The Executive's Guide on How to Choose HR Software

The future of companies is increasingly a story of technology, now more so than ever.

As a result, 46% of HR Leaders say that technology is their top priority, according to a 2023 Gartner study.

And as "people data becomes the new oil," like Suzy Chief People Officer Anthony Onesto told me in a recent interview, choosing the right platforms to underpin our daily operations becomes crucial — not just for HR but also for the business.

But choosing the right HR software isn't an easy feat.

Confusing feature sets, untransparent pricing, and biased salespeople make it hard to choose well.

And as Artificial Intelligence (AI) further transforms these platforms, alongside net-new HR AI tools, the complexity and information you'll deal with has only increased.

In this executive's guide on how to choose HR software, I'll share how to create your requirements list, how to assess vendors, and which mistakes not to make.

With 42% of HR Technology implementations failing, according to Josh Bersin research, this short guide will be worth spending time on.

Understanding Your HR Software Needs

Choosing the right HR Software all starts with understanding your needs.

Understanding these needs is a multifaceted process that involves evaluating your current systems, identifying inefficiencies, and forecasting future requirements.

The steps below focus on HRIS Software. 

However, the same framework can be applied to other HR systems and Employee Management Software like Performance Review Software, Contractor Management Software, and (Free) Payroll Software.

Here's how to navigate this critical phase and gather your needs:

Evaluate Current Systems and Processes

To implement an effective HR tech stack, it is important to evaluate the current systems and processes. 

This involves identifying HR processes and systems to understand the baseline of operations and conducting a software use audit to pinpoint gaps or inefficiencies. 

By defining and understanding your organization's core HR software needs, you can set clear objectives for the HR tech stack.

Forecast Future Requirements

The technology you’re about to implement should last you a while.

When forecasting future requirements, flexibility and scalability are essential for adapting to changing business needs and growth. 

It is also important to highlight current technology and aim for a desired state that aligns with long-term plans and objectives, including strategic decision-making, employee skill development, and scalability for future growth. 

Choosing technology that fits the company culture and supports learning opportunities through an integrated learning management system (LMS) can help employees develop their skills over time.

Listen To Your Employees

By addressing these areas, you can lay a solid foundation for choosing HR software that meets your current needs and can evolve with your organization. 

In this process, don’t forget that employees are your most important stakeholders when making this decision.

In a fantastic interview with David Green, which I'll highlight throughout this article, Hebba Youssef, Chief People Officer at Workweek, shares about this:

“Your employees want to feel like they have a say. I've been saying to a lot of HR people: "Why don't you bring employees to the demo?" Why don't you say, "Okay, I've already demoed this product, I've asked all my HR requirements, let's bring the employees in and make them feel like they have a voice", because I think that's ultimately why so much HR tech adoption fails, is you never ask the employees what they want.” – Hebba Youssef, Chief People Officer at Workweek

And failing, those implementations do, as the Bersin research shows. 

So, pay particular attention to taking the time to define your needs before you shop around for solutions. 

Creating a Comprehensive Requirements List

Now that you generally know what you want, create a detailed requirements list for your new HR software.

This list helps you ask the right questions to your potential vendors and assess them in an equal, democratic way.

When you write your requirements, do so with all key stakeholders in mind, recommends Hebba:

“I write my requirements for three groups. I say, as a manager, I need to be able to do X, Y, and Z; as an employee, I need to be able to do X, Y, and Z; and as an executive, I need to be able to see my skip level, just drill down into my department. I'm always thinking about those different personas because what everybody wants out of the system is different, and what everybody needs is also different.” – Hebba Youssef, Chief People Officer at Workweek

Key Features 

Creating a list of essential features is also crucial, with a focus on user-friendliness for your employees and HR, IT, and Operation teams.

What do you want from this platform? How about the other key stakeholders in the organization want and need? 

