The HR software market is constantly changing and growing as HR departments do. According to the 2019 KMPG Digital Trends Survey, “two-thirds of HR executives believe that HR has undergone or is undergoing a digital transformation,” but many companies feel they’ll only succeed in driving digital transformation by making a large software purchase, which requires a reliable — and often large — budget. Luckily, HR software for small business doesn’t have to break the bank.
What if you can’t afford a major technology purchase? For a small business or startup, buying the latest incarnation of Peoplesoft sounds about as realistic gifting employees a total of $10 million for their Christmas bonus.
Despite tighter budgets and limited IT resources, small businesses need to centralize workflows and be efficient, especially when it comes to HR systems for small businesses. In this article, we’ll take a look at some of the best HR software for small businesses — modern, cloud-based systems with industry-leading functionality at an affordable price point.
Table of contents
- Best HR systems
- Best payroll systems
- Small business pain points
- Key features of HR software for small business
- Types of small business HR solutions
- 7 top small business HR solutions
- Choosing the best HR software for your small business
Best HR systems
To shorten your research time, we’ve put together this list of the top HR software.
Best Payroll systems
If you’re looking to focus specifically on payroll solutions, without the need for broader features, we recommend the solutions below.
Intuit’s QuickBooks provides in-depth accounting paired with an intuitive interface that helps businesses manage their accounting and finances. There are three main versions of QuickBooks. QuickBooks Online has become one of the most widely used accounting suites on the market today, and QuickBooks Desktop is the legacy accounting software. The Enterprise Solutions Suite offers the same as Online or Desktop, but with the capacity to handle accounting and finance for the large businesses.
Use Paylocity to simplify payroll, automate processes, and stay tax compliant, all in one spot. Pull expense reimbursements into paychecks and run custom reports to get the data you need. And provide the flexibility for employees to access a portion of their earned wages when they need it. Ensure accuracy and get time back in your day. Eliminate spreadsheets, calculators, and signatures along the way with a tool built directly into your payroll software.
Paychex is a cloud-based payroll management system offering payroll, HR, and benefits management systems for small to large businesses. Paychex covers payroll and taxes, employee 401(k) retirement services, benefits, insurance, HR, accounting, and finance. The software also offers accounting and finance solutions including payment processing services and expense management, while also taking care that federal state laws and local regulations are observed.
Small business pain points
Villanova University cites change management, leadership development, and effectiveness measurement as some of the top challenges HR faces.
Businesses of every size are impacted by the need for more efficient record keeping and answers to employee burnout, and the software industry is evolving to meet these demands. At the industry level, things are looking up, but small businesses still face many nuanced challenges.
No dedicated HR staff
Many small businesses either assign HR responsibilities to a cross-functional manager or to a single, in-house HR administrator. In both scenarios, a single person handles payroll and benefits, time tracking, grievances and disciplinary action, hiring, and promotions, which can be overwhelming.
While HR software can’t replace an HR administrator, it can make it easier on the staff you do have. It simplifies and even automates certain HR processes, like sending new hire paperwork and benefits enrollment, your team can focus on the tasks that most need their expertise.
Record-keeping and regulatory compliance
HR regulations are constantly in a state of flux. Small businesses must balance healthcare reform, tax codes, and labor laws. Armed with only a file cabinet and the Sunday paper, this is sure to result in mistakes, processing delays, and in worst cases, legal fees.
HR software organizes your records and makes them easily searchable and accessible. Many HR tools also automatically calculate tax and benefits withholdings to reduce the chances of human error and keep you compliant.
According to a OFWpinoy Employee Satisfaction and Loyalty study, 42.6 percent of employed workers are actively seeking or are at least open to a new job. Without a strategy for investing in talent and building an attractive work culture, small businesses lose good employees to competitors that offer higher salaries and better benefits.
The right HR software can actually lower operating costs, so you can afford to invest more in your people. Through automating and streamlining processes, HR software reduces the workload of your HR staff, meaning they’ll likely be less stressed as well.
With smaller teams, it quickly becomes apparent if certain employees aren’t pulling their weight. But without a formal performance management or training system in place, how do you orchestrate consistent improvement?
Many HR platforms feature performance management tools to standardize the review process and ensure that everyone’s meeting expectations. This can also improve metrics for bonus payouts to reward employees going above and beyond and motivate those that aren’t.
Also read: Bonus Time: Using Performance Metrics for Payouts
Key features of HR software for small business
The right HR software for small business can alleviate small business pain points by automating administrative tasks, record-keeping, and compliance, and by giving HR coordinators tools to find and retain the best talent. In the current market, most solutions are moving toward mobile access, multi-channel talent management, internal collaboration models, and self-service portals.
In order to get the highest return on your investment, it’s important to choose a small business HR solution that offers modern capabilities and intuitive access. Although solutions vary from vendor to vendor, a full-featured HR management platform will offer some combination of the following features:
- Employee self-service
- Applicant tracking and onboarding
- Compensation and succession planning
- Benefits administration
- Performance management
- Time and attendance tracking
- Social recruiting
- Collaboration tools (newsfeeds, internal messaging)
- Mobile access (through native app or web interface)
Types of small business HR solutions
There are many ways to package HR software for small businesses. Most are cloud-based, which saves upfront cost and eliminates the need for IT infrastructure. Beyond deployment models, there are three primary classes of small business HR solutions structured around use intent:
Core HR solutions help businesses perform the administrative functions of managing a workforce — payroll, benefits administration, time and attendance tracking, workforce planning, and regulatory compliance. The self-service portal — which lets employees access their work-related data and enter updates and requests — is also an integral feature for most core systems.
The primary focus of strategic HR solutions is to hire, retain, and develop the best employees, which is why it’s often referred to as “talent management.” These solutions mostly address recruitment, performance management, training and development, and succession planning. Some may even be best-of-breed applications designed to address a specific aspect of talent management, such as the hiring process.
Integrated HR suites
These solutions provide end-to-end functionality across most or all areas of HR management including administrative aspects as well as recruitment, talent management, and e-learning (or learning management systems). Some product suites are sold in modules, which can be purchased according to need.