- Essential-for-All Features: These are key and indispensable functionalities that small and midsize businesses (SMBs) must look for in an HR system.
- Essential-for-Some Features: These functionalities become important as your business’s needs and revenue grow over time. That’s why it’s good to have at least one of these features in your HR system.
Essential-for-All HR Features
The basis of most HR software, these must-have features address basic employment management needs—storing employee information, organizing their benefits programs and mining insights from employee data. When your HR staff uses these features, the benefits trickle down to other employees, who can then better understand HR policies and procedures.
Also known as personnel management, this feature centralizes employee information, such as their SSNs, contact information, previous employment details and demographic data. It helps businesses track work hours and employees’ physical locations (to track remote salespeople, for example). Managers can set timelines, plan for absentees, anticipate delays and re-assign resources to more immediate tasks.
Business value to SMBs: If your company continues to manually set employee schedules, personnel tracking will save you tons of time and effort. Once you automate the task of scheduling, it becomes easy to track and approve paid time-off requests, set backups and have a holistic view of the workforce.
This feature helps manage your company’s various benefits programs, such as paid time off, medical, dental and life insurance policies and 401k. It helps keep track of all your current vendors and existing plans. It also allows you to monitor expenses of these plans and understand which plans are preferred by your employees.
Business value to SMBs: The software allows the HR staff to stop chasing after employees to sign paperwork; instead it lets employees manage their benefits on their own through an online portal. It’ll also automatically notify them about vendor upgrades or government regulations.
For example, if your company switches its dental coverage provider, the system could automatically transfer employee information to the new vendor database. You wouldn’t have to manually copy or re-enter all the information.
HR collects and manages a lot of data, and reporting helps identify trends and action points within this data. For example, analyzing current employee types and skills can help you define your future hiring requirements. Similarly, the HR team can identify the root of common issues and use the software to identify the right resolution strategy.
Business value to SMBs: Adding reporting to HR functions will help you gain accurate insights on how to upgrade your business strategy. For example, a midsize engineering company with operations in three different countries might want to generate reports on their competencies. The business could also track employee data across all locations to measure performance accurately.
Based on Gartner’s “Market Guide for HCM Suite Applications” report (content available to Gartner clients), numerous chief HR officers and HR IT leaders prefer getting these core HR capabilities as a suite from a single vendor. This ensures seamless data transfer and ease of use for your employees.
However, some solutions offer an open API, which makes it easy to integrate with other software solutions. If you’re following a build-as-you-grow model, this approach may be preferable to you.
Essential-for-Some HR Features
The Software Advice Buyer’s Guide for HR software categorizes the following features into workforce management and strategic HR. They tend to be add-on features that you can adopt as your business grows.
This feature involves managing employee workload and compensation. Many companies manage compensation manually, but, it’s hard to do that when you factor in benefits, taxes, overtime and PTO. Also, manually calculating compensation for hourly or contract employees can be difficult.
When your employee size or benefits needs increase, payroll software integrated with the benefits administration feature can reduce the complexity. You can also integrate payroll with the employee scheduling feature in personnel tracking to calculate PTO and overtime.
Most useful for: Businesses that manage numerous employee salaries, bonuses, 401k contributions, health coverage and other deductions.
This feature can also help calculate the withholding for tax and create paychecks. While payroll can be outsourced, software makes it easy to manage in-house, thus saving you additional costs.
This feature uses a centralized database for candidate information. Recruiters and managers refer to and update this database throughout the application process to make notes. It automates the time- and labor-intensive processes of job posting, resume browsing, candidate shortlisting, interviewing and tests, scheduling and even onboarding.
Most useful for: Recruiters and recruiting agencies. Searching for the right candidates is burdensome if you do it one resume at a time. Software makes the whole process efficient, cost effective and easy to use for both HR and managers.
The easiest way to manage benefits is by letting employees choose their preferences—via a self-service portal. As we’ve noted before, companies commonly use self-service portals to help employees select insurance options and check allotted PTO. These portals can enhance employee satisfaction in your organization.
Most useful for: Businesses that are looking to remain relevant in a digital age when most people use a mobile device for many of their needs.
Gartner’s “Why You Need to Rethink Your Customer Self-Service Strategy” report (content available to Gartner clients) recommends that organizations should strive to offer self-service portals, which both better serve customers and save costs. You can also save your HR department’s time with self-service portals by using automated query resolution and a ticket system to resolve basic employee queries.
Learning and Development (L&D)
This category includes a wide gamut of features that link learning to performance review so that employees are encouraged to grow and are consistently provided the right resources. Learning management solutions (LMS) are essential to impart training across the organization in a uniform and organized manner.
Gartner’s “Overview on How to Plan, Recruit, Develop and Retain a Skilled Workforce in the GCC Region” report (content available to Gartner clients) found that the top reason for retention among IT professionals was a formal career development program. Such a program reduces the chance that your best talent will get poached.
Most useful for: Businesses that constantly require employees to be certified as per market standards, such as in aviation and food preparation.
However, some small businesses may not be able to afford a system due to lack of budget. In that case, you can consider MOOCs (massive open online courses).
Some level of LMS is essential for all organizations. You should tie learning management to the evaluation process. This way, your employees and managers know exactly what areas to improve and what resources can help them do that.