While tiny businesses may be able to handle all of their employee information in spreadsheets, purpose-built HR software becomes increasingly essential as your business grows. If you’re still not sure if HR software is right for your business, here are some key signs that you should be thinking about implementing one:

• You Have More than 25 Employees: While 25 employees is not a rigid threshold (a startup with under 20 employees can still benefit from HR tools), it is an excellent place to start thinking about using an HR software system. With more than 25 employees, keeping track of data becomes a chore, and at a certain point, it becomes impractical (and error-prone!) to manually enter and update all employee data.
• Many of Your Jobs Require Licensing or Certification: If you are in an industry where employees require up-to-date certifications for legal reasons, staying on top of the schedule is critical. HR software can streamline the process by setting up automated reminders when certificates are due to expire.
• You’re Growing Fast: Companies face changing legal requirements as they pass different size thresholds. Keeping up with the legal requirements of a growing company is much easier to do automatically with HR software than by hand in spreadsheets.
• You Want Your HR Team to Play a More Strategic Role: Having one easily searchable system that stores employee information, runs payroll, and handles benefits saves a lot of time for your HR team. It allows them to focus on more strategic projects for your business, like increasing employee engagement and retention or improving organizational culture.
• You Manage Hourly Employees: With hourly employees, you often have to track hours and manage changing schedules. This is another process that is made infinitely easier with HR software.‍
• ‍You Need Custom Workforce Data Reports: As businesses become increasingly data-driven, accurate and readily available people analytics becomes more and more critical. Many HR software solutions have features that enable you to hone in on data-driven recruitment and gain better ideas of your company's health.

While tiny businesses may be able to handle all of their employee information in spreadsheets, purpose-built HR software becomes increasingly essential as your business grows. If you’re still not sure if HR software is right for your business, here are some key signs that you should be thinking about implementing one:

• You Have More than 25 Employees: While 25 employees is not a rigid threshold (a startup with under 20 employees can still benefit from HR tools), it is an excellent place to start thinking about using an HR software system. With more than 25 employees, keeping track of data becomes a chore, and at a certain point, it becomes impractical (and error-prone!) to manually enter and update all employee data.
• Many of Your Jobs Require Licensing or Certification: If you are in an industry where employees require up-to-date certifications for legal reasons, staying on top of the schedule is critical. HR software can streamline the process by setting up automated reminders when certificates are due to expire.
• You’re Growing Fast: Companies face changing legal requirements as they pass different size thresholds. Keeping up with the legal requirements of a growing company is much easier to do automatically with HR software than by hand in spreadsheets.
• You Want Your HR Team to Play a More Strategic Role: Having one easily searchable system that stores employee information, runs payroll, and handles benefits saves a lot of time for your HR team. It allows them to focus on more strategic projects for your business, like increasing employee engagement and retention or improving organizational culture.
• You Manage Hourly Employees: With hourly employees, you often have to track hours and manage changing schedules. This is another process that is made infinitely easier with HR software.‍
• ‍You Need Custom Workforce Data Reports: As businesses become increasingly data-driven, accurate and readily available people analytics becomes more and more critical. Many HR software solutions have features that enable you to hone in on data-driven recruitment and gain better ideas of your company's health.

At SelectSoftware Reviews, we like to start with the “why?” behind any piece of software. With HR software, many assume that the answer is simple: it’s a must-have because a database that tracks your employee information is necessary.

In fact, buying an HR software is not the no-brainer choice it’s made out to be. It is a major strategic decision that requires a lot of time, thought, and buy-in, and in some cases, it’s just not the right tool for the job. However, I’ve seen HR software systems offer tremendous benefits when they are adopted at the right place and time. Here are the key ones:

Save Time with Automation

By automating recurring tasks like benefits, payroll administration, new employee orientation, time tracking, and attendance management, HR software with a core human resources information system (HRIS) helps make tedious HR processes quick, simple, and less prone to error.

According to Nucleus research, companies that do use HR automation reported 67% faster new hire onboarding and 90% more time savings on admin work.

Improve the Employee Experience

HR software doesn’t just benefit your business and bottom line. It’s also a direct asset for your employees. With a user-friendly employee portal, your employees can navigate benefits options easily, review and update personal information, manage requests for time off, and much more.

Employees who feel their employers’s onboarding software is effective are five times more likely to report high levels of engagement.

Employee Performance

Beyond simply reviewing conduct and achievements, your HR system can drive employee performance.

Performance reviews, engagement surveys, performance management capabilities, and customizable integrations with other tools can all be used to build culture and turn company values from ideas to action. Statistically, 72% of HR generalists engaging in self-service HR software reported a lighter workload.

Increase Compliance

If you are careful with the setup and initial data entry, HR software can significantly improve your business’ data accuracy and accessibility.

