The Best HR Software: Key Differences Explained

What is HR management software?

Instead of keeping manual HR information records, HR software digitally stores and manages core HR functions, such as staffing and onboarding, payroll and benefits administration, workforce management, employee training and development, performance management, and legal risk and compliance.

You may have heard the terms “human resources information system” (HRIS), “human capital management” (HCM), and “human resource management system” (HRMS). Although they vary slightly, HCM, HRIS and HRMS refer to the same general concept: managing human resources via software. 

There are many sub-genres of HR software (which we cover below) that can funnel up into the HRIS, HCM and HRMS categories. It’s important to note that some software serves a single purpose (i.e., payroll software is for payroll), while other solutions are more comprehensive, satisfying multiple HR functions (i.e., recruiting, onboarding, benefits administration, payroll, performance management, analytics).

What is the best HR software?

There is a wide range of HR management software on the market, each with its own specific features, benefits and limitations. Some software serves niche purposes; however, we found many of the best software to be more comprehensive, offering all of the services needed in one easy-to-use platform..

We spent dozens of hours researching and analyzing various HR systems to identify the top solutions. Here are some of our favorite options when it comes to full-service, comprehensive HR software.

HR management systems solve a plethora of HR problems. However, certain types of software are better at addressing particular needs. Before you choose an HR solution, determine which functions your HR software should accommodate.

What are the different types of HR management systems? 

There are several types of HR management systems. While some systems serve one primary function, others are comprehensive and include a combination of services. Here are 10 of the most common HR management system types and some of the primary services they include.

1. Recruitment software
2. Employee scheduling software
3. Time and attendance software
4. Benefits administration software
5. Compensation management software
6. Payroll software and services
7. Learning management software
8. Employee monitoring software
9. Performance management software
10. Employee engagement software

1. Recruitment software

Finding the right employees can be crucial to your business’s success, but attracting and hiring top talent can be tough. In a survey by PwC, 39 percent of HR leaders said recruiting and hiring was one of their biggest challenges. Recruitment software can be a game changer for this process because it allows you to cast a wider (or more targeted) net to find qualified candidates. As a result, more businesses are using HR software as part of their recruitment process.  

There are multiple types of recruitment software. Some common types include: 

• Applicant tracking systems (ATS): This software lets you track applicants throughout the recruitment process to ensure they move swiftly through the funnel before they get swooped up by the competition. This includes tracking information like job postings, resume screenings, interviews, and candidate profiles.
• Recruitment candidate relationship management (CRM) systems: Recruitment CRM systems focus on building and managing relationships with potential candidates. They often integrate with ATS to track interactions, communication history and candidate engagement.
• Video interviewing software: Whether you are conducting a preliminary screening for a candidate or a final interview for a remote worker, video interviews have become a mainstay in the recruitment process. Video interviewing software can facilitate this process with features for scheduling interviews, recording sessions, and sharing feedback with hiring teams.
• Background check software: Some software and services allow you to screen candidates with pre-employment background checks to verify criminal records, employment and education history, professional licensing and more. It is a useful way to ensure compliance and mitigate potential risks.
• Onboarding software: Once a candidate is cleared and ready to hire, you can use HR software to onboard them. This software has features to help automate paperwork and digitize documents with e-signature capabilities. It can facilitate training modules, compliance tasks, and employee introductions through automated workflows.

It’s important to note that some recruitment software can perform multiple functions of the software listed above. Additionally, many of these types of software can integrate with each other to allow for a seamless recruitment process.

2. Employee scheduling software

If you want your business to be as efficient as possible, you must manage your workforce strategically. Employee scheduling software provides features to help manage your workforce efficiently and allocate resources effectively. It simplifies the process of assigning shifts, tracking employee availability, and handling time-off requests. Additionally, it provides insights into labor costs, productivity trends, and compliance with labor regulations, aiding in strategic decision-making for staffing needs. Proper staffing means your customers receive appropriate attention and your employees aren’t overworked.

