10 Core Functions of HR Software

What are the core functions of HR software?

The core human resources functions cover all people-related worker activities, from the time employees are recruited and hired to the time they retire or leave the company. Here are the 10 core functions of HR that the best HR software offers.

1. Find and hire great employees.

Whether you do the hiring yourself or outsource recruiting to a staffing agency, HR’s primary responsibility is to find the right people to sustain and grow your company. The tools of the trade include job boards and recruitment software that keeps track of applicants, candidates you’ve interviewed and people who have passed your screening criteria and background checks.

“Recruitment software tools use data analytics to optimize job ad placements, helping companies find the right talent efficiently,” said Michael Ang, CEO of JobElephant. “Effective recruitment strategies use software that focuses on analytic-based, position-specific ad placements. This targeted approach maximizes ROI by reaching qualified candidates.”

2. Ensure fairness and compliance.

HR software allows business owners to comprehend and abide by federal, state and local labor laws, such as the Fair Labor Standards Act, the Affordable Care Act (ACA) and antidiscrimination laws. That can help you avoid expensive mistakes and fines.

HR software can also be used to overcome common HR compliance challenges. It can be used, for example, to maintain your employee handbook, ensure you have the correct labor law posters, update your policies when laws change, provide onboarding to new hires to ensure they’re aware of workplace requirements and investigate claims of harassment, discrimination or company violations within your business. Since most HR software includes workflow and automation features, it allows you to automate certain functions that are necessary to maintain compliance.

3. Drive productivity and results.

Employees know when they work for a company that treats people well. That’s why HR leaders focus on helping workers understand the business’s objectives and how their work helps to achieve those goals. HR software is a valuable tool in that process, because it often includes performance-management tools such as goal setting and tracking, feedback opportunities, surveys, and performance analytics. That can be essential in keeping employees on track and aligned with company expectations.

4. Keep employees healthy and safe.

The Occupational Safety and Health Administration (OSHA) requires employers to keep employees safe and healthy at work. The rules vary according to the kind of firm. In an office, for instance, safety may include having personal protective equipment available for visitors, emergency exits labeled and a fire escape map posted. In a commercial kitchen, it may mean ensuring that employees are trained on how to use equipment safely and that underage workers aren’t put in harm’s way.

When it comes to HR software, you can help keep your employees safe and healthy through benefits administration. Offering health insurance, health savings accounts and employee assistance programs, for example, can help keep your employees healthy, thereby lowering absenteeism. The best HR software connects with popular benefits carriers that typically let workers manage their own benefits through mobile and desktop employee self-service capabilities.

5. Optimize the organizational structure.

HR supports your business in structuring the organization to improve efficiency and reduce noise and conflict. At a smaller firm, that may mean creating an organizational chart to show who reports to whom, as well as making a contact sheet so employees know whom to call for questions on things such as ordering office supplies or getting a copy of their pay stub.

As a firm grows, it often needs to restructure jobs and create supervisor responsibilities. HR experts in organizational design can help determine what kinds of leaders and team structures are needed. They can assist in determining the best span of control (how many workers report to each manager) and clarify how much decision-making authority rests at each level of the organization.

Whether you have a small or large organization, you can use HR software to digitize your organizational structure and provide employees with a clear visual of the hierarchy of your organization. The best software also tracks employee head count among departments, teams and individual positions, which can further help optimize your structure. 

“HR software can help predict hiring trends and make proactive decisions that better serve candidates and the organization,” Ang said.

6. Coach, train and develop staff.

HR is often called on to provide training and coaching. At a smaller business, that probably includes welcoming new hires on their first day and getting them set up in their workspace. At a bigger firm, the HR team may teach employees about software, business practices and company culture. HR software can be used to simplify and manage these processes from onboarding to offboarding. For example, it can help you manage employee development, provide one-on-one coaching, train managers on leadership skills and help employees embrace new products, software upgrades, policy changes and more.

7. Pay workers accurately and on time.

One of the most essential functions of HR software is payroll. What was once done by hand is now an automated process. HR software tracks employee hours worked, time off, overtime and more. Software that has both time-tracking and payroll components can automatically roll employee hours into payroll, reducing the potential for human error. If your software partners with a benefits carrier, your employee benefits deductions can automatically roll over as well. 

HR software also helps simplify payroll taxes by tracking federal, state and local taxes for you. That can streamline your overall payroll tax process.

8. Engage and motivate employees.

Employee motivation and engagement are key to a successful workplace. HR embraces and drives engagement through best practices such as ensuring diversity and inclusion, managing remote work teams and providing effective peer feedback. As your team works to improve motivation, HR software can provide surveys and metrics to track how successful your engagement efforts are.

9. Innovate and manage change.

At a small business, the business owner is usually the driver of change and innovation. Once you hire more than a handful of employees, however, you’ll need assistance with getting your team to buy into your new business idea, product offerings, software solution or executive team.