A few common requirements beyond specific features include:

1. Top-of-the-line security to protect sensitive HR data
2. Automation of time-consuming tasks like scheduling and time management
3. Integration with existing HR systems for efficient data management 
4. An employee self-service portal for accessing documents and managing requests
5. Robust compatibility with existing systems

More specifically, you can divide your requirements into two categories:

Essential HRIS Modules

These are the must-have, non-negotiable elements your new HR software should have.

Features that companies typically include here are employee administration, applicant tracking and recruiting, employee onboarding, and document management. 

What's essential to you may be different from others. 

For example, if you’re practicing remote work, you’ll want a system with integrated EOR and contractor management capabilities. 

Desirable Features

Besides the must-have, you will also have desired or ‘nice to have’ features.

Frequently mentioned features in this category are performance management, benefits and compensation, time and attendance, learning and development, employee engagement, employee surveys, and payroll management.

These features enrich the HR software, offering a more holistic solution, but may not be critical to your chosen platform. 

This decision also partially involves choosing an HR suite or a core platform that integrates with specialist tools, but more on that later. 

Technical Aspects

When selecting an HR system, it is important to consider technical and usability aspects. 

On the technical side, you should focus on employee information and financial/payroll management, benefits management, compliance, recruiting and onboarding features, and data security.

Cloud-based solutions are recommended for their flexibility and scalability, but they come with an ongoing cost. Keep an eye on initiatives like ONCE from Basecamp-maker 37 Signals, which aims to end the ever-expanding SaaS bills many companies grapple with.

User Experience

For the user experience, the software should be easy for HR personnel and employees, integrate seamlessly with existing systems, and automate time-consuming tasks such as scheduling and time management. 

By meticulously following these steps, you can create a comprehensive requirements list that addresses current needs and positions your organization to leverage HR AI tools and efficiently adapt to future workplace trends.

Employee enjoyment should be one of your key priorities for this new platform. As employees interact frequently with this software, it will reflect on your company and become part of the employee value proposition.

As Hebba Youssef shares in the interview with David Green:

"The thing about your HR tech stack is thinking, "What will excite my employees, a tool they want to use?" Because if you're always forcing them, you're never going to see real adoption. Many tools were built with the HR person's experience in mind, never with, "How are the employees interacting with this?" – Hebba Youssef, Chief People Officer at Workweek

This is why Hebba prepares detailed user stories and takes those with her in vendor discussions:

“I am the most annoying person on a demo because I'll say, "Can you click that?  Can you do that?  Can it do this?  Show me the data:" I usually come with 10 to 15 system requirements that have already been written across potentially three different users.” – Hebba Youssef, Chief People Officer at Workweek

Choosing Between HR Suites vs. Standalone Tools

When deciding between HR Suites and Standalone HR Tools, it is crucial to weigh each option's specific benefits and considerations. 

Here's a breakdown to guide you through the key aspects of each choice:

HR Suites (e.g., HRIS, HRMS, HCM)

HRIS (Human Resource Information Systems), HCM (Human Capital Management) platforms like Workday, and HRMS systems (Human Resource Management Systems), are comprehensive software solutions designed to manage and streamline an organization's human resources and related processes. 

As highlighted in this list of HR Software and my article on h https://www.flexos.work/learn/how-to-choose-hr-softwarewhat is HR software, these systems differ in the amount of tools they offer, but all integrate various HR functions into a centralized system.

This could include recruitment, onboarding, payroll, performance management, and employee data management. This integration optimizes HR operations and supports strategic decision-making by providing insightful analytics on workforce dynamics.

While each system may have its nuances, they collectively aim to enhance the efficiency of HR departments, thereby contributing to the overall success of an organization.

Advantages:

• Centralized data and processes, offering a unified platform for all HR functions.
• Streamlined compliance and automation of payroll and benefits administration.
• Single login access reduces complexity and enhances security.

‍Considerations:

• They may offer more generalized functions, potentially lacking in specialized features.
• Implementation involves a single, large-scale project, which can be beneficial for consistency and cost but may require significant upfront investment and effort.

