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10 Core Functions of HR Software

Updated Aug 17, 2023

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Laura Handrick
Contributing Writer at business.com
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Most people know that human resources (HR) departments handle things like hiring and paying employees, but they are often tasked with lesser-known responsibilities as well. At large companies, an entire team of HR professionals may divide up these tasks into smaller units, such as managing employee safety or setting up employee benefits programs. At smaller businesses, however, the business owner and an administrative assistant may manage HR functions with HR software. Regardless of company size, HR serves many roles within an organization and they can be divided into 10 core functions.

What are human resources?

Human resources is the term used to describe functions within a company that support people within the workplace. Some firms refer to the HR role as “people operations,” a more human-focused evolution from the outdated “personnel department.”

What are the core functions of HR software?

The core human resources functions cover all people-related worker activities, from the time employees are recruited and hired to the time they retire or leave the company. Here are the 10 core functions of HR that all of the best HR software offers.

1. Find and hire great employees.

Whether you do the hiring yourself or outsource recruiting to a staffing agency, HR’s primary responsibility is to find the right people to sustain and grow your company. The tools of the trade include job boards and recruitment software that keeps track of applicants, candidates you’ve interviewed and people who have passed your screening criteria and background checks.

HR employees known as recruiters or talent managers identify your hiring needs, create the job descriptions, post the jobs and manage the candidates to ensure you hire the best talent for the job. You can also use staffing firms and executive search firms to help you find and recruit talent for your business.

FYIDid you know

Many employers are turning to technology, such as artificial intelligence, to streamline the recruitment process. However, regardless of whether you have a human or robot take part in your screening process, it’s important to watch out for hiring scams like deep fakes.

2. Ensure fairness and compliance.

HR software allows business owners to comprehend and interpret federal, state and local labor laws. They serve as business advisors, providing details about the Fair Labor Standards Act, the Affordable Care Act (ACA) and antidiscrimination laws so that you can avoid expensive mistakes and fines.

Your HR team creates and maintains your employee handbook, ensures you have the correct labor law posters hung, updates your policies when laws change, provides onboarding to new hires to ensure they’re aware of workplace requirements and investigates claims of harassment, discrimination or company violations within your business. [Related article: 8 HR Compliance Challenges Small Businesses Face Today]

3. Drive productivity and results.

Employees know when they’re being discriminated against or treated unfairly and that affects their productivity and loyalty and, in turn, your bottom line.

Conversely, employees know when they work for a company that treats people well. That’s why HR leaders focus on helping workers understand the business’s objectives and how their work helps to achieve those goals. In that sense, HR serves as an advisor and coach to the business, determining what will help people do their best work.

4. Keep employees healthy and safe.

The Occupational Safety and Health Administration (OSHA) requires employers to keep employees safe and healthy at work. The rules vary according to the kind of firm. In an office, for instance, safety may include having personal protective equipment available for visitors, emergency exits labeled and a fire escape map posted. In a commercial kitchen, it may mean ensuring that employees are trained on how to use equipment safely and that underage workers aren’t put in harm’s way.

Once a company reaches 50 or more full-time staff, it’s HR’s role to ensure those employees have the employee health insurance benefits required by the ACA. They’ll negotiate with benefits providers to help your business get the best health insurance rates. HR benefits experts understand the different types of resources, such as health savings accounts and employee assistance programs, that can work to keep your employees healthy, thereby lowering absenteeism.

5. Optimize the organizational structure.

HR supports your business in structuring the organization to improve efficiency and reduce noise and conflict. At a smaller firm, that may mean creating an organizational chart to show who reports to whom as well as making a contact sheet so employees know whom to call for questions on things, such as ordering office supplies or getting a copy of their pay stub.

As a firm grows, it often needs to restructure jobs and create supervisor responsibilities. HR experts in organizational design can help determine what kinds of leaders and team structures are needed. They can assist in determining the best span of control (how many workers report to each manager) and clarify how much decision-making authority rests at each level of the organization.

6. Coach, train and develop staff.

HR professionals focus on people, so they are well-versed in psychology, communications, body language and leadership. They’re often called on to provide training and coaching. At a smaller business, that probably includes welcoming new hires on their first day and getting them set up in their workspace.

