How to choose the best HR software for 2024

Updated 11 January 2024 • 8 min read

What is HR software?

HR software includes digital tools that streamline, manage and optimise human resource tasks. These tasks may include employee information management, onboarding, document routing and collecting employee feedback.

HR software is invaluable; it allows managers and staff to automate or streamline specific tasks so that they can focus their energy on more important work that requires their attention. Usually, these tools are cloud-based, meaning they’re scalable and remote-work-friendly.

Why do you need HR software?

HR software offers the following benefits:

Automates repetitive and time-consuming admin tasks
Streamlines important HR processes such as payroll
Organises employee data and internal documents
Analyses HR data, such as employee satisfaction and churn rates
Ensures compliance with federal guidelines
Improves employee experience.

Approaches to managing small business HR

Dedicated in-house HR manager

Small businesses may choose a single HR manager, while growing teams may have that manager supervise additional HR staff. Whether they work alone or with a group, the person in this role should have specialist knowledge to help the company navigate complex HR processes, including compliance with local and national laws.

Part-time HR role plus HR software

Small brands and startups can often handle HR workloads with the help of HR software. By hiring part-timers, you can reduce your spending on HR services while maintaining a dedicated staff. The HR software can handle repetitive tasks even when the employee is away, so they can focus on more important things, like resolving conflicts and negotiating salaries.

All-in-one HR solution only

It isn't always possible for businesses to hire an HR specialist. A comprehensive HR software solution is the best approach in this case. Many platforms offer features like onboarding, training, employee engagement, payroll and feedback collection features into a single tool.

The MYOB business management platform, for example, offers products that help with small business HR, like payroll, job tracking and workforce management.

Outsourced HR services

Outsourcing HR services is an option for companies that can’t or don’t want to hire dedicated HR personnel. Often, HR firms are less expensive than hiring someone (or multiple people) full-time. These professionals learn about your company and act as an extension, often relying on your HR software so that you can control (and own) your HR data and processes.

A comprehensive approach to choosing HR software

Step 1: Identify your needs

Before choosing small business HR software, consider what features and functionality you need from it.

Ask these questions:

How is your current HR system doing?
What does your HR team need help with?
What are your HR team’s most significant pain points?
What challenges do you have in creating positive employee experiences?
Which HR processes take up too much time?
What local and federal laws impact your business?
How big is your HR team (and company) now and in the future?
How much can you afford to spend on HR software monthly or annually?

Step 2: Explore solutions for key HR software features

Choosing the right HR software requires some research, primarily because you need to make sure it has the features you require.

Key features to consider in HR software include:

Cloud-Based Access: Ensures remote access for your team.
Payroll Integration: Seamlessly connect with major payroll systems.
Applicant Tracking System (ATS): Streamline candidate assessments.
Third-party app integration: Seamlessly integrates with your existing tools and apps.
Onboarding Tools: Manage offer letters and contracts, gain e-signatures and track progress.
Compliance Management: Stay updated with local and federal requirements.
Data Security: Benefit from secured servers, two-factor authentication and regular backups.
Time & Attendance: Utilise digital timesheets and intelligent scheduling.
Employee Self-Service: Empower employees to manage their own information.
Performance Tracking: Monitor and evaluate employee performance.

Step 3: Consider costs

The costs and pricing models of HR software brands vary. Some plans, for example, may charge flat fees per user, while others have tiered pricing that includes a set number of customers but charges more for different features. Comparing the annual or monthly costs of each platform is essential.

When comparing pricing plans, make sure you consider your future needs both in terms of the number of employees and the features you’ll expect to need. Paying slightly more monthly for long-term scalability may be a good investment.

Step 4: Make a shortlist

After completing the previous steps, you probably have a good idea of who may be a contender. Create a list of the top three to four platforms and thoroughly research them. The following steps can help you explore your shortlisted companies and narrow your top contenders:

Search comparison blogs and review sites
Read case studies with real customer stories
Visit the brand's website to review their features
Send a Request for Information (RFI) to each vendor
Review the RFIs with your HR department for their opinion
Schedule a call or book a demo with a sales rep
Consider submitting a Request for Proposal (RFP) with key information about your company and its needs.

Step 5: Test drive contenders

Software isn't always as user-friendly or intuitive as it seems. A solution may meet all the criteria for features, costs and other factors yet be difficult to use in practice.

Try out your top contenders for free by using free trials and demos. Discover how the features work, what the interface looks like and how easy it is to set up.

If a company you’re interested in doesn’t offer a free trial, make sure you have a step-by-step walk-through during a demo with a qualified sales rep. And before you lock into an annual plan, give it a go month-by-month to ensure it’s a good fit.

Step 6: Choose and implement your new HR software

After choosing your software, you must complete the set-up and implementation process. Process steps include:

Providing employees with information about the new HR software
Creating accounts for HR professionals and employees
Transferring existing employee data to your new software
Developing new work processes
Training your HR team to use the new software
Introducing employees to the features and documents they need.

Avoid these common mistakes when choosing HR software

Insufficient research

Don't sign up for the first HR software you see. You could miss out on software that offers more features you need or aligns better with your growth plans. Review the top contenders on review sites and do free trials or demos of your favourites.

Not qualifying vendors

Legitimate vendors are often happy to provide references from existing clients. Checking references may be more effective than reading online reviews, which aren’t always reliable.

Ask a vendor's reference these questions:

Why did you choose this software compared to other tools on the market?
How long did it take your team to set up and adapt to the software?
What is the company's customer support and training like?
Have you had any issues or concerns?
What features do you feel are missing or would like to see?
Do the HR features work the way you expected?
Has the software met your expectations?

Ignoring scalability

Right now, your business may have only 20 employees, but if you plan to scale, that number could be drastically different in a few years. Make sure the HR software you select supports your potential future needs, both in terms of scalability and features, so you don't have to switch when the company grows.

Not considering all departments

The HR software you choose impacts your entire workforce, not just the HR department. Even if it's just to check their timesheets or submit feedback, every employee will use the software in some way. Before making a final decision, consider the overall user interface and seek input from team members across departments.

Better HR management with MYOB

MYOB brings together the 6 core workflows that you need to run your business: employees, customers, suppliers, projects, finance, accounting and tax.

Cloud-based, you can build out the employee management system that’s right for your business, adding on new modules and functionality as required - from payroll-only to comprehensive workforce management capabilities.

Pay for what you need, when you need it. MYOB’s integrated workflows allows your business and HR function to scale with your business as you need it, future-proofing your HR capabilities.

At MYOB, we have you covered. Speak to an expert today!

Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.