12 Best HR Software for Small Businesses 2020

By Daniel Lewis
Advertiser disclosure

The best businesses are founded on a strong human resource (HR) department so that new hires and executives can be first found, and then looked after. Modern companies (such as Google and Apple) understand that the best companies are built with happy employees.

But even small businesses can benefit from a human resource platform, given there are subscription packages to cater to all preferences. The following are the best HR software platforms that we found after extensive testing and analysis. Keep in mind that there are many similarities between HR and payroll, and they kind of run alongside one another.

HR is not reserved for large corporations but has universal applicability. In fact, Aberdeen research states that businesses with a formal engagement strategy in place are 67% more likely to improve their revenue on a year-over-year basis, and only 35% of employees indicate they are actively engaged at work. This is where HR software comes into play. 

Short on Time? Top 4 HR Software at a Glance

#1 – Gusto (Free trial): Fantastic HR benefits package and a well-known provider in the payroll and HR space.

#2 – BambooHR (Free trial): Ideal for medium-sized international businesses that work with many contractors. The HR system with happy employees at its core.

#3 – Zoho People (Free trial): An extremely granular application that delivers fantastic value for money with an intuitive and fun design. Easy integration with the Zoho suite of products.

#4 – GoCo: Excellent HR services where you customize exactly what you need. Excellent value for money and amazing customer service.

Vendor Basic Service Package Cost Best For Summary
Gusto
(Website)
$149 +$12 per employee Default small to large business owners looking for an efficient and functional service. A well-known payroll and HR provider that will provide all the functionality you could want.
BambooHR
(Website)
Call for quote Medium-sized businesses with moderate requirements A pure HR service that is perfect for businesses that work with employees in different jurisdictions.
Zoho People
(Website)
$0.83 per user($8 per user for Zoho People plus) Managers looking for granular and specific applications. A very specific package that might need to be connected to other Zoho products.
GoCo Customer quote + $5 per user Business with existing payroll and benefits A friendly business with excellent customer service that makes onboarding a dream.

#1 – Gusto

gustoGusto is most popular as a payroll provider and is something of a leader in that market. So it is no surprise that Gusto has also started to offer some ancillary services such as HR software and accountancy, given how such services often go hand in hand.

Because Gusto has such knowledge of payroll and accounting, it makes it a lot more streamlined for small business owners who already do business with them for their exceptional payroll services. They are known for their intuitive design interface and competitive rates.

They are a fantastic and well-rounded provider. They are not quite the cheapest HR platform, being more middle of the road. But for the value on offer, they could deliver more than any other. Sometimes, it can be hard to judge which provider is truly the most competitive, as they offer different services for different rates, and also cater to different markets.

Gusto makes it easy for small businesses to remain compliant with very complex legal laws across a variety of different jurisdictions. It is the most up to date software in terms of compliance. If you think that all HR and payroll platforms are automatically compliant with all state laws, then you would be completely wrong. Many providers can take some time to update their systems, and states can change their requirements all the time.

So with Gusto, you are getting an HR platform that is easy to use and very functional. It is the most automated solution in the sense that you don’t have to worry about anything. The ease of use is not sacrificed for functionality in any sense whatsoever. It is quick to configure and setup, so if you are looking for effortless automation, look no further.

Gusto is known for providing an excellent HR platform as well as its payroll processing. When it comes to HR, what most people want to hear about is the benefits on offer. With Gusto, this happens to be quite a comprehensive package, including:

  •  Benefits Administration Outsourcing
  •  COBRA Administration
  •  Deduction Management
  •  Disability Insurance Administration
  •  Employee Benefits Administration
  •  FMLA Administration
  •  HIPAA Compliant
  •  HSA/FSA Administration
  •  Health Insurance Administration
  •  Life Insurance Administration
  •  Online Benefits Enrollment
  •  Retirement Plan Management

Most HR platforms do not provide such an extensive list of benefits. It is rare to find a provider that caters to FMLA and HIPAA. The HR software itself allows for payroll management, employee self-service, time and attendance management, time-off management, an employee database, onboarding, and employee profiles. The full payroll subscription has a huge range of payroll features with 401(k) management check printing, tax compliance, wage garnishment, and much more. Both the benefits package with the HR subscription and the sophisticated payroll features will make for happy employees and an efficient business model.

Gusto HR is really an extension of its Gusto payroll subscription packages. The full-service payroll costs $39 a month and $6 per additional employee. The ‘Complete’ package costs $39 a month with $12 per additional employee, with more advanced time management tools, employee surveys, employee offers, PTO policies, next day direct deposit, customized employee onboarding forms, and document management.

And then we come to the real HR package, which is far more expensive at $149 a month but still only $12 per additional employee. The main difference is that you have a dedicated HR resource center. With this package, you are essentially outsourcing your HR administrative duties. Note that all of the Gusto packages offer workers compensation administration, even the $19 a month basic plan. All packages also offer direct deposit and employee self onboarding. Payroll autopilot and health insurance administration start at the $39 a month package.

Gusto also integrates with most of the high-quality accounting, legal, HR, and payroll providers. Notable mentions include QuickBooks, Bamboo HR, Xero, and Boomr.

Features

  • Full-service payroll across all 50 states
  • Employee self-service and profiles
  • Workers’ comp administration
  • Next-day direct deposit
  • PTO policies and time-off requests
  • Dedicated best-in-class support
  • Customizable employee onboarding tools
  • Accounting and time tracking integrations
  • Payroll on Autopilot
  • Health insurance administration
  • Employee access to Gusto Wallet
  • Employee offers and document management
  • Permissions
  • Employee directory and surveys
  • Time management tools
  • Certified HR pros
  • HR resource center

Price: $149 a month for the dedicated HR resource center.