At a bigger firm, the HR team may teach employees about software, business practices and company culture. Larger corporations hire teams of people to manage employee development, provide one-on-one coaching, train managers on leadership skills and help employees embrace new products, software upgrades, policy changes and more.

Did You Know?Did you know

Facilitating employee growth is key to growing your business. The right professional training and development opportunities can increase productivity, engagement, creativity and innovation and employee retention.

7. Promote best practices.

A core role of HR is to be the voice of what workers need as humans (fairness, connectedness and communication) and what they need as workers (tools, processes and software). For example, HR managers help remote teams find and use tools that keep them productive on the job, such as Zoom and Slack.

It’s often an HR staffer who updates the desk manual, maintains standard operating procedures and ensures that forms used by the business ― such as job application forms, direct deposit forms, requests for time off and employee personnel folder documents ― are up to date.

HR teams also bring tools, such as personality assessments, that can improve team communication, presentation decks to promote company values and internal employee communication platforms to keep workers aligned with business goals.

8. Engage and motivate employees.

An HR team also understands employee motivation and can coach managers on a variety of activities, such as how to interview without bias, motivate low-performing employees and reduce interpersonal conflicts on the team. They’re sometimes the event planners too.

It’s HR’s job to stay up to date on more than just labor law. The HR team embraces and drives best practices such as ensuring diversity and inclusion, managing remote work teams and providing effective peer feedback. HR experts understand how crucial it is to listen as part of engaging employees and helping them work through on-the-job issues.

9. Innovate and manage change.

At a small business, the business owner is usually the driver of change and innovation. However, once you hire more than a handful of employees, you’ll need someone with excellent communication, people skills, project management and change management expertise to get your team to buy into your new business idea, product offerings, software solution or executive team.

The HR person or department can help you identify the impacts of these changes on people and build a plan to mitigate the risks inherent in rapid growth or other business changes, such as a merger or acquisition. HR helps you strategize the best approach and bring tools from multiple disciplines (training, compensation, organizational design) to ensure your changes stick. [Related article: How to Handle Internal Communications During a Merger]

10. Minimize annoying paperwork.

This core HR function is listed last because it’s the bane of HR. States require you to report new hires. The federal government requires year-end paperwork, OSHA requires reports and employees need pay stubs and benefits forms. That’s not all; job applications, garnishments and requests for family medical leave are a paperwork nightmare. It’s HR’s job to minimize the paperwork by streamlining the business processes required when you have workers (contract or employees) on staff.

HR experts can help you choose the best systems and processes to manage all of the administration, forms, filings and mandatory paperwork required of employers. At a smaller business, they may be the keepers of the forms, timelines and reports. At a larger firm, HR experts may help you find and implement technology solutions, ranging from a simple project management board to track new-hire onboarding to a full-blown human resource management system that manages electronic document storage, benefits enrollment and payroll self-service for your team.

TipBottom line

If you want to streamline certain administrative HR functions, look for HR software that includes pre-built and custom HR reporting tools.

What are the best HR software providers?

There are several great HR software providers on the market. Each one has its own pros and cons, so you will want to evaluate each one carefully to determine which is best for your business. Here are five of our favorites to get you started:

  • Gusto HR software: Gusto is a powerhouse HR provider for any business that wants extensive payroll and compensation features. It offers multiple plans with transparent pricing, allowing businesses to choose a tier that is right for them. In addition to full-service payroll, Gusto offers hiring and onboarding tools, employee benefits administration, performance management and HR insights and reporting. Check out our Gusto HR Software review to learn more.
  • Rippling: If you are looking for an HR solution that can automate and streamline virtually any HR task, Rippling is a good option. With a wide range of available workflows and approvals, you can customize the platform to meet your HR needs. It offers HR management services, such as onboarding and offboarding, time and attendance tracking, benefits administration, payroll processing, learning management and device management. You can use the platform on its own or with a professional employer organization (PEO) co-employment model. Read our Rippling HR software review to learn more.
  • Paycor: Companies that want advanced HR analytics and reporting features will want to consider Paycor. This software comes with robust analytics, complete with benchmark data and key drivers to help you identify workforce trends. It integrates with hundreds of third-party applications and automates many workflows. It also offers essential HR services like recruiting, performance management, time tracking, payroll processing and benefits administration. Check out our review on Paycor HR software to learn more.
  • Paychex Flex: Paychex is one of the biggest names in the HR game and for good reason. It offers comprehensive HR functions such as recruitment and onboarding, payroll processing, employee benefits administration and performance management. It’s also a great resource if you are looking for assistance with risk management and legal compliance. Its user-friendly platform and flexible features make it a great option for small and medium-sized businesses (SMBs). Read our review on Paychex Flex to learn more.
  • BambooHR: Another top HR solution for SMBs is BambooHR. This HR software is flexible, user-friendly and available in multiple plans with add-on services. It offers all the essential HR services you could need, such as applicant tracking, employee onboarding, benefits tracking, payroll processing, document storage, time management, workflows and approvals, reporting and performance management. Read our BambooHR review to learn more.