HR software can help you identify the impacts of those changes on people and build a plan to mitigate the risks inherent in rapid growth or other business changes, such as a merger or acquisition. Features such as HR reporting and analytics help you strategize the best approach and bring tools from multiple disciplines (training, compensation, organizational design) to ensure that your changes stick.

10. Minimize annoying paperwork.

This core HR function is listed last because it’s the bane of HR. States require you to report new hires. The federal government requires year-end paperwork. OSHA requires reports, and employees need pay stubs and benefits forms. That’s not all. Job applications, garnishments and requests for family medical leave are a paperwork nightmare. HR software can minimize the paperwork by digitizing and automating the business processes required when you have workers (contract or employees) on staff.

“A major advantage of HR software is its capacity to enhance efficiency in administrative tasks and enable HR teams to achieve more with less,” said Scott Walker, CEO of Brightmine, a global provider of people data, analytics and insight. “With the implementation of advanced HR systems, manual processes — such as compliance tracking, payroll and employee data management — are being automated.”

Automated HR technology solutions range from a simple project management board to track new-hire onboarding to a full-blown human resource management system that manages electronic document storage, benefits enrollment and payroll self-service for your team.

What types of HR software solutions are available?

There are several types of HR software, ranging from basic to comprehensive. Although some systems focus on one specific area of expertise, others offer multiple HR functions in the same platform.

• Recruitment software can help you attract, interview and hire top talent. Some popular types of recruitment software include applicant tracking systems (ATS), recruitment candidate relationship-management systems, video interviewing software, background check software and onboarding software.
• Employee scheduling software simplifies the process of building and managing employee schedules. You can use it to assign shifts, track employee availability and manage time-off requests. The best software includes schedule templates, shift splitting, shift swapping and mobile self-service features. 
• Time and attendance software tracks employee hours, including overtime or how much time an employee worked on a specific project or job. It can be used to manage time-off requests, view employee locations and combat time theft.
• Benefits administration software is a centralized solution for admins and employees to enroll in and manage employee benefits.
• Payroll software is used to track employee hours, wages, time off and deductions. You can process payroll, pay employees and file payroll taxes.
• Learning-management software is a professional-development tool that employees use to learn or improve upon certain skills. These e-learning platforms offer necessary trainings such as sexual harassment, as well as up-skilling trainings on topics such as leadership and technology.
• Employee monitoring software tracks what types of websites and applications your workers use on their company devices. The software can block and filter websites and provide metrics on user activity to promote productivity and ensure company security. 

“Regardless of the type of HR software being used, it is essential for the tool to integrate data, insights and human expertise,” Walker said. “By harmonizing these elements, HR software can not only enhance operational efficiency for HR teams, but empower them to make more informed, strategic decisions that drive positive outcomes for both employees and the organization as a whole.”

How do HR software needs vary by business type?

The decision to handle HR yourself, hire someone on your team to manage HR or outsource your people operations to an external HR expert depends on the business’s size, industry, budget and structure. Regardless of what route you choose, HR software can support the process. Here are some ways HR software needs may vary by business type.

• Mom-and-pop businesses: A retail or service company managed and staffed by family members may not require a full-fledged HR software solution. The business owner or spouse can often hire new employees on Indeed or similar job boards and pay them using online payroll software.
• Tech: A small firm that wants to attract and retain highly educated or technical staff will want to choose software with the HR features that modern white-collar workers have come to expect: streamlined recruitment, document management with e-signatures, competitive compensation with direct deposit, online employee benefits administration, learning and development opportunities, and other features with employee self-service capabilities.
• Manufacturing company: A midsize company in a regulated environment may need HR software that can support more than hiring. They may need help with OSHA compliance and workers’ compensation, for example. They may also need an HR solution to set up and manage HR policies, processes and software for scheduling, timekeeping and overtime calculations.
• Growing businesses: A growing business will want to choose an HR solution that can scale with their needs. A bare-bones solution for timekeeping and payroll may suffice in the beginning, but as your business grows you will likely want to upgrade your HR software with features such as benefits administration, performance management, training and development tracking, compensation management, and custom analytics and reporting. Choosing a solution that can be easily scaled will save you money in the beginning and save you the headache from switching providers in the future.
• Larger or multistate firms: Any company that has 50 or more employees or hires workers across multiple states likely needs the support of a comprehensive HR software or external HR service provider to navigate the myriad labor laws affecting larger, multistate employers as many requirements vary by locale.

“Ultimately, customizing solutions to fit the specific needs of your business is key,” Walker said. “Not every organization will benefit from the same set of HR solutions. It’s about identifying the right technologies and tools for your HR team and wider organizational needs and ensuring the software supports your broader business goals.”

Laura Handrick contributed to this article.