals are less likely to make mistakes when HR software is user-friendly and attuned to their business needs.
  • Eliminate the costs of extensive training and support, as HR teams can use the software to their potential without guidance.

Here are the questions you must ask to decide whether the HR software is user-friendly or not:

  • Can your HR team navigate the software and quickly perform the desired actions?
  • Can even the staff who do not have technical expertise get along with the HR software?
  • Can users easily find what they’re looking for, or do they’ve to spend hours looking for these items?
  • Does the HR software offer instructions and prompts to guide users through each task step?
  • Are there visual cues, such as icons or color coding, that help users quickly identify important information or actions?
  • Does the HR software offer customisation options, such as rearranging or hiding features, to better suit the needs of individual users or departments?
  • Is the HR software responsive and fast, or does it take a long time to load or execute tasks?
  • Does the HR software use plain language and avoid technical jargon or complex terminology that might confuse users?
  • Does the HR software offer online help, tutorials, or other resources users can access if they need additional guidance or support?
  • Ensure that your HR software is secure and data privacy compliant

HR software handles sensitive employee information, such as personal details, employment history, and salary information. If the HR system is not secure, the data may fall into the wrong hands, and malicious actors may misuse it. It may further lead to costly lawsuits and damage to reputation. That’s why ensuring your HR software is secure and complies with data privacy laws is essential.

Before choosing HR software, ensure that the vendor has a solid security policy and has measures like data encryption and regular data backups in place.

Secure and data privacy-compliant HR software can also help you:

  • Prevent costly data breaches that may lead to identity theft, financial fraud, and damage to reputation.
  • Maintain the integrity of HR processes by ensuring data accuracy.
  • Make informed decisions with valuable data insights.

Here are the data protection laws your HR software should comply with:

  • General Data Protection Regulation (GDPR) in European Union
  • California Consumer Privacy Act (CCPA) in the US

Also, you must ask the following questions to select secure and data privacy-compliant HR software for your enterprise:

  • What features does the HR software offer to protect employee data?
  • Does the HR tool comply with data protection laws like GDPR or CCPA?
  • Does the HR software have a data recovery plan if any data breach or system failure happens?
  • Does the HR software vendor provide details of their data encryption and storage policies?
  • Does the HR software vendor regularly conduct security audits and penetration testing to identify and address vulnerabilities?
  • Can the vendor offer examples of companies successfully using the HR software while maintaining compliance with data protection laws?
  • How does the vendor handle data deletion requests?

4. Carefully evaluate the vendor support

The HR software vendor will play a crucial role in maximising your efficiency. A vendor offering rich support during the implementation phase will help you seamlessly implement the HR system and migrate your data to it. This way, your team can use the HR software without the hassle and maximise your productivity.

Here are a few things in which a great vendor can help:

  • Offering training on how to use the software effectively.
  • Providing technical support to resolve any issue that may arise with the software.
  • Offering regular updates and upgrades to the software to ensure it remains up-to-date.
  • Guiding in maintaining compliance with data protection laws like GDPR and CCPA.

Hence, looking for a vendor with a good market reputation for customer support would be best. 

The following questions would help you select such a vendor:

  • What technical support does the vendor offer, and what is their response time?
  • How often does the vendor upgrade the software?
  • How long does it take to implement the software? Does the vendor offer support during the process?
  • What training and documentation does the vendor offer for the HR software?
  • Does the vendor offer any demos for the software? If yes, was the demo worth your time?

5. Consider an HR software that you can scale over time

Your business will grow over time. Today, you may be a team of 10-20 people that your HR team can easily manage. Tomorrow you’ll have hundreds or even thousands of team members. How would the HR team manage them? They can’t because the organisational structure will be complex. To handle such a large workforce, you need scalable HR software and process that you can adapt to your business needs.

Scalable HR software also ensures you can add new features, functions, or modules as your business needs evolve. You can quickly adapt to recent market trends, changes in the business environment, or technological advances.