What types of HR solutions are available?

Cloud-based HR software and virtual HR consulting firms can fill many of your business’s human resources needs. For instance, a small eatery may choose to use an online scheduling and payroll system that also keeps track of employee records while a larger restaurant may decide to sign up with an HR outsourcing provider to build its employee handbook and set up secure personnel folders.

Larger firms tend to hire full-time HR employees while the biggest enterprises have entire departments dedicated to HR activities, with smaller teams that focus on areas, such as learning and development, diversity and inclusion or employee benefits management.

To help SMBs compete with bigger companies, HR consulting firms offer both niche services, such as staffing, outplacement, training, employee satisfaction surveys, and complete solutions that manage all HR functions.

Many smaller businesses aren’t aware they can outsource their entire HR function to a co-employer, or PEO. A PEO manages the HR, benefits, payroll and compliance and you manage the workers. [Looking for a PEO service for your business? Check out our recommendations for the best PEO services.]

How is HR a value-add?

When managed well, HR brings value to your organization by providing your business with people strategies to get more done and giving workers the kind of work environment that allows them to thrive.

HR saves your business money by hiring people faster, avoiding workplace conflict and reducing the expense of attorneys and lawsuits. Best of all, talented, engaged employees improve client satisfaction, get work done faster and represent your brand positively. HR is all about ensuring you find and keep good people, which ultimately boosts your business’s bottom line.

How do HR needs vary by business type?

The decision to handle HR yourself, hire someone on your team to manage HR or outsource your people operations to an external HR expert depends on the business’s size, industry, budget and structure. Here are some examples of how different business types might handle HR:

  • Mom-and-pop businesses: A retail or service company managed and staffed by family members may not require a full-time HR manager. The business owner or spouse can often hire new employees on Indeed or similar job boards and pay them using online payroll software.
  • Tech: A small firm that wants to attract and retain highly educated or technical staff may prefer to partner with an external HR consulting firm for specific HR activities, such as recruiting and leadership coaching, as well as to ensure that worker’s compensation remains competitive.
  • Manufacturing company: A midsize company in a regulated environment may need HR support for more than hiring. For example, they may need help with OSHA compliance and workers’ compensation. They may also need an HR resource to set up and manage HR policies, processes and software for scheduling, timekeeping and overtime calculations.
  • Growing businesses: Any company with more than 15 employees needs HR support to ensure federal labor law compliance. Firms with 50 or more employees must offer health insurance as well and this requirement often necessitates outside benefits expertise to set up and manage enrollment.
  • Larger or multistate firms: Any company that has 50 or more employees or hires workers across multiple states likely needs the support of a full-time HR manager or external HR service provider to navigate the myriad labor laws affecting larger, multistate employers as many requirements vary by locale.

Since every business has unique HR needs, it’s important to carefully evaluate your specific HR needs and options before selecting the right HR software or service for your business.

Laura Handrick
Contributing Writer at business.com
Laura Handrick, MA, SPHR, is a professional with more than 30 years experience in HR, training, organizational development, and innovation management give her insight into business management, technology best practices, and labor law compliance. Having served at the executive level in Fortune 100 firms and international franchise organizations, Laura is passionate about helping businesses grow and scale. She has written over 100 long-form articles on topics ranging from software selection to performance management and shared her expertise in over 75 publications including the Wall Street Journal and Fast Company. Laura has a master's degree in instructional technology, is certified as an international franchise executive through the IFA, and as a senior professional in human resources through SHRM.
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