Why We Recommend
Ticks all the boxes. Super intuitive platform. Moderately priced. Excellent features. Brilliant feedback for many clients. Established platform.
Best for…
Businesses that want to get their benefits streamlined and that want to optimize their HR processes. 
Pros
  • Superb benefits administration
  • Excellent user interface
  • Easy to use and configure
  • Lots of integrations
  • Well established vendor in the payroll space
Cons
  • Poor customer service reviews on some sites.
  • Only supports one language (English)
  • Expensive.

#2 – BambooHR

bamboohrBambooHR is an excellent choice for medium-sized businesses in particular. It offers simplicity and all that you would expect from an HR platform. However, it is not quite as customizable as many business owners would like. For businesses that have a lot of HR processes that they want to automate, however, it would definitely deliver value for money. It can assist in employee self-onboarding and free up your HR professional to work on more advanced recruitment strategies and employee maintenance.

A primary difference between BambooHR and Gusto is that Gusto offers payroll services with HR as an add on. In contrast, BambooHR offers HR with payroll processing as an add-on. Naturally, BambooHR tends to have some features and advantages that Gusto does not.

One of these advantages is that BambooHR is great for performance reviews and user feedback. It is more of a holistic HR model aimed at optimizing employee performance as opposed to simply automating tasks (though it certainly does this more than adequately). It operates as a comprehensive resource for the entire company. It is also very easy to use, not requiring any formal information.

If a business works from a centralized office, then there are superior options. But if the business is spread out across the globe with many different offices in different legal jurisdictions, BambooHR can really serve to bridge the gap and make sure that all parties, departments, and employees are on the same page. It is a very organized and integrated platform. If you are a business owner looking for a no-nonsense and affordable HR solution, then this really is for you.

If you are looking for a more specialized kind of software for customizable and granular options, then there are other avenues to take. For instance, permissions need more levels on the BambooHR interface. Some of them do not allow all the things you need people to see while restricting other items. You can’t see vacation time allowed without seeing Payroll and salary dollars, which is kind of a needless annoyance.

A huge criticism of BambooHR is the mobile application, which really does not work as well as it should. We tested the application and it did not function properly on either IOS or Android. We were randomly logged out while browsing through the application and the views were not displaying properly.

In addition, the reporting function is cumbersome and doesn’t allow for much flexibility in terms of role permissions. The file viewer window is pretty small, much easier to download the file for offline viewing.

BambooHR integrates with SalesForce and other applications such as Workable, Lessonly, and Humanity. When you deactivate an employee with BambooHR, then all of these associated accounts will also be deactivated. The bottom line of BambooHR is that it really excels for medium-sized businesses due to its simplicity and ease of use across jurisdictions. It lacks more specialized functionality that corporate outfits might view as mandatory.

For businesses with between 40 – 120 employees, BambooHR is a great choice. It can really make multinational employees feel closer to one another, so it can be especially useful for nimble startups that are expanding their workforce with a diverse range of contractors that need to be brought together.

Employees love this software as it is so easy to use. The BambooHR mantra is “HR Software with Heart”, and it really shows. This is why so many novel multinational businesses are gravitating towards this HR platform, with its employee and culture-building focus. It is designed to be fun and friendly. It is a beautiful software to use.

BambooHR also has a reporting functionality that can create and share reports in a short amount of time. The Report Library allows users to select pre-built reports as well as creating custom-built reports for sharing. Because creating reports only takes a few clicks, it saves hours of time for HR. The reports can be exported to Excel and PDF.

For recruiters, there’s an applicant tracking system (ATS) that’s integrated with existing BambooHR software. Recruiters can access candidates’ resumes and LinkedIn profiles, as well as post jobs and share candidates’ applications with hiring executives. High-quality applicant tracking is hard to find, but BambooHR does a decent job.

Bamboo HR has two packages, but you do need to contact them for a quote on either one. The two packages are ‘Essentials’ and ‘Advantage’. Both packages contain all of the essential elements associated with HR management, including:

  • Employee records
  • Benefit tracking
  • Standard reporting
  • Document storage
  • Standard access levels
  • Standard email alerts
  • Standard workflows
  • Employee self-service
  • Customer support

The Advantage package is the one that contains hiring/onboarding (applicant tracking, onboarding, offboarding, training, electronic signatures) and advanced components (reporting, tailored workflows, custom access levels, custom emails, audit trails, branding, etc). It also contains employee satisfaction monitoring, BambooHR marketplace, and BambooHR Open API.

Features

  • Audit trails
  • Employee records
  • Benefit tracking
  • Standard reporting
  • Document storage
  • Standard access levels
  • Standard email alerts
  • Standard workflows
  • Employee self-service
  • Employee onboarding
  • Employee offboarding
  • Customer support
  • Applicant tracking
  • Performance management
  • Absence management
  • Smart reminders
  • HRIS software
  • Bonus management
  • Report generation
  • Electronic signatures

Price: Need to call them for a quote.

