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This article is part of our Buyer's Guide: A complete guide to buying human capital management software

How to choose the best HR software for your company

Human resource management tools vary greatly, serving companies of all shapes and sizes. The best HR software for any company is very specific to the company's needs and potential.

Successful companies are fluid things, flexing and shifting as needs and markets change. Human capital management software vendors know this, and most offer modular products, complete with core HR tools, as well as recruiting, talent management systems and employee engagement tools. The high level of modularization enables companies to pick and choose to assemble the best HR software for their needs. The flexibility is great, but it also places the onus upon companies to determine how well a given HR toolset meets requirements.

Here we examine six of the leading HR tools from Oracle, Workday, SAP, Cornerstone OnDemand, ADP and Ultimate Software, and offer guidelines to help determine which products are best.

Core HR tools

Most vendors offer core human resource management tools such as payroll, benefits and time and attendance. Companies with specialized needs, such as compliance monitoring or a global payroll option, should consider Ultimate Software UltiPro, ADP, SAP SuccessFactors, Workday and Oracle HCM. These products offer global payroll software that supports the workforce and compliance requirements of employees in countries outside of the U.S.

Talent management systems

Small- to medium-sized businesses looking to add talent management software have several options.

The best deployment option is usually software as a service (SaaS). Cornerstone and Workday excel in this area. These vendors run the software and provide expertise to help implement and run a talent management system. This also puts less of a burden on company IT, as the vendor assumes much of day-to-day maintenance.

Companies looking to start small, and add one software module at a time as they grow, should consider ADP. It has a long history of working with very small companies as both a software and an HR outsourcing provider. Cornerstone OnDemand, SAP SuccessFactors and Oracle HCM also provide the flexibility of starting with a small subset of software modules, with the option to add other modules as the company expands.

If the HR goal is training and internal employee development, Cornerstone OnDemand, Oracle HCM, Workday, ADP and SAP SuccessFactors all offer end-to-end talent management that begins with recruiting and extends into the entire employee development,  performance management and succession planning processes.

Software compatibility and integration with existing systems are major concerns, especially for large enterprises with substantial custom code and business processes built around it. The easiest way to avoid problems with new software is to first check with the existing system vendor on potential compatibility issues.

Companies with an on-premises legacy system should consider moving to a cloud-based offering for their desired HR functionality. Often, companies can integrate new software with existing on-premises system through a standard API that links the on-premises human resource management tools with software in the cloud. Both SAP and Oracle traditionally offered on-premises HR systems, but now they also offer systems in the cloud.

The move to pay for performance

For companies looking to administer a variable compensation system (pay for performance), the best choice is usually a variable compensation module from a SaaS HCM vendor, such as Cornerstone OnDemand or SAP SuccessFactors. It's the most straightforward approach from an economic standpoint.

The complicating factor in doing this is that the new compensation software module must also work with the company's existing HR software. Specifically, it must work with existing HR subsystems such as performance management, which contains employee performance data. This is vital to identifying and rewarding top performers who are deserving of better bonuses and higher salary increases.

Integrating a stand-alone SaaS compensation module with a company's existing systems can require extra development time. Developers must build custom interfaces so the new and existing software can readily pass data to each other.

Beware if the existing HR software vendor and the variable compensation module vendor differ. They may not have a cooperative agreement for integrating the two products. In this case, a lack of vendor cooperation could cause the integration project to stall. The noncooperative vendor that perceives it could lose business could give the integration project low priority.

Bottom line: It's worth investigating for the best HR software that fits this specific need. Integrating a stand-alone variable compensation module with existing human resource management tools makes economic sense, since the company needs to only purchase or subscribe to a single module of software that covers variable compensation.

If the integration for a stand-alone variable compensation module proves to be too risky, it might be time to consider moving to another HR software suite that more closely aligns with future HR needs. A cloud-based and end-to-end HCM suite is a good bet. Both Workday and Ultimate Software provide cloud-based HR software that includes a feature-rich compensation module. These modules enable companies to selectively design appropriate pay-for-performance metrics and rewards systems for different areas of the company, all based on work objectives.