Besides, scalable HR software can:

  • Save you the cost of switching to a new HR software or purchasing additional tools to manage an additional workforce.
  • Help you gain a competitive edge as you would be better equipped to manage your business growth, evolve with the changing market, or innovate with new trends.

Here are the questions that you must ask to ensure that the HR software you’re buying is scalable:

  • What is the maximum number of employees the HR system can accommodate?
  • How does the HR system handle complex organisational structures like multiple locations or hybrid working?
  • Does the HR software offer customisation options to meet your business needs?
  • Can the HR software integrate with other systems like candidate relationship management (CRM), payroll, or time-tracking techniques?
  • How would the software handle data storage and security as your business grows?
  • Does the HR system offer expansion options as your organisation’s needs evolve?

6. Consider the cost

While you would want secure, scalable, and feature-rich HR software, you would certainly not want to blow your entire budget on it. It is essential because there are also many other endeavors for which you need money, such as hiring candidates, paying salaries, or even operational expenses. Hence, you must determine your budget and look for HR software that meets your requirements while staying within your budget.

Here are a few questions you must ask to decide whether the HR software is within your budget or not:

  • What’s the pricing structure of the HR software? How does it evolve with your organisation’s growth?
  • What’s the cost of scaling up if you decide to grow your business in the future?
  • What’s the total ownership cost (including ongoing maintenance and support, training and implementation, and other additional charges)? Can your team provide a good return on investment (ROI)?
  • What features and functionalities does the base version of the HR software include? Is there an additional fee to include additional modules or features?
  • How does the HR software cost compare to other HR solutions in the market? Does it do justice to the money you’re spending?
  • Is there a free trial or demo for testing before you go ahead with the purchase?
  • Does the vendor offer any discounts or promotions for new or long-term customers?
  • What level of support and training does the HR software include? Are there any additional fees for advanced support?
  • How does the cost scale as your business grows? Will the vendor offer any volume discounts?
  • Are there any hidden costs you may need to pay later, such as data storage or integration fees?

You must remember that buying the software depends on the cost. Hence, you must carefully consider it before you go ahead with purchasing the software.

Wrapping it up...

Choosing HR software is not a small decision. You’re betting your time and money on it. A wrong choice can result in a heavy loss, impact your hiring process, and lead to lousy recruitment choices. Hence, it’s essential to ensure that you invest in HR software that delivers you the desired outcomes.

To conclude, here’s the checklist for choosing the right HR software:

  • Consider your HR team’s needs and see how the HR software can fill them.
  • Choose HR software with a user-friendly interface so your team can quickly get along with it.
  • Ensure that your HR software is compatible with the tools you’re currently using. It would help you centralise your team’s hiring efforts.
  • Treat security and data privacy as a priority, and don’t settle for HR software that’s not secure. The HR software should comply with regulations like GDPR and CCPA.
  • Carefully analyse your vendors and settle for the one who offers excellent support.
  • Go for HR software that you can change with your evolving business needs and market trends.
  • Never go out of budget to choose HR software that looks promising and feature-rich. 

Hopefully, this HR software checklist helps you choose the software that solves your business needs and helps your HR team maximise productivity. Implement these learnings to compare different HR solutions and pick the best one.

Best of luck!

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HR Software Checklist FAQs

What are the three main types of HR software solutions?

  • Human Resource Information Systems (HRIS): A human-resource information management system manages employee data, such as personal information, employee history, benefits, and performance records. 
  • Talent Management Software: Talent management software manages the employee lifecycle, from recruitment and onboarding to training and development. With talent management software, employees can identify and attract qualified candidates, offer them training, and manage performance evaluations and promotions.
  • HR Analytics Software: The HR analytics software aims to analyze data like turnover rates, productivity metrics, and employee engagement. It can help you make informed business decisions.

What are the seven pillars of HR?

The seven pillars of HR are a framework developed by the Society of Human Resource Management (SHRM). It aims to define the knowledge, skills, and abilities HR professionals should have to effectively support their organization’s goals and objectives.

