What is human resources (HR) software?

What is HR software?

HR software is a digital solution that helps organizations streamline HR-related processes such as employee information management and document routing.

Human resources management software (HRMS) increases the efficiency with which HR teams operate. This is done through automated workflows, collaborative tools and a centralized file database.

Such HR information systems are the standard for fast-growing businesses that need to store confidential employee data securely, stay compliant with regulations and boost the productivity of their HR professionals on a day-to-day basis.

Why is HR software important for businesses?

HR software plays an important role in improving administrative efficiency and employee information security.

The right HR management system empowers your entire HR workforce to maintain complete control of employee data and accelerate document reviews or approvals with workflow automation.

Cloud-based HR systems, in particular, promote self-service access to business users with the proper permissions. This means HR teams can locate, view, edit, share, sign and collaborate on files from anywhere in the world — without having to wait weeks for their request to be approved.

What are the benefits of having HR software?

Without the right solution, HR teams will find it difficult to cope with newly introduced legal requirements, time-consuming recruitment or onboarding processes and document workflows.

Key improvements to organizational efficiency include:

Centralizing HR information

Although many HR professionals make do with storing documents in filing cabinets or their own computers, that is not the best solution for fast-growing organizations. As employee files pile up, it becomes increasingly difficult for HR teams to search for what they need — especially if it remains scattered across systems, desks and inboxes.

Many businesses have turned to cloud-based employee file management for the convenience, accessibility and cost advantages that reduce the risks of unstructured data. An effective HR system will consolidate crucial documentation in one place, so teams can retrieve files instantly and make more informed, faster decisions.

Electronically capturing and digitizing information

The best HR software goes well beyond storing employee files. With the help of data capturing tools, organizations can process and record incoming data — accelerating HR processes right from the beginning.

This can be very useful for businesses that need to digitize paperwork, as well as for HR departments that need to capture data such as employee contact information, training records and payroll information. Optical character recognition (OCR) technology can also be used to scan documents and images, making them searchable and easily accessible.

Simplifying HR workflows with automation

When documents need to be routed for review, it can take a lot of time and effort to track down the right people and get their feedback. With an automated workflow, all of that can be taken care of with minimal manual supervision and without the risks of administrative bottlenecks.

Automated workflows can also help ensure that all required approvals are obtained before the document is released to potential candidates, new hires or existing employees. By automating tasks and tracking the status of each document, hiring, onboarding or other HR-related processes can be completed quickly and efficiently.

Collaborating on up-to-date documents

HR teams need to edit and share documents daily, whether that’s with employees in an organization or external users. If the only way to collaborate on document revisions is through email attachments and disparate file-editing tools, HR professionals will be left with too many costly systems to update and ad hoc, confusing processes to maintain.

The right HR management system deploys version control and historical tracking to keep everyone on track. Multiple HR staffers can work on the same master document — removing the need to create duplicate documents and subsequently keeping crucial information in one place. All this promotes greater transparency in the document creation and editing processes, so teams can have end-to-end control over HR document lifecycles.

Improving compliance

Fast-changing retention requirements and federal regulations will make any form of file handling a challenge. HR teams now require the gold standard in software to help them adhere to compliant data collection, storing, retention, distribution and destruction.

An employee document management system should be able to enforce proper document retention schedules. This must be able to keep confidential employee data (tax forms, salary payslips, medical records, etc.) safe and accounted for in the event of an audit or legal action.

Protecting sensitive employee data from security risks

A huge amount of sensitive employee data is under the control of HR departments. It is crucial to adopt data protection measures at every step of the document management process. Document security must be implemented when employee files are at rest, in transit or in use.

Deploying a secure human resources management system means that your critical employee information is protected from the latest security threats and data vulnerabilities. Built-in security features can include:

• Permission controls that regulate and restrict user access to confidential information
• Strong password policies to protect against data breaches
• Digital signatures to notify teams of unauthorized document revisions

Saving on the cost of paperwork and inefficiencies

When HR processes are manual, paper-based and inconsistent, security, compliance and cost-related threats are everywhere. When improper file-handling leads to the unintentional breach of workplace misconduct and data privacy laws, it can result in significant fines, necessitating the use of a good content services platform.