Why We Recommend
Very organized and easy to use, it offers collaborative HR functionality to integrate disparate teams, offices, and departments. A beautiful and fun platform to use.
Best for…
Medium-sized businesses, especially those that hire workers across different municipalities, could really benefit from BambooHR.
Pros
  • The most attractive and user-friendly platform we reviewed
  • Excellent employee onboarding
  • Simple user-friendly platform
  • Updated state law resources are very useful
Cons
  • Really lacks in the payroll processing department
  • Lacks granular customization options
  • Off-boarding not as easy as onboarding

#3 – Zoho People

Zoho PeopleZoho People is without a doubt one of the most affordable entries on this list. And if you are familiar with the Zoho suite of products, you will be aware that all of them are very nearly designed and easy to use from a centralized dashboard. Zoho makes administration so very easy for managers and professionals, as well as business owners of various kinds. 

At $0.83 cents per user, it’s fair to say that Zoho People is cost-effective! But you have to understand how Zoho works first. Zoho makes singular applications for specific purposes. There is a Zoho product for any business purpose you can think of. The 12 major Zoho products include:

  1. Zoho People
  2. Zoho Books
  3. Zoho Inventory
  4. Zoho CRM
  5. Zoho Sites
  6. Zoho Projects
  7. Zoho Desk
  8. Zoho Social
  9. Zoho SalesIQ
  10. Zoho Expense
  11. Zoho Recruit
  12. Zoho One

There are actually many more, and the beauty is that you can select the purposes that you need, and manage your entire business using the Zoho suite. This obviously has a major appeal to many business owners, especially since the administration dashboard offer by Zoho is unparalleled. It makes everything so easy with the obvious interoperability between all of the applications. And if you feel you no longer need a particular function, you can simply remove it and continue with the rest.

But all of this is pointless if the core product cannot do what you want it to do. In terms of HR, employee records need to be accurately maintained and taxes need to be correctly reported. User experience and interoperability are pointless if the functionality is not there. Thankfully, Zoho People does not disappoint in this category either.

There are 5 Zoho People packages – ‘Free’, ‘Essential HR’($1 per user per month), ‘Professional’($2 per user per month), ‘Premium’($3 per user per month), and ‘Enterprise’($5 per user per month). Time off management, document storage, office readiness, and an employee database is available for all packages. Automation and Employee onboarding are available for the Essential HR package and above. Timesheets and Attendance tracking are available at the Professional package and above. Performance Management is available at the Premium package and above. Learning Management and Query Management are only available at the Enterprise Level Package. Zoho even offers specific onboarding plans to help directly with this area, outside of its subscription packages.

So, Zoho People is incredibly intuitive and amazingly granular in the sense that there is a customizable package to suit every kind of business, from micro to macro. Are there any drawbacks?

Well, sometimes it can be a little difficult to analyze what kind of service is on offer with Zoho. From one perspective, you could almost say they are too granular. Everything is separated out. They have Zoho Recruit for finding the right candidates, Zoho Payroll for payment processing, Zoho Expense for expense tracking, Zoho Connect for internal connections, Zoho Sign for document signatures, and on and on and on. With other providers, you sign up for one system that takes care of all of these disparate components. With Zoho, you sign up for a product for each component. This is both a strength and a weakness. You can identify exactly what you want and use Zoho to resolve that particular problem.

But you can spend a lot of time reading about many of the overlapping Zoho products and finding the correct one. The problem can be compounded when you account for the fact that products such as Zoho People Plus and Zoho One integrate multiple different components, which can get confusing.

To nail it down, the most comprehensive Zoho package would be Zoho People Plus, which consists of Zoho People (the core HR component), Zoho Recruit (for applicant tracking), Zoho Payroll (for payroll), Zoho Expense (for expense tracking), Zoho Connect (for internal team collaboration), Zoho Sign (for document signatures), Zoho Vault (password management) and Zoho Cliq (chat messaging). Zoho People Plus costs $10 a month, at $8 if billed annually. The Zoho People Plus might be a little more expensive than other providers, but it certainly offers more features when everything is added up.

Zoho People is a steal given its price and delivers quite a lot of value including time and attendance tracking, employee scheduling, performance appraisal, and learning management. The Zoho People module itself offers a wide range of packages to suit all preferences and should be more than enough to suit typical business owners. Zoho People Plus is a little expensive, but it is worth it if you have need of all of the individual components, especially its recruitment module.

You do need to take the time to get familiar with Zoho People. It is so incredibly granular, with each part broken into a separate component. Even the employee onboarding with Zoho is very compartmentalized. It is not quite the streamlined and automated HR platform that Gusto or BambooHR happens to be. But if you are a business owner who wants extreme functionality and the ability to customize and assess each molecule of your HR process, then Zoho is for you. If you need something more, you can add another application. If you don’t you can remove them.  Whatever you are looking for, Zoho is guaranteed to be able to provide it.

The primary area where Zoho People is not as strong as it should be is time and attendance tracking. It is not as well known in the space as its competitors, but it has a lot to offer. You could even say it offers too much with all of its products and package.

Features

  • Human resource
  • Time and attendance tracking
  • Employe self onboarding
  • Employee learning
  • Document management
  • Employee database
  • Timesheets
  • Performance management
  • Query management
  • Reports
  • Workforce management

Price: The Enterprise Package costs $5 per user per month.

Why We Recommend
Zoho is Zoho. The product works without glitches, support is awesome, and the design is flawless.
Best for…

Zoho People is ideal for businesses looking for an affordable HR solution. Pay as you need, upgrade as you need. An excellent all-rounder.

Pros
  • Easy to set up
  • Intuitive and easy to use
  • A package for every business
Cons
  • Interoperability with some packages is only available at the higher tiers.
  • Time and attendance functionality could be better.

