If your small business’s “HR solution”
consists of a few spreadsheets and some paperwork stashed in a filing cabinet,
you may be missing a trick.
Although the informal approach may work in
the very early days, it quickly becomes a nightmare as your business grows,
eating up valuable time with low-value administrative tasks.
In fact, a 2013
OfficeMax survey found that small business owners as a whole were wasting more than four billion hours each year on admin, and 41% of them said that this sapped their
passion and energy for running their companies.
One way out of this
chaos is to invest in a good HR software solution, which can help you stay
organised and handle common HR tasks like recordkeeping, payroll, and employee
performance management. With prices starting at just a few dollars a month and
typically increasing based on the number of employees you have, this is an
investment that can quickly pay off if, even if it just saves you a few hours
of your valuable time.
In this article, we’ll cover the key
features to look for in HR software for small businesses and how to choose the right solution for
you, and then we’ll look at some of the most popular solutions available today, with a brief overview of their main features and
benefits. By the end, you’ll have a clear idea of the options available to you
and how to choose a package that helps you manage HR more efficiently.
Key Features to Look for in HR Software for Small Businesses
In this section, we’ll look at some of the
options available to you when looking for HR software for small business.
Types of Business HR Software
There are two main types of Business HR software
packages: Core HR and Strategic HR.
- Core HR refers to the traditional,
“administrative” HR functions like benefits admin, attendance tracking,
processing payroll, etc.
- Strategic HR packages, on the other hand,
help you with more forward-looking strategic tasks like hiring and retaining
the best staff and tracking their long-term development.
This diagram from HRdirect
illustrates the difference:
Not all of the software suites focus on one
area or another—there’s often a lot of crossover, and some packages cover
everything, while others are more niche. But it’s a useful distinction to keep
in mind as you decide what you’re looking for.
Here are some of the key features that business HR
software can offer:
Employee Record-Keeping. Keep copies of
important records for your employees, as detailed in our tutorial on key small business HR requirements.
Self-Service Options. Let employees log on
and do things like update their details, request time off, etc.
Benefits Administration. Help employees
enroll for benefits and manage their options from within the software.
Recruitment. Use the software to keep track
of job applicants and manage the recruitment process.
Onboarding. Help new employees get up to
speed quickly by providing the training and resources they need.
Succession Planning. Plan your future
staffing needs and reduce your dependence on key staff members by having a
succession plan in place for important roles.
Training. Some packages let you plan your
employees’ training and development needs, and sometimes you can even integrate
training into the app itself.
Performance Reviews. Keep track of
employees’ performance year by year, set new goals and objectives, and have
access to their whole development history within the software.
Reporting. Analyze your employee data and
create customized reports on things like attendance, turnover, employee
Time and Attendance. Manage employees’
vacation requests with a schedule to make sure you have adequate cover. Some
software also offers more detailed time tracking for shift workers.
Communication. Pass on important company
news to your employees, and allow them to communicate with each other through
blogs, forums, message boards, etc.
Mobile Access. Let employees access the system
through a smartphone app so that they can check in and upload information while
on the move.
How to Choose the Right Small Business HR Software
As you’ve seen, there’s quite a wide range
of features available to you. But the more comprehensive solutions, of course,
often come with a higher price tag, so you’ll need to go through the list and
decide which of them you really need.
The key question to ask yourself is: “How
much time am I spending on this task right now?”
If you’re spending hours every month
printing off résumés from prospective employees and then trying to find them
and remember which people you’ve contacted and which you haven’t, then the
recruitment module will probably save you a lot of time and help the software
to pay for itself.
Other features, like the communication
tools, may not have such a direct payoff, but they still could be valuable. See
the following tutorial for more on the importance of good communication:
Also think about how you work and how your
employees work, and decide on the features you need and the ones you can do
without. For example, some packages offer a mobile app that employees can use
on their smartphones. If you have a very mobile workforce, this may be a useful
feature, but if your team is office-based, it may not be necessary.
Ultimately, the best way to make a final
decision is to narrow your choices down to two or three, and take them for a
test-drive. Most providers offer a free trial period, and even for those that
don’t, the cost of a single month is not prohibitive.
So, it’s worth setting up a test account on
two or three different systems. Poke around in the dashboards and settings, deciding which features you like, which interfaces are easiest to use, and so on.
You’ll usually get a feel for one that you like more than the others, and you
can then cancel the also-rans and focus on getting fully up to speed with your
HR Software Solutions for Your Small Business
So now that you know what to look for and
how to choose, here’s a list of the top small business HR software solutions to consider.
BambooHR has a strong record-keeping
component, including support for electronic signatures so that you can avoid
the tedious task of getting paperwork signed and keeping paper copies.
It also lets you track job applicants,
approve time-off requests, conduct performance reviews, and create “custom
workflows” to manage approval processes within your company, among other
Although BambooHR is aimed squarely at
small businesses, it boasts a roster
of clients featuring companies you’ve probably heard of, like Disqus,
Asana, Quora, Vimeo, SoundCloud, etc.