The decision to switch from paper-based HR operations to digital document management is a cost-effective one. Your staff saves time, and your business spends less on equipment, supplies and printing. Having the right document retention management would also further minimize the risks of oversight and manual error in all compliance tracking activities.

Creating better employee experiences

An HR team equipped with the right solutions will be able to manage and retain an organization’s most valuable resource: its talent.

Dynamic automation tools will drive the efficiency of onboarding workflows – so that new hires have company policies and relevant documents readily available to them from day one. At the same time, HR managers can track the entire employee onboarding process from a single location.

Improving productivity with seamless integrations

Ad-hoc, confusing HR processes across your organizations means that your teams must:

• Constantly switch between applications: HR professionals have no choice but to leave their core human resources information systems (HRIS) platform if they need to search for a file, fill out a form or edit documents
• Perform duplicate data entry: Users must re-enter the same forms of data into each HR system to keep employee information updated
• Manually verify information: Amendments are not being tracked properly, and HR teams must manually confirm the relevance of all employee documents stored

Deploying integrated solutions allows HR staffers to access all personnel files from one core HR platform. The right provider integrates with most ERPs, HRIS, HCM and other HR systems without the need for custom coding.

Supporting disaster recovery initiatives

Your organization simply cannot afford to lose mission-critical data from IT system failures, accidental deletions or even natural disasters.

An HRIS powered with disaster recovery solutions protects HR teams from unrecoverable losses to employee information. It simply replicates your computing environment (HR-related data, systems, applications, etc.) and makes this accessible on the occasion that your main IT environment is down. In the event of a disaster, HR teams can continue to access crucial information on a secure website whilst recovery procedures are taking place.

Types of HR software

Whether you’re an HR professional or a leader looking for the right HR software solution, it is important to understand how each type of human resource system can benefit you.

Here's a look at some of the most common types of HR software:

Human resources information systems (HRIS)

A human resources information system (HRIS) stores data related to employees and is widely used by HR professionals to make informed decisions on hiring, training and compensation processes. An HRIS stores employee data such as:

• Personal information (Employee full names, home addresses, dates of birth, etc.)
• Employment details like joining date, salary details and work experience
• Performance metrics such as training courses attended
• Benefits provided to employees like medical insurance and retirement plans

Human resources management systems

The differentiating factor of human resources management systems (HRMS) from other HR solutions is its focus on talent and cost-efficiency. By automating tasks and storing employee data in one place, HRMS can improve the way your organization manages its employees and processes. This makes it easier to find important information about employees when you need it, cuts down on paperwork and saves time overall.

Payroll is one of the most important functions performed by HRMS. It automates this process by calculating salaries based on factors such as skills, experience, bonuses and other benefits received by an employee from his/her employer in return for services rendered.

Human capital management

When employees feel valued at work, they are more likely to stay with your organization for longer periods of time. Human capital management (HCM) solutions aim to maximize the value of human capital and its contribution to organizational performance. It supports a broad range of activities, including the learning, development and retention of talent.

HCM solutions help companies build trust between employees and leadership by providing them with transparent information about their performance over time. This helps them make informed decisions about where they want to go in their career trajectory and how they want to get there by aligning their personal goals with those of the company.

Applicant tracking systems (ATS)

An applicant tracking system (ATS) is a software application that automates the recruiting process. It manages the entire hiring process from beginning to end, from sourcing candidates and screening them through to extending job offers and onboarding new employees.

ATS platforms let HR teams automate job posting on various sites to scheduling interviews with qualified candidates. The software also manages information related to different candidates in one place. This makes it easier for HR managers to compare candidates against each other and choose the best one for a specific job role.

Payroll systems

Payroll can be a time-consuming task, especially when your organization is quickly expanding. A payroll system is a program that automates the process of calculating, processing and distributing payroll on time. A payroll system can be used to calculate employee hours, determine pay and generate paychecks for employees.

It can also be used to manage:

• Tax withholdings
• Paycheck deductions
• Health insurance premiums
• 401(k) contributions