What is HR technology? It’s the software and systems used to manage human resources functions within organizations. As businesses increasingly rely on technology to get things done, so too do HR professionals.
HR tech tools designed for the different aspects of HR streamline processes, improve efficiency and drive strategic decision-making. The increasingly rapid advancement of technology has transformed the HR space, offering innovative solutions to age-old challenges and creating new opportunities for workforce management.
The importance of HR technology can’t be overstated. It can centralize employee data and empower your HR team to leave routine tasks in the hands of automation, reducing human error. This shift allows HR pros to focus on more strategic initiatives, ultimately contributing to higher productivity and cost savings for their organizations.
HCM vs. HRIS and HRMSTo effectively leverage HR technology, it’s crucial for HR leaders to understand the nuanced differences between the types of holistic HR software systems that can automate their processes.
Human Capital Management systems encompass a wide range of HR functions, including recruiting, performance management, compensation management and employee scheduling. HCM platforms help organizations manage their workforces more effectively, from hire to retire. HCM solutions often include modules for talent acquisition, onboarding, learning and development, and succession planning. By providing a holistic view of the workforce, HCM systems enable HR pros to make data-driven decisions that align with organizational goals.
“A lot of the HCM systems, they’re generalists. Like any generalist, they know a little about a lot. … For the most part, they do everything they need to do across the spectrum reasonably well. But if you want something to be the best performance system, you’re not likely going to find that inside of a generalist HCM system. You’re probably going to have to go find a specific … tool and integrate that with the HCM system because you’re going to get more functionality out of a specialty system,” said Michael Pires, co-founder and CEO of Enrichly HR.
He specifically mentioned performance management, benefits management and employee engagement tools on the market as being more sophisticated than what’s included in a typical HCM system.
Human Resource Management Systems provide a centralized database for employee information like contact details, performance reviews and training records. Software for human resource management systems also streamline HR processes by automating functions such as payroll processing, benefits administration and time tracking.
HRMS management also includes talent management tools, performance management modules, tracking regulations, and generating reports on key metrics like employee turnover, training effectiveness and compensation trends. This data helps HR make informed decisions about workforce planning, talent development and resource allocation.
HRMS software often offers self-service capabilities, allowing employees to access and update their personal information, request time off and view pay stubs. Self-service functionality reduces the administrative burden on HR pros and empowers employees to take control of their own data.
Human Resource Information Systems are, for the most part, central databases for employee information. Like an HRMS, software for HRIS can also include features for workforce planning and management of core HR functions like payroll and benefits administration. Repetitive tasks like onboarding new hires, managing leave requests and processing payroll can be automated within HRIS systems. By providing real-time access to critical data, HRIS platforms enable HR pros to respond quickly to changing business needs and make informed strategic decisions with HR software.
When asked about what companies are looking for when shopping for one of these holistic systems, Rachael Gannon, the EVP of Product for Paycom, said that in addition to simplifying all stages of their organization’s HR processes – including payroll – “HR technology that provides automated decision-making benefits managers and employees by eliminating unnecessary tasks and building seamless user experiences.”
She mentioned that one of the popular features of the Paycom platform is a time-off tracking feature called GONE, which provides employees with instant, automated decisions based on managers’ time-off decision-making criteria.
Being familiar with HR tech terms can help HR professionals stay on top of technology trends and provide actionable insight, whether you’re evaluating new tools for purchase or learning to use tech on the job:
Benefits management software simplifies the administration of employee benefits, including health insurance, paid time off and other types of leave. This HR tech tool increases productivity for HR by automating repetitive and complex processes and reducing manual data entry.
Advanced benefits management platforms often include features such as:
By streamlining benefits administration, organizations can reduce errors, improve employee satisfaction and ensure compliance with relevant regulations.
These platforms help HR teams improve communication, gather employee feedback and identify potential issues that may lead to turnover. By leveraging employee engagement software, organizations can enhance the employee experience, strengthen company culture and make informed decisions based on real-time insights. Key features of employee engagement software often include:
By fostering a culture of continuous feedback and recognition, organizations can improve employee morale, productivity and retention.