#4 – GoCo

gocoGoCo specializes primarily in Human Resources, though it also offers embedded payroll. It retails at $5 per employee per month. All GoCo plans include Hiring, Onboarding, Employee Self-Service, and MagicDocs. GoCo does not offer fixed subscription tiers. To use the service, you will have to call them for a quote. They build you a custom package depending on what you are looking for. GoCo actually offers 9 modules to businesses, and these modules are:

  1. New hire onboarding
  2. Benefits administration
  3. Payroll
  4. Modern HR
  5. Time tracking
  6. Documents signature
  7. Compliance
  8. HR on-demand support
  9. HR workflows

With GoCo, you have a clear view of the big picture, from headcount, benefit-cost, compensation, and other reports, allowing you to gain better, high-value insight into your organization. The software generates custom reports that show information that you need in the most comprehensible manner.

The software centralizes all information, documents, and benefits in a singular, unified location that you can easily access anytime. Everything is organized for fast and easy navigation. Security is also top notch, as GoCo uses bank-level encryption to protect data from unauthorized access and undesirable parties.

Seamless integrations with other systems simplify data entry. Any changes you made on GoCo is automatically synced to your other business applications, including your payroll software and other business apps like Google Suite.

GoCo’s hiring and onboarding solution give new hires the opportunity to sign offer letters and fill out the important paperwork (such as W4 and I9 forms) before their first day. HR administrators can create customizable onboarding checklists, tasks, and assignments.

The team feedback feature is available to both managers and employees. Employees can add notes about their achievements, room for improvement or general information about their performance. There’s a one-on-one tool where employees can add notes or an agenda of what they want to discuss with their manager at a one-on-one meeting. Employees can opt to mark their one-on-one post private or share it with their manager.

Managers can view their team’s performance at a glance as well as leave a note, praise, or suggestions for improvement with a specific employee. The note can either be marked as private by the manager or shared with the employee for comments.

The keyword with GoCo is flexibility. They do not require their clients to change the way they complete their processes. So if you already have benefits and payroll, then you can simply sync it up with what they have to offer. They have fantastic customer support and are a very friendly organization to work with. The level of customer support is what makes them stand out from other organizations, and they are a favorite among customer review sites. 

If you already have payroll and benefits, then it could make sense to go with GoCo. You will have amazing customer support and a streamlined hiring and onboarding process. GoCo also works well with benefits administration, offering Deduction Management, Disability Insurance Administration, Employee Benefits Administration, HIPAA Compliant, HSA/FSA Administration, Health Insurance Administration, Life Insurance Administration, Online Benefits Enrollment, Provider Management, and Retirement Plan Management. However, they do not offer ACA Reporting or FMLA Administration. It’s also worth noting that GoCo does not offer applicant tracking or recruitment management, which some of the larger businesses might be in the market for.

As far as ease of use goes, GoCo is one of the best. The platform is intuitive and well designed. We did not notice any glitches while we were testing out the software. And this is reflected in many of the social review sites. ‘Software Advice’ rates it 4.5 stars while it is one of the most highly rated resources on ‘G2’, with a rating of 4.8.

They also integrate with Slack, ADP, and Paychecks, and many more applications. Perhaps the most commonly cited benefit with GoCo is that the onboarding is so streamlined through the neat user interface.

So, what are the GoCo downsides? Well, for one thing, the service used to be 100% free, which is where many of the positive reviews came from. Originally founded by former Zenefits staff (mentioned below), they promised not to charge for functionality at a future date, which is exactly what they did. However, it is still very competitive if you only use basic functionality.

Secondly, the functionality is a little limited in some respects. There is no capability to retroactively add current employees. There is no application tracking or recruitment management.

But all things considered, we loved GoCo. They are very clear about what they offer, the platform is intuitive and easy to use, employee onboarding is a dream, customer service is amazing, and they are hyper affordable. There is no one size fits all approach when it comes to HR solutions. But GoCo is as close as you will get.

Features

  • Hiring and onboarding
  • Employee self-service
  • Benefits administration
  • Document signature
  • Payroll
  • Time tracking
  • HR support
  • HR workflows

Price: $5 per user, but must contact GoCo for a custom quote.

Why We Recommend
Just hook it up to your existing infrastructure and away you go. Customer service is top-notch and they take the word ‘streamlined’ to a whole new level.

Best for…
Businesses with an existing payroll and benefits system that want to extend their HR processes and expand to the next level.
Pros
  • Fantastic customer service
  • Excellent onboarding experience
  • Amazing reviews across a large number of sites
  • Seamless integration with existing payroll and benefits
Cons
  • No applicant tracking
  • Limited functionality

8 Other HR Providers

Sage Business Cloud People: Ideal for businesses with more than 200 or so employees. Sage Business Cloud People require about 90 days to get analytics, core HR, payroll, and reporting up and running according to its marketing department. This length of time might put off small to midsize businesses (SMBs) and startups with a smaller team of employees. For larger companies with the need for and time to invest in this level of HR functionality (especially those with a multinational presence), there’s a lot to like about Sage Business Cloud People.

Zenefits: The Zenefits People Platform brings everything HR into one radically simple, single app. The platform is designed to be comprehensive without being overly complex. It puts benefits, payroll, and HR access in the pockets and at the fingertips of employees. Zenefits Services has a great way to include new staff in an employee manual, monetary products, legitimate confirmation of jobs, and much more.