Standalone HR Tools (e.g., Recruitment Software, Performance Management Systems)

Standalone HR Tools, also called “Best of Breed,” such as Recruitment Software, Performance Management Tools, and Employee Engagement Survey Providers, are specialized applications designed to address specific areas of human resources management. 

Unlike comprehensive HR Suites, these tools offer deep functionality in their respective domains. 

They allow organizations to adopt flexible, need-based solutions integrated with other HR technologies to create a tailored HR ecosystem.

Advantages:

• Tailored solutions that address specific HR functions with advanced or sophisticated features.
• Flexibility to integrate various tools through APIs, allowing customization based on unique needs.
• Easier maintenance and upgrades, focusing on specific HR areas.

Considerations:

• Requires coordination across different platforms and vendors, complicating support and integration.
• This may lead to data silos if not properly integrated, affecting consistency and efficiency.

Decision Factors to Consider

When choosing the right solution for your organization, consider the following factors to ensure alignment with your HR strategy and operational needs:

1. Implementation and Integration: Assess the ease of deployment and how well the solution integrates with existing systems.
2. Features and Functionality: Determine the essential features required to meet your HR objectives and whether a suite or standalone tools better provide these functionalities.
3. User Training and Experience: Consider the learning curve and user experience for HR staff and employees, ensuring the solution is accessible and user-friendly.
4. Data Security and Management: Evaluate the security measures and data management capabilities, especially considering the sensitivity of HR data.
5. Vendor Relationship and Support: Understand the level of support and partnership the vendor offers, including training, maintenance, and customer service.

By carefully considering these aspects, you can decide whether an HR Suite or Standalone HR Tools better suit your organization's needs, ensuring a future-proof and efficient HR management system.

A good starting point is the data that you’re hoping to capture. 

Anthony Onesto, the Chief People Officer at AI consumer research platform Suzy, said in our interview that emphasizing people analytics is key in your process of choosing the right HR software:

“Think from the data perspective backward. In this day and age, you have to be analytics-focused. And the best scenario is to have all data in one place. Unless you're really sophisticated in terms of business intelligence, have a warehouse and a bunch of analysts, it's hard to get all that data into one place.” – Anthony Onesto, Chief People Officer, Suzy

Why More CHROs are choosing HR Suites

Starting with the ‘end in mind,’ the data you hope to collect and leverage to deliver on your HR or Operations KPIs, may sway you to opt for an HR Suite. 

And that’s not the only reason. 

Another vote in favor is from Hebba, who shared that after joining her company, she decided on implementing an HR suite rather than various best-in-breed solutions:

“I have one system right now, and I'm going to be very cautious before I implement anything else. There are things I want to do that that system doesn't do, and I've had to decide not to do them for the time being. I've weighed the pros and cons quite heavily, because I don't want to introduce mayhem and chaos that will never scale properly for just this tiny little thing I want.” Hebba Youssef, Chief People Officer at Workweek

Hebba also mentioned that the market is moving towards a centralized platform approach. She mentions that both Rippling and Lattice are building a broader set of capabilities versus where they started, for example, with Lattice launching an HRIS. 

Another example is Deel, which launched as an EOR but has since launched an HRIS and bought a payroll solution and an employee experience platform (Zavvy). Hebba shares that this trend is likely because these platforms “have heard from HR people how awful it is to work across 10, 15 systems.”

Q Hamirani, Chief People Officer at EdTech Unicorn Paper, told me in an upcoming interview similarly told me how he’s approached the HR tech decision and the importance of centralized platforms:  

“We're fragmenting the employee experience, and employees don't know where to go. And if they go somewhere, they can't find it. Unifying communication mediums and service delivery is in the best interest of people leaders to push and fight for. At the end of the day, that is how the culture will be built, with how people feel, how people can get information, and how they can interact with each other.” – Q Hamirani, Chief People Officer, Paper

He also adds that this is even more important for companies practicing remote work:

“Obviously, we live in a world today where remote work is significantly higher than it was pre-pandemic, even if not everyone has adopted it. That makes it that much more important to focus.” – Q Hamirani, Chief People Officer, Paper

The Importance of AI in HR Software

AI technologies have revolutionized Human Resources operations, delivering efficiencies and insights we could have only dreamed of a few years ago. 