Online employee scheduling software makes it easy to manage employee schedules on the go. Source: Buddy Punch

3. Time and attendance software

Time and attendance software allows you to monitor employee time so you can compensate workers accordingly. It tracks how many hours each team member works, the locations where they clock in and out, and how much time they spend on specific projects or jobs. You can also track and manage paid time off (PTO) requests. These features ensure you comply with labor laws and avoid time theft.

4. Benefits administration software

Benefits administration software simplifies the management of employee benefits like health insurance, retirement plans and paid time off. It centralizes all benefit-related information, automates enrollment processes and generates reports to track usage and costs. This software helps save time, reduce errors, and ensure compliance with regulations, allowing small businesses to focus on supporting their employees’ well-being.

Managing employee benefits is made easier with benefits administration services like ADP.  Source: ADP

5. Compensation management software

In recent years, pay transparency has become a top priority for many employers, and there is HR software that helps with that. Some HR and compensation management solutions track employee compensation and compare it against job benchmarks and industry standards. This functionality eliminates the guesswork of maintaining fair and competitive employee compensation throughout your company. 

6. Payroll software and services

Payroll software processes payroll, file payroll taxes, reports new hires to the state, tracks and manages time off accruals, and pays your employees. Some solutions even integrate directly with your employee benefits administration to ensure each employee is compensated appropriately. An all-in-one HR solution, or multiple solutions that integrate, is a great way to ensure your employees receive their total compensation on time.

7. Learning management software

Employee development is a crucial factor in many job candidates’ decisions to accept a new position. A well-defined employee development process helps attract and retain top talent while improving your bottom line. With a team of highly skilled employees in place, your organization produces better work overall. 

Learning management software provides professional development opportunities to your workers, often through e-learning platforms. Although some companies offer in-person training, online courses and workshops have become popular ways to upskill and educate employees. Giving employees a clear path to their future can help increase employee engagement and satisfaction.

Employees often use learning management software to access necessary training, including sexual harassment prevention training. Some HR software providers offer guidance to help you comply with labor and employment laws, such as ensuring COBRA and OSHA compliance.

8. Employee monitoring software

Employee monitoring software is a tool that allows small business owners to track and analyze their employees’ activities during work hours. It provides insights into productivity levels, task completion rates and time spent on various projects. This helps employers make data-driven decisions to optimize workflow and improve efficiency. Additionally, some employee monitoring software offers features like screenshot capture, activity tracking, keystroke logging and website usage tracking to promote accountability and ensure compliance with company policies.

Employee monitoring software can also be used to protect your organization. Some platforms let you filter and block certain websites and activities, configure user rules and permission settings, and monitor for insider threats.

9. Performance management software

HR software manages employees’ performance through goal setting, real-time feedback and performance reviews. The best software compiles a vast amount of data that can be used to create an excellent employee performance process. You can identify your most efficient workers and reward them accordingly. You can also see who might be approaching burnout or who needs a little extra training or support.

HR software with performance management features is a useful tool for monitoring employees’ progress toward their goals. Source: BambooHR

10. Employee engagement software

Employee engagement software is a digital tool designed to foster meaningful connections and boost morale among your team members. It helps you understand your employees’ needs and preferences, facilitate open communication, and create personalized experiences that promote a positive work environment. Utilizing this software can cultivate a motivated and engaged workforce, and increase productivity and employee satisfaction.

What are alternatives to HR software?

Just because there are many types of HR software available, doesn’t mean HR software is the right choice for everybody. For example, if you don’t have internal staff available to use and manage the software effectively, it may render useless or under-utilized. For some companies, it is more beneficial to outsource their HR functions to a third party like a human resources outsourcing (HRO) service or a professional employer organization (PEO). 

If you’re looking for a more comprehensive HR solution that can handle some or all of your HR responsibilities for you, consider using one of the best HRO services or the best PEO services available. In our buying guides, we break down the best options.