Popular HR tech platforms focused on employee engagement include:
Melissa Vadasserril, the director of HR software platform Justworks, noted that business travel has returned to what it was pre-COVID and small businesses in particular will reach a point where they need to move away from reconciling spreadsheets. They want to be able to bulk-approve reimbursement requests and automatically distribute them during payroll cycles, and they want something efficient, compliant and simple.
Expense management software streamlines the process of tracking, approving and reimbursing employee expenses, and managing company credit cards. These solutions provide detailed reporting capabilities, helping organizations maintain accurate records and control costs more effectively. Modern expense management software solutions often offer:
By automating expense management processes, organizations can reduce fraud, improve budget control and increase employee satisfaction through faster reimbursements.
Vadasserril highlighted the “Expenses” component within the Justworks platform, which allows business leaders to establish rules for each expense category and select fields for an employee to indicate whether a payment is reimbursable or not.
“This is particularly helpful for tracking company credit card usage, and employees can record non-reimbursable purchases. Each expense category is itemized on the company’s invoice, making it easier … to keep track of all expenses and transfer the data to their accounting system for reconciliation, creating ease and efficiency,” she said.
A lot of training happens at the onboarding stage of the employee life cycle. But what about after that?
Learning Management Software platforms facilitate employee learning and development, supporting upskilling and reskilling initiatives. These systems can reduce training costs, improve compliance, and even improve employee experience by creating personalized career pathing recommendations based on their skills, interests and organizational needs.
“AI (artificial intelligence) is more engaging than watching a video with a talking head,” said Bill Davis, a learning and development thought leader and founder of KGX2 Learning & Consulting.
Key features of modern LMS platforms include:
By providing accessible and engaging learning and development experiences, organizations can foster a culture of continuous improvement and adaptability.
Davis said that the most in-demand LMS feature is microlearning – five minutes of training per week within workflows pushed out to employees via their phones or the employer’s messaging systems. It’s a highly effective form of learning, he said, because according to The Josh Bersin Company podcast, employees engage with messaging apps an average of every six minutes.
Popular LMS software platforms include:
Payroll software automates processes that become particularly time-consuming for an HR team –calculating wages, generating pay stubs and managing tax withholdings.
According to a commissioned Total Economic Impact study conducted by Forrester Consulting in 2023, Paycom’s automated payroll solution, “Beti,” lowered labor for payroll processing by 90% and reduced time spent correcting payroll errors by 85%. This equates to 2,600 hours saved for HR and accounting teams per year by using automated software instead of manual tasks.
Payroll management systems integrate with time and attendance tracking, ensuring accurate and timely payroll processing. Advanced payroll management systems often offer:
By streamlining payroll processes, organizations can reduce errors, ensure compliance and improve employee satisfaction through accurate and timely compensation.
Performance management tools help HR leaders organize training goals, identify leadership potential and assess employee strengths and weaknesses. By providing a structured approach to performance evaluations, these systems can improve employee retention and engagement.
Key features of performance management software include:
By facilitating ongoing performance conversations and aligning individual goals with organizational objectives, these systems can drive higher levels of employee performance and engagement.
Popular performance management software platforms include:
Talent management platforms support the entire employee lifecycle, from recruitment and onboarding to development and succession planning. These comprehensive systems provide a single source of truth for employee and applicant data, contributing to more effective workforce planning. Key components of talent management software often include:
By providing a holistic view of talent across the organization, these systems enable HR leaders to make strategic decisions about hiring, development and retention.
The adoption of HR tech is transforming the role of HR within organizations. By leveraging these tools, HR can provide data-driven insights that support strategic business decisions. This enhanced capability opens up the lanes of communication and allows HR to collaborate more effectively with the business leaders in the C-suite, securing a seat at the table for important company discussions.
HR technology enables HR leaders to:
By leveraging technology to provide strategic insights, HR pros can position themselves as valuable strategic partners in driving organizational success.
Small and medium-sized businesses (SMBs) can also benefit from HR tech innovation. By implementing these solutions, SMBs can streamline their HR processes, innovate their operations and compete more effectively with larger organizations. Many HR technology solutions offer self-service capabilities, allowing employees to manage their own benefits and information, which can significantly reduce the administrative burden on small HR teams.
Key considerations for HR systems for small business include:
By carefully selecting and implementing HR technology, SMBs can improve their HR operations, enhance employee experiences and focus on strategic growth initiatives.