People Spheres: This organization is less well-known than many of its counterparts, and has less online reviews and information. But our team had heard good things from clients and decided to try it out. At $5 a month per user, People Spheres is an affordable and functional HR solution that excels at integrating disparate HR systems into one manageable repository to enhance employee engagement. Essentially, it lets you build your own HR software. It is incredibly cool, to say the least. Choose the modules that you need to customize your own solution. As far as we can tell, there is nothing that really matches this new kind of HR model.

Deputy: While not as robust or functional as Gusto or BambooHR, Deputy still works quite soundly as a decent HR platform. It also has one of the best shift scheduling facilities available. At $2 per user per month, it also happens to be one of the more affordable providers. It also has quite a powerful employee scheduling functionality and a strong mobile application. Unfortunately, it just does not have the resources to be classified as a fully-fledged HR toolkit and is mainly suited for small businesses with minor HR requirements.

BerniePortal: BerniePortal is a powerful and reliable HR platform that lets employees self onboard and also handles benefits very well, much like Gusto HR. It is a fully-fledged HR platform that offers applicant tracking, applicant hiring, onboarding, benefits, payroll, PTO, performance management, time and attendance tracking, and more. Customer service is fantastic. It lacks some cutting edge functionality and the design interface associated with other HR platforms, but still only barely missed the top 4 list. A reliable and solid platform that is really useful for applicant tracking.

Namely: In contrast to practicality every other HR platform, Namely specifically (and openly) targets medium-sized enterprises. Payroll and time tracking are excellent. Unfortunately, we found that a few of the negative social proofs were substantiated. In addition, the payroll does not offer pay stubs and it’s also more expensive than most of its competitors. The HR and payroll should really be more seamless and integrated than it currently offers, but many people have reported a good experience with this provider despite the setbacks.

Rippling: Rippling is a superb HR platform that narrowly avoided making our top 4. It has been rated highly on Forbes Magazine, G2, Capterra, and GetApp. This platform is a little more expensive than others, starting at $8 per month. You will also have to contact them for a custom quote, depending on what you are looking for. The best software around, at the highest price. It is more suitable for enterprise-level organizations offering benefits to hundreds (or thousands) of employees.

Cezanne HR: This is a UK based HR provider. It offers 24/7 online access to essential information, intuitive self-service, and time-saving modules for core HR, payroll, absence management, performance, onboarding, time tracking, and more. Cezanne HR has everything you need to better engage, manage, and support a modern workforce.

How We Ranked HR Services

Ranking HR services was a little tricker in comparison to ranking payroll or online legal services. This is due to the nature of HR. A lot of it is ’defensive’ in nature, as records have to be maintained to avoid fines from certain government authorities. And a lot of the benefits are not directly linked to a financial metric. HR has a role in building the organization’s culture and giving employees what they need to get the work done.

Still, there are still a lot of ways to rank HR platforms based on a number of criteria. The criteria we used were:

  1. Customer Service – There are a lot of reviews online that are not substantiated and there is a review ‘ecosystem’. We took the social proofs into account (TrustPilot, Capterra, GetApp, etc) and also tested out the software and customer service team to observe what kind of response we received with very basic questions.
  2. Price – What is the price for each package, and how does this compare to other providers? We find that most of the price points were not all that different, and they tend to consolidate.
  3. Functionality – This was an area where many of the low-quality HR platforms really fell down. Mobile applications not working, views not showing, and rejected input is simply not acceptable with such a delicate operation.
  4. Ease of Use – The easier it is to onboard employees and automates payroll, the easier a business will run. Having a platform that runs smoothly with a gentle learning curve is a serious consideration. It is not easy to change an HR platform and it is important that it runs without errors.

We also had to take into account what the software was used for and who the target market was. It is impossible for any software system to cater to all the people, all the time, at the lowest price. Some HR platforms are actually payroll platforms with HR functionality. Some are great at onboarding and not so good at payroll. Others are designed to streamlined benefits management and are not so good at the time and attendance tracking.

But we did expect each platform to deliver what it said it would deliver, and to enjoy easy configuration and employee additions to the system. When a provider quotes a price for a particular service and you pay a particular price, reneging on that promise is a definite no-no. Many things may change in business and finance – but trust is non-negotiable and a business is only as good as its word and its reputation.

There are many automation platforms coming out with confusing terminology that makes it all difficult to understand. Many of the services can also overlap, making it even more confusing.

In truth, many of the sectors are intimately connected with one another. We will try to be as specific as possible to avoid any confusion. Ultimately, you will need to identify what it is that your business is looking for before making any purchases. 

Otherwise, you will end up with functionality you do not need. And don’t forget the ‘familiarity cost’. If all of your employees spend 2 months learning one software system, it is a major overhaul to get them all on a new one. Choose your HR platform carefully as you do not want to be stuck with an inefficient platform for the year. Migrating benefits from one provider to another is anything but streamlined, despite what you might be told.

Human Resources

This usually refers to employee hiring and record maintenance, as well as performance tracking. Human Resource personnel will often devise strategies to increase employee satisfaction levels, thus boosting revenues. Human Resource software is called ‘HRIS (Human Resource Information Systems). Applicant tracking is also part of human resources, who are responsible for finding the right people for the business using the correct technology architectures.

Payroll

This relates to the payment of freelancers and fixed workers and the filing of certain employee documents. It will also include time tracking and potentially even benefits, though this area overlaps with HR to an extent. Payroll is essential to all businesses, large and small. The software needs to be able to provide for Forms I9, W2, 941, etc. Payroll software should also have automatic tax filing to State and Federal authorities to avoid financial penalties.