In addition to helping out in a pinch, data accuracy, and task automation support compliance year-round. Automation results in fewer human errors. Many vendors do a great job of staying on top of changes in laws and regulations, keeping you in the loop, and updating their products accordingly.

Better Organization

If a team’s starting point is pencil and paper, using an HR system will alleviate some data security risks and the hassle of sifting through physical files. For teams who have moved beyond the paper files to a patchwork of spreadsheets and other tools, buying a complete HR suite will help keep everything in the same place.

Stacey Richey (VP of People at Corvus Insurance, 18+ years in HR) shared her personal experience with this problem, and how an HR software platform solved it.

Early on, her company used multiple tools for people processes: one tool for payroll, one for employee perks and benefits, one for talent development, one for performance management, etc. Does this sound familiar? She knew it was time for an all-in-one HR software system. First, she identified the needed features and set her team off with a headstart and a list of non-negotiables. 

The result: they identified the right tool for the right price, and today, they save hours each month by not having to switch from one app to another, build integrations, or transfer info.

Streamline the Hiring Process

Some HR software tools can also act as lightweight applicant tracking systems (ATS), and some have a full-fledged ATS built-in.

These features allow you to easily collect resumes, review candidate info, and speed up employee onboarding and training, providing new hires with a seamless transition into your company. Custom workflows also help ensure the onboarding process does not overlook key steps or necessary documents.

Business Intelligence

Analyzing data metrics becomes increasingly important as your business grows. By creating custom reports, your HR software system makes it easy for your HR team to analyze hiring costs, calculate turnover, and employee engagement, and ultimately use data to help inform business decisions.

Workforce Management

The top HR software platforms come from best-in-class HR technology companies. Progressive, forward-thinking HR departments can count on comprehensive HRIS, HCM, or HRMS (human resource management software) platforms for complete workforce management.

For example, employee engagement is sometimes built right into HRIS or HCM systems, along with intuitive employee onboarding, easy-to-access payroll and benefits, mobile first-time and attendance, and payroll management. This is done through a cloud-based service that automatically updates as new modules roll out.

A clever way to save money on buying an HR software platform is to think about your goals and codify them into an organizer spreadsheet to make notes throughout your vetting process. It’s worth thinking through some of the key HR software features. Here are a few you’ll want to consider.

• Employee Self-Service Portal: Employee data management can be a lot of work for your HR department. The self-service function of many human resource management systems helps eliminate this challenge by enabling employees to view and edit their information, including benefits selection, time off, and more through a self-service portal.
• Time and Attendance Management: HR software simplifies tracking time off and planned and unplanned absences due to sickness, injury, maternity leave, or unauthorized leave.
• Onboarding Capability: While onboarding typically involves a lot of paperwork, with HR software, employees can complete much of the onboarding process electronically, including open enrollment. Most HR platforms even have electronic signature functionality, allowing employees to sign scanned documents that can be stored in the system.
• Custom Reporting: As HR increasingly relies on data and trends, it’s crucial to have a system that can create reports to help improve business decisions. A powerful people analytics system takes the manual labor out of preparing reports and replaces it with empirical evaluation speed, accuracy, and objectivity.
• Learning Management: Though a learning management system (LMS) may be baked into your HR software, it's much more likely that, like the ATS, you’ll use this tool as a standalone solution. Whether integrated or built-in, the LMS is critical for managing educational materials during employee onboarding and throughout the employee lifecycle.
• Employee Database: The employee database of an HR software platform allows you to store all employee records and information in a centralized location. The data is searchable, making finding details on employee salary and position, performance appraisal histories, disciplinary histories, and training records easier.
• Recruiting Functions: Many HR solutions allow you to air job postings, conduct interviews, store resumes, and transfer information when a new candidate is hired. While not all HR software systems have applicant tracking system features, they often allow native ATS integration so that you can transfer new-hire data to your system quickly and smoothly.
• Training and Development Management: Tracking employee training is essential, particularly in an industry where employees require specific certifications or licensing. HCM or HRMS platforms let you see what training employees need or want and helps you stay current on any required recertifications.
• Central Storage for Company Documents: As a centralized location for any information your employees might need, your HR software should be where employees can find HR policies, employee handbooks, emergency evacuation procedures, safety guidelines, and more.
• Benefits Administration: Your HR software should enable employees to enroll in health insurance, manage their 401(k), and track their benefits information. Many systems also offer payroll software and services to keep your employee benefits information auto-updated though often the payroll features cost extra.‍
• ‍Compensation management: To reduce the risk of error when handling employee compensation, HR software systems often offer payroll and compensation management functions. This allows you to handle many forms of incentive compensation, including salaries, paid time off, overtime pay, and bonus programs automatically.