15 must-have HR software features and system requirements

1. Cloud-based vs. on-premises

Most HR systems are cloud-based. The software is hosted by the vendor, and corporate access to the application and data is available through a web browser or mobile device. Alternatively, vendors offer HR software that's installed and managed on premises within the enterprise, typically by IT. Both options have advantages, but cloud-based is the preferred model.

2. Core HR

A key component of HR software, the core HR module stores information about employees and is often the hub for functionality that's applicable to the whole HR system, such as security and reporting. When evaluating the core HR functionality, validate the following points:

• one centralized database rather than multiple databases, which can happen when the software is built through acquisitions;
• all the necessary employee information can be entered, such as employee name, address, emergency contacts, salary, job and department;
• ability to create custom fields to track information specific to the organization;
• role-based security, which simplifies the assignment of access rights to employees;
• future-dated and back-dated changes are entered;
• system is configured to meet all government compliance requirements and the required data extracted; and
• non-employee data, such as contractor information, can be entered.

3. Time and attendance

HR software typically provides features to track absences and capture working hours on a timesheet. Ensure that the system can accommodate corporate policies and practices. Validate that the system can do the following:

• provide the ability to configure all the absence types used by the company;
• define which absence types apply to which employee populations;
• produce schedules and timesheets that display and capture required information;
• make timekeeping simple for employees using a mobile device or browser;
• provide exception reporting to highlight missed shifts, missed clock-outs and overtime;
• specify statutory holidays by country and region and configure eligibility requirements; and
• provide approval workflows and reminders for absence requests and completed timesheets.

4. Recruiting

Often referred to as an applicant tracking system, the recruiting module covers the lifecycle of finding and hiring new employees. Most HR systems include this functionality, though it's not always as advanced as the systems from vendors who specialize in this area. Key HR software features to consider include the following:

• job library that contains a job description and key information about the job, such as salary, job family, job level and salary range;
• configurable requisition and offer-approval workflow;
• easy process to post open positions to multiple sites and job boards;
• reports, tags and custom groups to track candidates;
• support for multiple offer templates to meet the unique needs of the company;
• support for the entire offer process, including sending offers, candidate signature and returning a signed offer electronically;
• support for advanced digital signatures like those offered through DocuSign;
• ability to add attachments to offers; and
• easy-to-send regular communications to passive candidates.

5. Onboarding

An onboarding module can enhance the onboarding process for new hires and provide a positive first impression. At a minimum, new hires use the onboarding module to complete forms and review policies. Consider the following features when developing an HR system requirements checklist:

• simple process to move new hires from recruiting to onboarding and avoid rekeying data;
• customized landing page that includes adding company information, videos and organizational charts;
• employees able to complete and sign forms and policies;
• before their first day, new hires able to access and complete all the necessary paperwork; and
• task lists for everyone involved in the onboarding process.

6. Performance management

Many vendors have added features to support informal feedback options, while continuing to provide functionality for a traditional performance review management process. Regardless of the performance management approach, consider the following points when evaluating HR software features:

• configurable form to capture required data from employees and managers;
• configurable workflows so the process and approvals align with the company's process;
• concurrent filling of forms, which reduces the amount of ping-ponging required to complete the review process;
• reports and dashboards to track progress and analyze results;
• 360-degree feedback; and
• integration with compensation and succession.

7. Employee benefits

Incorporating a feature that captures employee benefits information can save significant time during the onboarding process and open enrollment. Based on company requirements, confirm that these capabilities can do the following:

• configure multiple plan options;
• upload data to insurance providers rather than rekeying the data;
• when applicable, allow employees to choose their coverage based on the options presented and provide costing; and
• push data to payroll to avoid rekeying data.

8. Reporting and dashboards

While reviewing HR software features, allocate sufficient time for reporting and dashboards. Too often, those capabilities are left until the end of a demo. Consider the following:

• enough standard reports available to meet most needs;
• dashboards that include charts and graphs to provide actionable insights;
• ability to create custom reports and dashboards without too much complexity;
• scheduling reports and dashboards emailed to specific employees on a regular basis; and
• restricted access to data using role-based permissions.

9. Learning and development

Incorporating an LMS and learning experience platform (LXP) can streamline the administrative tasks of scheduling and running courses, provide online courses and reinforce a corporate learning culture. Consider the following features when exploring an LMS and LXP:

• support for online and instructor-led training;
• ability to combine courses, articles and videos into a curriculum;
• integration with third parties that license online courses;
• detailed reporting and dashboards; and
• auto-assign courses based on predefined rules.

10. Self-service portals

A significant benefit of using HR software is the ability to securely share information with employees and managers. Consider the following self-service features:

• employee self-service that allows employees to view and update personal information;
• manager self-service to view and update direct report information;
• role-based permissions to control access to sensitive data; and
• approval process that ensures all employee- and manager-initiated changes are acceptable.

11. Integration options

The ability to integrate the HR system with other software used within the enterprise can be very valuable. IT systems, for example, might benefit from knowing about new hires and terminations. These two options are typically available:

• custom integrations, which allow data to be pulled programmatically from the HR software; and
• partner integrations, which offer prebuilt integration with specific third-party applications.

12. Data management

Data can be edited and audited with HR software's built-in tools. The following HR software features may be available:

• data import when multiple changes are required at once;
• quick entry to list multiple employees and a subset of fields requiring an update; and
• error checking to ensure data is cleanly entered and valid.

13. Payroll

The data between HR and the payroll department is closely tied and warrants consideration, regardless of whether payroll reports to HR or finance. Many HR systems offer a payroll module in addition to prebuilt integrations with the major payroll providers. Consider the following payroll features:

• tight integration with core HR to avoid rekeying data;
• support for multiple currencies;
• enough payroll codes to meet current and future needs;
• employee access to pay statements and other tax-related forms;
• integration with the time and attendance module and benefits module;
• simple data validation tools to ensure data is correct before being submitted; and
• payroll comparison to highlight significant changes from one pay cycle to the next.

14. Succession planning

Adding a succession planning module to an HR system can help identify and prepare rising stars within the company for senior roles. But since time and cost are involved to implement and license this module, be sure there's a companywide commitment to succession planning. Consider the following capabilities when evaluating a succession planning feature:

• integration with performance management and core HR;
• easier to use than spreadsheets and emails; and
• ability to incorporate job data, such as job grades, job families and job descriptions.

15. Compensation

Although just a once or twice a year process, compensation planning is critical to get right, and the often-used spreadsheet can be problematic. A compensation module can provide the following benefits:

• eligibility rules to determine which employees will be part of the compensation process;
• budgets that can restrict managers from overspending;
• workflows and approval processes;
• data security and control to protect sensitive data;
• comprehensive reporting to understand who will receive a pay increase and how budgets are being spent; and
• performance management ratings that default to a recommended salary increase.