2. Zoho People
If you only have a few employees, one thing
you’ll love about Zoho People is that it’s free to use for up to five
employees. After that, the monthly prices scale up with the number of employees
like most of the others.
As you can see from the image above, there
are plenty of features to choose from. The self-service feature is quite
impressive—it lets your employees:
- modify personal information
- view attendance reports
- add jobs and log time
- claim medical reimbursements
- view benefits
- collaborate through feeds
- export personal data
- view leave reports and balances
- raise travel requests
- view all approvals and permissions
- access announcements
Namely targets mid-sized companies, which
it defines as anything from 15 employees to a few thousand. So, it may not be ideal for a true micro-business, but it’s a great option if you have ambitious
growth plans and want a solution that is very scalable.
According to Namely, 75% of its clients say the
software has increased employee engagement, and 72% say it’s made employees
more productive. That’s partly because it’s designed to look and feel like the
social networks people already use, so it’s easy for employees to start using
the system and collaborating with colleagues.
Another powerful feature is the ability to
integrate the software with a large number of other companies and solutions you
may be using for anything from timesheets to employee recognition.
With Gusto, you can convert your whole
recruitment process into a more efficient, paperless process. You can send out
offer letters to new employees, get them onboarded, have them sign up for
benefits and payroll, and more—all online.
Then you can do things like manage time off
requests, conduct employee surveys, create org charts and so on. And Gusto also
offers payroll and benefits admin modules, as well as integrating with popular
accounting software, time tracking apps, and more.
The HR module of the Zenefits platform
covers things like hiring and onboarding, employee record-keeping, reporting,
etc. Those features are quite powerful, but it’s just one part of a wider
offering that includes things like time tracking, regulatory compliance, payroll
processing, and benefits admin.
The company proclaims a “mobile-first
mindset” and offers iOS and Android apps for everything from checking insurance
details to clocking in and out, so it’s a good option if you have employees who
spend a lot of time on the road.
Cake began as a small Latvian startup in
2011 and has expanded to serve clients in more than 1,000 cities, including
well-known names such as e-commerce firm Paperless Post.
It’s a simple online solution offering a
range of services such as vacation tracking, a shared company calendar,
reporting, mobile apps, and integration with popular apps like Slack and Google
Apps. A performance review module based on 360-degree feedback is coming soon.
If you want something more complex and
full-featured, try Cezanne. It’s aimed more at mid-sized companies than small
businesses, so it may be too complex for very small businesses. But for growing companies, it gives access to a powerful software suite that can handle most HR tasks you can think of.
With the People module, for example, you
can do everything from managing work shifts to logging health and safety
incidents, recording and tracking disciplinary processes, and much more.
Meanwhile, the Career & Succession module lets you put together strategic
plans for your future staffing needs, map key roles and potential successors,
Those are just a few examples—this really
is a comprehensive solution for any business with the size and budget to
Like Zoho, WebHR offers a free plan for up
to five employees, with monthly rates based on the number of employees you have
The slogan “From Hire to Retire” is quite
apt—the WebHR offering is pretty comprehensive, covering every stage of the
employee’s life at your company, from hiring onwards. There’s a nice
social-media-style feature to boost employee communication through messaging,
forums, status updates, etc. And employees can do a lot of things through the
system, such as applying for leave or travel authorization, submitting a
reimbursement request, and even tendering their resignation online.
UK-based BreatheHR lets you bring a lot of
disparate data together into easy-to-use dashboards for both you and your
For example, an employee could view a
dashboard showing the number of days off they’ve booked and the number they
have left, their sickness record, any training they’ve completed or requested,
their key objectives and deliverables, and any one-to-one meetings they have
scheduled with their manager. And on the same page, they can click a button to
take action in each of these areas: request training, request a one-to-one
It also has many of the other common
features like record-keeping and reporting, and offers a 14-day free trial.
Most of the solutions we’ve looked at have
been quite wide-ranging. But sometimes you don’t need everything—you just need
a specialized product for one particular area.
JazzHR is an example of a more specialized
offering. It focuses squarely on the recruitment aspect of HR, providing a real
depth of features in that niche area. You can create job postings and
automatically post them to multiple job boards, for example, and then track the
applications and choose which ones to advance or reject. Then you can use the
software to record the interviews and compare candidates in a systematic way,
before researching compensation, making offers, and much more, all from within the
If you need a wide range of HR solutions
then one of the other solutions will be better for you, but if you just need to
get your recruitment right, then JazzHR is ideal.
In this tutorial, you’ve got an overview of
the best HR software for small businesses, and you’ve seen what features to
look for and how to choose the right one for your company.
Take your time and explore a few different
options, and come up with a shortlist of two or three contenders. Then test
them out, see which one works best for you, and get up and running with your
final choice. You’ll start seeing the benefits in no time.
If you decide you need more hands-on
assistance, you could investigate HR
outsourcing. Instead of relying on software, you can get access to actual
HR staff at an external company who will manage things for you. It’s typically
more expensive than the software solutions we’ve looked at, but it can give you
access to some valuable HR expertise. To learn more about how outsourcing
works, see the following tutorial:
And if you found this article useful, why
not check out some of the other articles in our series
on HR for small business?