Accounting

This refers to the creation of balance sheets, cash flow statements, and other financial documents. These are used for the analysis of the spending and future budgeting as well as numerous other financially related tasks. Potential investors will often want to see such statements, as will banks. Accounting is needed for tax purposes. It is often integrated with payroll to make accounting a lot more streamlined.

There are two braces to this. The first is the creation of a new business. An online legal service can easily complete this for you, with a small fee. They can also offer registered agent services, document signing, and legal document customization and storage. The second kind is customized legal service offerings, which relate to a wide range of niche legal situations.

Employee Scheduling Software

Often linked to appointment scheduling and/or payroll processing software. Employee scheduling shows booked holidays and when people are working so there is no miscommunication between employees. It also allows managers and employers to see who is needed and to approve or reject holiday requests.

Appointment Scheduling Software

Appointment scheduling software is for service-based businesses that want to meet clients without any no-shows or miscommunication. Appointment scheduling software is now industry-specific – for financial service, business, yoga, hair salons, etc. But it essentially allows customers to book and cancel appointments for unique services. This reduces staff and overhead for businesses and makes it easier to see how many are attending an event, the cost, etc.

Main Role Cost
HR Compliance, internal collaboration. Expensive – in addition to payroll
Payroll Processing payments, benefits, attendance. Cost is dependent on the number of employees. Costs can add up depending on the workforce.
Accounting Financial Reporting Depends on accounting requirements.
Online Legal Services Company filing, formation, and compliance. Typically once-off in terms of company formation.
Employee Scheduling Employee timesheets and time tracking. Typically quite cheap in comparison to payroll and HR.
Appointment Scheduling To make an appointment for service-based businesses and freelancers Very affordable, though it can rise if you want a dedicated on-call person for appointments.

What is HR Anyway?

The word ‘human resources’ covers a wide range of topics. We have broken them down into 5 key areas for the purpose of simplicity.

  1. Hiring – The HR department has to find the right people to work for the company. Few HR platforms really serve this function, but an HR department often will. They are then responsible for initiating the new employee into the company and ensuring that they have everything that they need.
  2. Payroll – Payroll refers to the way that employees receive payment for the hours worked, including holidays and overtime. There are different types of workers with different rates and different payment details that need to be attended to.
  3. Benefits – HR software can assist with Benefits, while the majority of automated payroll providers do not complete this function. Benefits relate to any kind of non-financial compensation you offer to employees. These could be pension funds, cycle to work schemes, healthcare, etc.
  4. Management – Once you do actually have a team, you have to look into how to manage them with a real strategy.  Modern-day employees need to be well treated and respected. They need to be incentivized and assessed and treated like human beings instead of just ‘employees’.
  5. Compliance – Every single state has a number of laws that have to be adhered to. So if you operate in different jurisdictions, you need to comply with all relevant laws (not to mention Federal laws). All employee details need to be recorded accurately. You also need to have compliant hiring and firing processes, as well as compliance in terms of health and safety. The number of legal compliance requirements that need to be taken care of is incredible. Which is why you need to have a top-class HR platform to deal with them.

As can be seen from the list above, there is a lot of overlap between payroll and HR, but HR has additional advantages. It encourages employees and informs them as to the overall business strategy. Employees need to be involved and feel like they are part of something bigger than themselves. They will feel better and become more productive.

You can outsource your HR or you can do it internally with an automated software platform. You can also do it yourself manually, but this is wildly inefficient. HR personnel now occupy positions at decisions making tables in major corporations to answer key questions, such as whether or not the current level of talent is sustainable in the future in light of the changing needs of the organization.

How to Choose Your Human Resources Platform?

Selecting the right HR platform can be a little tricky. The first item to identify is what exactly you are looking for. If you do not have payroll automation software already, then it is certainly best to use a provider that can cater to both HR and payroll. This will make things a whole lot easier as opposed to using two separate providers that may not integrate with one another. It is probably best to break it into separate components to evaluate each HR software platform.

  1. Employee Onboarding
  2. Employee Recruitment
  3. Employee Self-Service
  4. Payroll
  5. Timesheet and Attendance Tracking
  6. Benefits Management
  7. Employee Performance Analysis
  8. Reporting

The first 5 on the list above will be needed by the majority of business owners. You need to onboard employees easily, and the records need to be kept. You need to pay them easily and effortlessly, taking account of holidays and overtime. These are the essentials, and you should look for an HR platform that also caters to payroll. Many HR providers are excellent at employee onboarding and self-service, but may not be as efficient at the payroll and attendance management side of things. After this, you might want to look into other feature that may be essential to your business, including:

  • I9 and W4 compliance
  • Customized proposal letters
  • Paystub downloads
  • Custom workflows
  • Custom policies, etc

The last 3 (Benefits Management, Employee Performance Analysis, Reporting) are a little more complex and will be the domain of medium-sized businesses to corporations. Benefits are a tricky area and employee analysis and advanced reporting tools are there for corporations needing this level of specialization.

After this, you will also want to investigate the reputation of the provider, especially customer service. Ideally, what most providers need will be a streamlined onboarding and payroll system without any hassle. Larger businesses might have a requirement for customized options.