Maximizing mobile workforce potential

With employees out in the field and seldom in the office, there's high risk for missed communications and project delays. Here, an employee engagement system is vital, not just for connecting employees with headquarters and each other, but also for online training and employee self-service, with access to HR benefits elections and HR information 24/7.

The best HR software vendors offer more than just mobile apps and employee engagement. Accessibility and ease of use from an employee perspective is paramount, since these apps will likely be used in the field. Also, mobile security (and compatibility with IT security governances and security standards) is important. The best HR software here should support popular and personal mobile devices. Minimally, this means support of iOS, Android, Chrome OS, MacOS and Windows. The tool should also be able to work with popular browsers such as Google Chrome, Mozilla Firefox, Apple Safari and Microsoft Edge.

Finally, most social engagement software comes with standard APIs that enable it to pass and receive data from existing HR systems -- and a majority of HCM vendors now offer active engagement tools for employees across the company. These tools also feature real-time learning and knowledge sharing on the go. For example, Cornerstone OnDemand features video learning on any mobile device.

Employee lifestyle and work needs

Today's employees value work, but they also want opportunities to make a difference. An emerging area in the best HR software is employee work-life products that can assess an employee's interests and skills and match them to corporate volunteer initiatives and projects. Oracle HCM, for example, addresses this with its My Volunteering module.

Running a bare-bones payroll system

For small companies with limited IT staff that want to keep administrative HR work to a minimum, SaaS payroll software and outsourcing might work best. One of the most widely used HR outsourcing providers is ADP. In addition to administering payroll, it offers a service-level agreement (SLA) that guarantees rapid response on issues (and software) resolution, a dedicated account representative, additional HR on-staff expertise that can be consulted with on an as-needed basis for HR issues, and a minimum of at least quarterly meetings between the vendor and the company on payroll and HR status and issues. ADP also offers a full suite of HR software, which growing companies can expand into.

Handling HR for corporate acquisitions

For companies expanding through corporate acquisitions, it's imperative to get IT and HR requirements for the newly acquired entity onto systems as quickly as possible. This is difficult with highly customized, internal HR tools, integrated through custom-coded interfaces with other internal systems such as ERP. The task is further complicated when each newly acquired company is running an HR system from a different HR software vendor.

In this case, look to the cloud as a bridge between the two organizations. It's often the best approach for companies with different HR systems. With a SaaS HCM system, the enterprise can more quickly onboard its acquired companies (and their employees). The new employees can get quick access to the HR system the enterprise uses internally.

Over time, the enterprise can decide to what extent to merge the HR data and systems of the formerly separate entities.

In some cases, the decision may even be to ultimately migrate the entire enterprise to SaaS HR. Large enterprises often have on-premises HR software from SAP or Oracle. Both vendors also offer newer SaaS options (SuccessFactors and Oracle HCM) and offer tools and services to help with the data-migration and integration issues that often arise when moving from the vendors' on-premises products.

Finding the best HR software for your company

There are more flavors and delivery models for HR software than ever before. This means companies can find the right fit for their needs, but only if they have a clear understanding of their HR business cases, and what they want to achieve now and in the future.

Vendors know this, and will provide demos to dazzle prospective clients with features that will help the company grow and flourish. But it's important through the sales process that companies remember they are in the driver's seat, and they ultimately make the HR software buying decision.

Next Steps

Know which questions to ask before implementing human resource management software

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This was last published in March 2018

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Which human resource management tools best fit your company's needs?
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Which HR tools best fit your company's needs?
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Based on my experience, it is better to opt for a SaaS based solution, where maintenance charges and efforts are minimal and these are hassle free to handle. We use SutiHR software which is a cloud based HCM solution.
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