Here's how AI significantly impacts HR, including several platforms listed in our Top 40 AI for HR tools:

Recruiting

One of the most impactful areas for AI in HR is recruiting. 

AI recruiting allows talent acquisition teams to spend more time with candidates and less on paperwork.

The various AI Recruiting Software that have emerged over the past years is incredible:

• AI-powered screening tools like Skillate swiftly analyze resumes, shortlist candidates that align with job requirements in seconds, and streamline the recruitment process.
• AIs like Paradox make scheduling interviews and communicating with candidates more efficient, reducing time spent on administrative tasks.

• Platforms like Sapia, Paradox, and Interviewer.AI even take over the first round of interviews, allowing businesses to offload massive amounts of work to AI.
• Unconscious biases in recruiting are minimized as AI analyzes resumes based on skills and experience without considering demographic information, ensuring a fair and bias-free hiring process.

Training and Development

• Customized training is at the forefront, with AI-powered platforms like Sana offering personalized content based on an employee's learning style, skill level, and role requirements. This allows people to receive personalized training in the flow of their work, rather than periodically and standardized. 

• Platforms like Glider use AI to simulate realistic scenarios for job-specific tasks, offering a safe space for practice and skill enhancement. 
• The adaptability of AI in training programs ensures content remains relevant and engaging for the employee, tracking progress and adjusting training content accordingly.

Employee Engagement and Support:

• AI-powered chatbots like Leena offer 24/7 support, answering queries and resolving issues, which leads to a positive employee experience and increased engagement.
• AI algorithms analyze employee data, identifying strengths, areas for improvement, and learning styles, facilitating personalized development plans.
• Predictive analytics help foresee and manage potential issues, aiding HR professionals in taking proactive steps to retain employees and maintain a positive work environment.

In short, AI's role in HR software extends beyond operational efficiency; it transforms decision-making processes, enhances employee engagement, and paves the way for a more inclusive and equitable workplace. 

By leveraging AI software, HR teams can work more efficiently, maximize their time, and take talent management strategies to new heights, ensuring a future-proof and thriving work environment.

Evaluating and Testing HR Software

Evaluating and testing HR software is critical in ensuring that the chosen solution meets your organization's needs and can adapt to future requirements. 

This process can be broken down into three main phases, each involving specific teams and methodologies:

Phase 1: Initial Testing with Core Team

The first phase of HR software testing involves preparing a 12-week timeline and assembling three teams: a Core Team to test critical functionalities, an Extended Team for wider operational insights, and a Demo Team to showcase the software to stakeholders:

1. Prepare a Timeline: Implementing new HR software or making significant changes should be planned over approximately 12 weeks to ensure thorough testing and analysis.
2. Assemble Teams:
   Core Team: These primary users will test the software's usability and functionality. This team should consist of HR professionals familiar with daily operations and requirements.
   Extended Team: A broader group of users who can provide additional insights into the software’s practicality across different departments.
   Demo Team: A select group demonstrating the software’s capabilities to stakeholders and addressing concerns.‍
3. Core Team Testing: This team tests the new HR software, focusing on essential features such as hiring, performance reviews, payroll processing, and more. They should import real data for an authentic testing experience, evaluate design and user experience, and even attempt to identify limitations by pushing the software to its limits.

Phase 2: Feedback Collection and Analysis

The second phase involves collecting feedback via multiple channels and analyzing it with methods like sentiment analysis and frameworks like NPS to evaluate software performance and user satisfaction.

1. Feedback Mechanisms: Utilize online survey tools, feedback forms, chatbots, dashboards, and reports to collect and manage feedback from all team members involved in the testing process.
2. Analysis: Conduct qualitative and quantitative analyses, including sentiment analysis, thematic analysis, data visualization, and statistical analysis. This could involve frameworks and models such as Net Promoter Score (NPS), System Usability Scale (SUS), User Experience Questionnaire (UEQ), and Technology Acceptance Model (TAM) to evaluate the software's performance and user satisfaction thoroughly.