7 Questions to Ask When Evaluating an HR Platform

Before buying an HR platform, there are a number of questions that you should run through as a preliminary check. These questions will include:

  1. What is my budget?
  2. How large is my workforce?
  3. What are my primary requirements and preferences?
  4. Can I scale with this company?
  5. How easy is the onboarding process?
  6. Does the HR platform offer time tracking and payroll functionality?
  7. Does it suit my benefits package?

Once you have familiarised yourself with all of these questions and answered them definitely, then you should have far more clarity in terms of what you are looking for. This means you will be far clearer in terms of finding what you need and identifying it when it pops up.

Most providers tend to fall into certain brackets. Zoho for granularity and precision. BambooHR for diverse businesses looking to bolster morale and collaboration. Gusto for payroll. GoCo specifically for HR. You can use these classifications broadly to see if they are a general match and then drill down for more information.

What Is the Real Role of Human Resources?

Many people think that Human Resources is all about being ‘happy’ and ‘thinking positively’. This is a little bit of an understatement. It is vitally important to have an overall strategy and ethos in place in order to encourage employees and make them feel at home. This is what turns a good short term employee into a fantastic long term employee that is really involved in the business. HR is what generates loyalty within the business.

Of course, it also helps in terms of filing the details of employees to the authorities and avoiding expensive fines. HR can automate many tasks and help you to find and hire the right employees, and comply with both state and federal laws. Ultimately, HR is the ultimate resource for finding the right people and keeping them happy, for the betterment of both your company and their lifestyle.

They take care of many of the things that are only indirectly related to the business but are still of essential importance. Such items could include health and safety, social events, business strategy, resolution of disputes between co-workers, resolution of employee queries, marketing (in a minor context), contact with the press, and many more pivotal components of 21st-century business. They encourage interoperability between various departments and are an intermediary between public/private, employer/employee, and employee/ employee.

What Are the Key Features of HR Software?

HR is a broad term and the features will vary depending on what the client is looking for, the industry, and the size of the business. But there are still many similarities. At its core, HR software must be able to hire people, onboard people, maintain records, and facilitate employee growth and understanding. The following are some of the fundamental features of HR software.

  1. Employee Management – HR software is essentially a database of all of your employees. This includes all of the relevant details such as the job roles, time at the company, address, payment details, work history, and all other pertinent information. Not only is this useful to have the information at hand as needed, but it also assists in terms of compliance. Most businesses need to have this information at hand.
  2. Employee Analysis – It’s great to have employee records at hand. But it is even better to have assessment functionality (this can be a little bit tricky with so many different workers and different assessment models). You should be able to customize reviews based on a number of different criteria.
  3. Benefits – This is a huge area that is not always catered to by standard payroll systems. It can also be quite tricky to manage, with different packages for different worker types. Packages can range from the standard healthcare to stock options and 401(k)s. This is often the most time-consuming sector of any HR department. Many businesses can get an HR solution just to resolve this problem. It is an area where HR automation really can assist with the burden.
  4. Payroll – It is possible, though often not very practical, to do your payroll with one provider and your HR with another. But most HR solutions will serve to handle payroll, which includes automatic wage payments, time tracking, overtime, and holiday requests. You can see how the two services are intermingled. As the employees on board, they provide legal information to an HR platform for compliance purposes.
  5. HR Recruitment Analysis – This is more relevant for larger businesses and companies. How much money is spent on finding a person for a particular role? How much time does it take? Was the applicant suitable for the job? How long did they stay at the company? HR platforms should be able to assess the efficiency of the existing system so it can be improved upon. Keep in mind that most HR systems are not proficient at the screening of the best applicants, and a specialized applicant tracker will be needed.

There are many subheadings underneath all of the above, as well as many more advanced components. For instance, many HR platforms will perform applicant tracking. Applicant tracking systems (ATS) provide a centralized platform where companies can manage all of their recruiting and hiring efforts. With an applicant tracking system,  recruiters can post job openings to job boards and social media, store job applications and resumes, track applicants through their hiring funnel, grade and rank candidates, and, ultimately, extend a job offer.

Besides providing a digital space to manage to recruit and hiring, ATSs are also a valuable weapon in the war for talent. These systems can blast your job postings to as wide an audience as possible and increase the likelihood for a curious visitor to become an applicant through an improved online candidate experience. Embedded analytics also allows you and your team to decipher where talent is turning off from your company and why. Businesses with between 250 and 3,000 employees will have a need for some kind of applicant tracking software to find the right employees. But for many small businesses, it is overkill.

Another advanced kind of requirements would be learning management, typically seen in corporate type outfits. If you’re still largely relying on classrooms and slideshows to train employees, learning management systems (LMSs) can help you bring employee training into a more flexible and engaging online environment. With an LMS, trainers can create training courses merging different multimedia formats, administer courses to workers, test them on the knowledge they’ve retained, and analyze training effectiveness over time.

Ongoing training is vital if you want to develop workers to progress up the career ladder at your company while also retaining top talent. This is easier said than done, especially with a large, global workforce.

A Note on Benefits Administration – The Bane of Business Owners

Benefits administration is a tricky area. It might make sense at first glance to outsource this sector, but this might not be the most streamlined option, for a number of reasons. When you take on a benefits provider, it is not easy to switch. While it is possible to switch every year, it is very disruptive and costly, and that is a lot of sensitive information to be handed over each year. There can be penalties for changing providers, depending on the kind of benefit and the unique provider.

Benefits administration software provides a centralized solution where employees can not only enroll in benefits or change options themselves (instead of filling out a form for HR to enter into their system manually), but also troubleshoot questions on their own. Being able to closely monitor benefits costs will also be critical to maximizing ROI. You can get standalone benefits administration software, though a good HR platform should be able to take care of it.