Steps business leaders can take now to improve their HR technology strategy include:
As HR technology continues to evolve, several trends are shaping the future of workforce management, including:
As these technologies continue to mature, they promise to further transform HR practices and drive organizational success.
Perhaps HR’s biggest tech challenge right now is AI integration.
Artificial Intelligence can help HR pros do their jobs better and target their efforts and resources more effectively. With the capability to analyze data to identify patterns and trends that humans sometimes don’t see, AI has great potential to improve recruiting, reduce employee burnout and improve employee satisfaction. For example, AI can analyze employee data to predict the likelihood of attrition, allowing HR to develop retention strategies before top talent leaves.
HR chatbots powered by AI can take care of answering frequently asked employee questions about benefits and policies, screen job candidates, handle pre- and post-interview communication, schedule appointments, process leave requests and more.
AI-powered tools can even encourage collaboration and inclusivity in the workplace, including providing alternative communication formats for neurodiverse workers.
Generative AI, such as ChatGPT, Google Gemini and Microsoft Copilot, can also help to automate some tasks, such as drafting job descriptions.
But in an episode of HRMorning’s “Voices of HR” podcast, ADP chief data officer Jack Berkowitz cautioned that generative AI “is creating content, or it’s creating new things, but it doesn’t actually understand what it’s doing necessarily. It just knows that words string together.”
“So, we should use it as a tool just the same way as … you use your car. You have to be safe, and you have to be trained,” he said.
One area that may take some training is mastering effective generative AI prompts, which require context, an objective and the format you want your results in. Davis noted that if you get good at prompting generative AI, it’s possible to utilize it to create your own employee training courses.
Technology plays an important role in facilitating remote work and helping hybrid workers shift from office to work-from-home by providing tools that enable communication and collaboration among geographically dispersed teams.
Effective remote/hybrid work and maximization of productivity requires tools such as videoconferencing, project management software, group messaging apps and note-taking apps. Some examples include Zoom, Asana, Trello, Slack and Evernote. These tools can help remote teams address challenges, stay on the same page, meet deadlines and share information easily.
Those tools and platforms double as HR technology resources for addressing different aspects of remote employee management and engagement, including recognition, feedback collection and productivity tracking. Additional tools and platforms that can be useful for HR to manage and engage remote employees include:
Data security in remote and hybrid work environments has been an ongoing concern for many employers from the moment workforces were dispersed during the pandemic. For example, some organizations have had to worry about payroll fraud being committed by employees based outside the office because there’s no way to manage their daily tasks in person.
AI-powered HR tech on the market can be deployed to alert the company to costly discrepancies in a time-crunched work environment.
That nagging fear that HR technology software and robots will completely take over the HR function is unfounded, experts say. After all, it’s still important for HR professionals to provide human input, as well as oversight of HR tech to avoid compliance problems from using AI.
“While AI is having a significant impact on the processes of HR, the role itself will not be changed by the technology,” said Britta Mühlenberg, the chief operations officer of content production software company Acrolinx. “Being a human has, and always will be, such a critical part of HR, even as AI plays a larger role in HR operations. I strongly believe that the human side of HR will never be able to be replaced by AI.”
When HR pros and ChatGPT 4.0 were challenged with answering a list of the same essential HR questions, the humans won! AI could handle linear, straightforward questions, but its answers became unreliable as the questions got more complex.
However, a comprehensive study by the Academy to Innovative HR concluded there are many HR roles with high levels of repetitiveness and/or low levels complexity that AI may make obsolete. But it also said if you have a role with a lot of responsibility, like CHRO, senior VP of HR, chief people officer, HR director, head of talent, chief learning officer, etc., your job is safe.
HR advisor Tracie Sponenberg encouraged HR pros to think of AI as their assistant. “The way I’ve been using [AI] is as a thought partner, talking out different scenarios. It’s a pretty good coach. I think it’s going to change us in the way we analyze data. It’s going to automate a lot of the day-to-day,” she said in an episode of “Voices of HR.”
As HR technology continues to evolve, staying informed about the latest trends and solutions is crucial for HR. By embracing these tools, HR teams can drive organizational success, improve the employee experience and position themselves as strategic partners within their companies.
The future of HR lies in the effective integration of technology with human expertise, creating a powerful synergy that can propel organizations forward in an increasingly competitive business environment.