Here are those seven pillars:

  • Leadership: HR professionals should be able to lead and navigate their organization’s strategic direction. They should understand the business landscape, collaborate with stakeholders, and successfully respond to future challenges.
  • Ethical practice: HR professionals should maintain professionalism and responsible behavior. They should adhere to legal and regulatory requirements, promote diversity and inclusion, and maintain confidentiality and privacy.
  • Business acumen: HR professionals should have a solid understanding of their organization’s business and industry, including financial and operational performance, market trends, and competitive pressures.
  • Relationship Management: HR professionals should be skilled at building and managing relationships with stakeholders inside and outside the organization, including employees, managers, customers, and partners.
  • Consultation: HR professionals should be able to provide strategic guidance and advice to managers and executives on a wide range of HR issues, including talent management, organizational design, and employee engagement.
  • Critical Evaluation: HR professionals should be able to analyze and interpret data to inform HR strategies and decision-making and evaluate the effectiveness of HR programs and initiatives.
Global and Cultural Effectiveness: HR professionals should be able to work effectively in diverse and multicultural environments, including understanding and respecting different cultural norms and adapting HR practices to local contexts.

What is the 5 Ps model of HR?

Dave Ulrich, a leading HR thought leader, developed the 5 Ps model of HR to describe an HR’s function, roles, and responsibilities within an organization. Here are the 5 Ps:

  • Purpose: Creating value for the organization through its people. Activities like attracting and retaining talent, developing employees’ skills and capabilities, and managing employee relations fall under this P.
  • People: People refer to employees who are the primary focus of the HR function. This P includes recruiting and hiring, onboarding and orientation, performance management, and career development.
  • Process: HR processes and systems that support the organization’s people-related activities. It includes HR planning, job analysis and design, compensation and benefits management, and employee engagement.
  • Performance: Driving an organization’s productivity by measuring and analyzing employee performance, providing feedback and coaching, and aligning employee goals with the organization’s strategic objectives.
Proficiency: HR function’s proficiency and capability as a function and individual practitioners. It includes continuous learning and development, staying up-to-date on HR trends and best practices, and maintaining a customer-focused mindset.

What is the black box theory of HR?

The black box theory of HR suggests that the HR function operates as a black box where the inputs like employee data, HR processes, and policies go in and outputs like employee behaviors, and organizational outcomes come out. However, there is no idea about the processes within the box.

The idea behind the black box theory of HR is to show a lack of understanding and visibility into how HR practices and policies can impact employee behaviors and organizational outcomes. It can make it difficult for HR professionals to demonstrate their value to senior leaders.

To overcome this challenge, HR professionals must develop a deeper understanding of the link between their HR practices and organizational outcomes through data analytics.

What is the HR paradox?

HR paradox is the tension that exists when their dual roles of being a strategic partner to their business and advocate for employees conflict with each other.

As a strategic partner, they must make tough decisions that may not always be popular with employees, such as downsizing or restructuring. On the other hand, they have to advocate for employees and create a positive work environment by ensuring employees are treated fairly, promoting diversity and inclusion, and providing opportunities for development and growth.

To address this challenge, employees must be skilled at communication, negotiation, and stakeholder management and effectively navigate the competing demands of different organizational stakeholders.

What are the best HR tools for startups?

Here are some HR tools that can help startups automate and streamline their HR processes:

  • HR Information System (HRIS) for managing and tracking employee data.
  • Applicant tracking system (ATS) for automating the recruitment process by tracking and managing job applications.
  • Performance management systems (PMS) for managing employee performance, setting goals, and offering feedback.
  • Employee engagement tools to measure employee engagement and satisfaction through pulse surveys, employee feedback, and recognition programs.
  • Learning management systems (LMS) to manage employee training and engagement.
  • Benefits administration platforms to manage employee benefits and perks.
  • Time and attendance system to automate time tracking and employee attendance.

By Radhika Wangoo

21 Mar 2023 · 9 min read


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