You also need to discuss the speed of claims (there is great variance in terms of how quickly claims are paid out) and whether or not there is a feasible method of gauging the performance of the benefits administrator.

As a general rule of thumb, it is better to use the provider of the benefits (i.e. the insurance provider or similar). Alternatively, if you are a small business, it may be best to stay away from benefits altogether. It is a complex area and can be more trouble than it is worth unless you are familiar with this area.

Conclusion

HR is very important for all kinds of businesses. If you are small, you can bundle most of the functionality into a high-quality payroll processing system that handles most of the HR-related tasks.

As your business grows, you might want to consider a dedicated HR package to ensure compliance, employee satisfaction, and legal compliance. It will save you in the long run and result in a more efficient business with happier employees.

FAQ

What Is the Main Role of HR?

The main role of HR is to hire the right people and keep them happy so they are more efficient in their jobs. But it goes further than that into time tracking, benefits, and payroll processing. Even if you are a small business owner with no dedicated HR department, you need to perform HR-related functions for increased efficiency. HR is also responsible for tracking internal claims and is the first point of contact when an employee makes a claim against the business.

Who Does HR Interface With Other Departments?

Human Resources will interface with practically all other departments. They are responsible for the hiring of new employees across the business, regardless of what type. They are the group that employees go to when they have issues. They are also responsible for payment processing and maintaining HR records. When you are onboarded with a new business and need to submit documents, you submit them to HR. In many businesses, HR is also responsible for marketing and promotion.

How Can HR Management Software Help My Business?

HR management helps with legal compliance, so you do not run into trouble down the line. Depending on the HR you need, it can help you to find the right applicants and track their efficiency, improve on the hiring process, streamlining payroll, and bolster employee morale to a large degree. It can foster collaboration between employees and make the organization a happier place. It can automate disparate tasks and once business grows to a certain point, it is time to streamline HR so it is more professional and efficient.

How Do I Know if I Need HR?

By default, you will automatically need a human resource department. The HR department is responsible for finding the right talent, reaching out to them, filtering resumes, maintaining essential records, and monitoring performance over time. HR is also intrinsically linked with payroll processing, as they go hand in hand. So you will definitely need the core components of HR such as employee onboarding and record maintenance. Applicant tracking and benefits may or may not be needed. If you have more than 100 employees they will start to become more relevant.

What is HRIS?

HRIS is the blend of Human Resources with Information Technology. The acronym stands for ‘Human Resource Information System’. In any case, the jargon can largely overlap. Essentially, much of HR is now automated instead of manual. Data analytics can make the assessment of employees much easier and automates many manual processes. Every Human Resource department essentially uses an HRIS software platform to take care of these manual processes, and to a large extent, HRIS and HR software mean the same thing.

Put simply, an HRIS system is the integration of HR activities and information technology. It enables data entry, and tracking and management for human resources, payroll, and accounting. Since most HR teams use an HRIS to help them improve their processes and stay organized, it’s good for everyone who works with HR to be familiar with a few HRIS basics like the variations and definition of HRIS, what an HRIS does, which organizations need HRIS, and how to best use an HRIS.

Is the Role of HR Changing Right Now?

The function of HR is largely remaining the same as always. Finding the right people, onboarding them correctly, collecting all the legal details, resolving legal issues, and ensuring compliance with the relevant departments.

But while the role is still saying the same, the way that HR is completed is definitely changing. This is mainly due to automation technology in the field. There is no longer any manual payroll with Quickbooks and Gusto providing superb functionality, not to mention time tracking, all for a reasonable price. Onboarding, records management, benefits, tax submissions, and evaluation can all largely be automated, though an HR representative will still be needed to oversee all of these details or to resolve certain issues. Despite all of the automation technology, businesses still need people to settle the curveballs. There are always legal disputes and errors to be contended with.

How Much of HR Can I Automate?

The bulk of traditional HR tasks (onboarding, payroll, records management, timekeeping, evaluations, benefits, tax submissions) can all be automated. There is software available that can onboard an employee, track time, allocate benefits, file taxes, and evaluate. But you still need a dedicated professional for the human touch, to resolve issues, and to potentially interview employees. There are some things that software simply cannot do, and it still has to be managed and configured. But it can most definitely cut down on the number of staff that you need. Traditionally, HR staff tend to be overworked and understaffed. With automation software, this is no longer the case.

Is HR Just a Corporate Function?

HR is mainly for large and medium-sized businesses, as well as corporations. All businesses that have more than 50 employees should have an HR department of some kind, even if it is just one or two people or some automated software. It is more than merely a hiring process but extends to a number of other fields. HR is all about increasing employee satisfaction once they are onboarded and also about maintaining accurate employee records and time tracking.

A common misconception is that HR is only for ‘nice’ people. The HR department will often deal with a number of issues and are also responsible for vetting out unsuitable candidates. HR employees have to be’fair’, not nice. The information must be correct and disputes must be legally resolved. A symbiotic relationship must be created between the development of the organization and the satisfaction of the employee. There must be a fair and balanced system, not merely a group of ‘nice’ people who say yes to every request.

Daniel Lewis
Daniel Lewis
Daniel Lewis is an MBA accredited investment professional who wants to assist small business owners to gain access to finance. After going through many channels for funding, Lewis has found that getting the first loan right is vitally important for future success.