Phase 3: Implementation and Continuous Improvement

The third phase encompasses presenting findings to stakeholders, executing improvements based on identified gaps, and continuously monitoring and evaluating the impact, fostering a culture of ongoing enhancement and refinement.

1. Present Findings: Share the findings and recommendations with stakeholders using clear and concise language, compelling visuals, and relevant examples.Highlight the software’s strengths and weaknesses, identify gaps and opportunities, and propose actionable solutions.
2. Execute Improvements: Plan and execute actions to address identified issues. This involves collaboration with stakeholders such as the IT team, vendors, and users to ensure practical and effective solutions.
3. Monitor and Evaluate: Monitor the implemented solutions to track their impact and effectiveness, solicit stakeholder feedback to refine goals, criteria, KPIs, and results and adopt a culture of continuous improvement, reflecting on the evaluation process to identify areas of strength and weakness for future enhancements.

By methodically following these phases, you ensure their HR software meets current needs and is scalable and adaptable, positioning them for future success in a rapidly evolving workplace.

As your business evolves and the world of work changes, continuous listening is especially key for employee-centric organizations.

The Bottom Line: How to Choose HR Software

Choosing the right HR software is crucial in a technology-driven HR landscape, as highlighted by Gartner and insights from industry experts like Anthony Onesto, Hebba Youssef, and Q Hamirani. 

With AI's growing role, identifying your organization's needs—including current inefficiencies and future requirements—is key to selecting effective and scalable software for future demands.

The process involves creating a detailed requirements list, emphasizing user-friendliness, and engaging employees in the selection process to ensure the software meets the varied needs of all stakeholders. 

This approach addresses immediate operational needs and aligns with long-term organizational growth and culture.

The selection, evaluation, and implementation process must be strategic, focusing on collecting feedback, conducting thorough analyses, and fostering continuous improvement. 

This ensures the chosen HR software remains aligned with evolving workplace dynamics, supporting a more efficient and responsive HR function.

Frequently Asked Questions

1. Why is choosing the right HR software important for executives?

Selecting Human Resources software is crucial for aligning HR operations with business strategies, enhancing workforce management, and improving decision-making through data-driven insights.

2. What role does AI play in modern HR software?

AI enhances your internal HR system software by automating routine tasks, providing analytics for better decision-making, and improving the overall employee experience through personalized interactions and insights.

3. How can I ensure the HR software system fits our organizational needs?

Start by evaluating current processes and identifying inefficiencies. Engage stakeholders across the organization to gather diverse needs and forecast future requirements to ensure the HR software features you need are available, scalable and adaptable. Buy HR software that you feel confident will serve your organization – now and in the future.

4. What's the significance of employee involvement in selecting HR software?

Involving employees ensures the selected software meets their needs and preferences, fostering higher adoption rates and satisfaction. This ultimately impacts the organization's productivity and culture positively, as the right software will get used daily. Choosing HR software should be done by all stakeholders, especially employees.

5. How should we approach the evaluation and testing of HR software?

Implement a structured testing phase involving core teams for functionality testing, extended teams for broader insights, and demo teams for stakeholder demonstrations. Make sure you are clear on your HR system requirements. Ask software vendors to give you consistent data so that you can more easily compare and decide. An HR software sales rep may otherwise confuse you.

6. What are the key considerations when deciding between HR suites and standalone tools?

Choosing HR software is a long and often painful process. Consider your organization's specific needs, the ease of integration with existing systems, user experience, data security, and the level of support and partnership offered by the HR software provider.

7. How do we manage the implementation process effectively?

Plan a phased approach, starting with a detailed timeline and task list, ensure clear communication and training for users, and establish mechanisms for ongoing support and feedback to facilitate smooth adoption and continuous improvement. Additionally, make sure that you have budget and an agreement for the post-sales  support from your HR software provider.

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