Core HR Software Overview

What is Core HR Software?

Core HR software, often referred to as HR Management Systems (HRMS), or, more archaically, HR Information Systems (HRIS), is software for managing the back-end administrative HR tasks, some elements of which are essential to the everyday running of an organization. Core HR systems are the employee systems of record and are fundamental to all human resource administrative processes.

Core HR is distinct from other HR technology categories with which it is sometimes confused. The following table gives an overview of the HR technology landscape and of the main categories of HR software, including Core HR.

Core HR technology landscape

However, it is important to note that HR is becoming less and less focused on back-office only. Vendors have developed employee self-service, wellness, and engagement features, as well as analytics dashboards for managers and executives, to drive adoption in the customer's company beyond HR administrators. Their goal or value proposition is often described, somewhat grandly, as “changing the way people work” or “making work life better.” In accordance with this trend, Core HR products are becoming less and less strictly systems of record, with a category-wide focus on things like mobile, actionable insights from big data and predictive analytics, and integrated workforce and/or talent management capabilities. So, while it is useful to distinguish between full best-of-breed solutions in these five categories, it is also true that many of the leading vendors are building HR suites that include features from multiple other categories.

Core HR software, as the employee system of record, is very closely connected to payroll tasks. Payroll is sometimes considered a separate activity, and most (but not all) Core HR vendors also provide payroll capabilities. ADP is the giant in the payroll space, and many HR vendors integrate with ADP to manage payroll externally. There are dedicated payroll applications and also a large universe of PEOs (professional employer organizations), outsourcing companies who handle payroll and benefits on behalf of companies. PEOs work by technically hiring the employees of the client company, and co-employing them for tax and insurance purposes. For the most part these are not covered in this guide, except where they offer a technology platform with significant investment in Core HR, workforce management, and/or talent management features.

TriNet is the primary example of a PEO that also offers a cloud platform for Core HR; services are a much larger component of their offering than some of the other pure software vendors covered in this guide. We have included them because they are a major player in the growing, highly fragmented SMB market for HR technology, where buyers may want a Core HR platform but not have enough in-house resources to manage HR on their own. (Zenefits is another key example, though it is lighter weight technology-wise.) See our discussion of the emergence of Core HR for Small Businesses and Start-Ups for more information.

Common Capabilities of Core HR Software

The following section outlines the primary capabilities common to most Core HR software products:

Human Resource Management

The primary function of Core HR software is to provide a central database containing records for all employees and contractors, past and present. These records contain data on employee personal information, employment history, job profiles, workflow for transfers, promotions, pay raises, benefits information, etc.

Features related to Recruiting/ATS are:

  • Ability to enter detailed demographic data for each employee
  • Ability to track previous positions held
  • Creation and management of job profiles with descriptions of specific jobs
  • Workflow for transfers, promotions, pay raises
  • Benefits information and management
  • Ability to manage employees across multiple geographic locations, including internationally
  • Ability to comply with federal workplace regulations like COBRA, OSHA, and the Affordable Care Act (ACA) by capturing all relevant data in database

Payroll Management

Payroll management capabilities provide for calculation of employee pay and benefits, in addition to managing direct deposit, salary revisions and payroll tracking.

Features related to Payroll Management are:

  • Calculate employee pay including state and federal deductions
  • Ability to integrate with external payroll vendors
  • Ability to issue off-cycle checks
  • Maintain payroll history for each employee
  • Administration of health insurance plans, 401k plans and other benefits
  • Ability to electronically transfer pay to an employee's personal bank account
  • Payroll tracking and auditing
  • Ability to modify individual employee pay increments or other modifications
  • Statuary form management

Leave and Attendance Management

Leave and attendance management streamlines communication between HR and employees, and facilitates efficient management of employee leave including requisitions, approvals, balance calculation, and annual carry-forward.

Features related to Attendance Management are:

  • Workflow process for approval of employee paid time-off requests
  • Email notifications to employees regarding time off requests
  • Maintaining paid time-off balance after request approval
  • Enable unused paid time-off days to be carried forward to new year, or paid in cash

Employee Self-Service

Employee self-service is a portal allowing employees to view and update their personal information. This removes considerable administrative burden from HR staff. It is also a major part of technology-enabled managed HR services offerings for small businesses (such as TriNet).

Features related to Employee Self-Service are:

  • Employee login to portal
  • Ability for employees to view pay and benefit data and print pay stubs
  • Ability for employees to update personal profile with change of address, dependents, etc.
  • Ability to view personal job and performance history
  • Access to company handbook, corporate policy documents
  • Ability to view company news and information, organizational charts, etc.
  • Ability to recognize or thank a team member for work well done
  • May also include things like personal wellness and productivity tracking, or features related to goals and professional development

Asset Management

Some Core HR systems have the ability to keep a record of assets such as laptops, pagers, cell phones, etc. issued to employees. The record typically includes asset type, number, serial number and date of issuance.

Features related to Asset Management are:

  • Ability to track laptops, pagers, phones, and other company equipment
  • Asset issue and transfer management
  • Asset return tracking
  • Warranty and after-sales maintenance tracking

Reporting & Analytics

HR reporting has come to be seen as more important than ever as HR data is now considered strategic to the running of any business. Some vendors build their own reporting capabilities, while others partner with BI vendors to embed 3rd-party functionality.

Features related to Reporting are:

  • Ability to build custom reports via graphical user interface
  • Ability to export data to external systems for further analysis
  • Pre-built reports on employee retention, and other key metrics
  • Reports for auditing and data-cleanup
  • Ability to bring data from external systems like CRM and combine with HR data. For example, sales performance metrics from a CRM system might be combined with data from the HR employee system of record to determine the relative performance of geographically dispersed sales teams.
  • Dashboards for HR analysts, managers, and/or upper level management (particularly in products that focus on strategic HR and talent management or workforce optimization)

Workforce Management

Workforce Management is often considered to be a Core HR capability and is designed to manage scheduling and optimization of a large contingent or hourly workforce.

Features related to Workforce Management are:

  • Time and Attendance
  • Employee Scheduling
  • Absence Management
  • Workforce Planning

Core HR Trends

HR Category Convergence

Core HR and Payroll products have largely comparable feature sets, but a strong trend towards category convergence, even among other HR categories such as Talent Management, has been underway for some years. Thus, the dividing lines between HR categories are blurring.

Most Core HR vendors offer at least some capabilities from adjacent categories in an attempt to broaden their offerings beyond mere back-end administrative and data entry systems, in order to capture some of the attention being given other HR technology categories, which are viewed as more strategic.

As corporations strive to capture strategic advantage through hiring and training top-quality staff, and aligning their work in pursuit of strategic corporate goals, talent management systems in particular have received enormous attention recently. Evidence of this can be seen in the quantity of M&A activity, with large enterprise vendors rushing to complete their HR offerings with these talent capabilities. For example, SAP acquired SuccessFactors in 2011 for $3.4 billion, while Oracle acquired Taleo two months later for $1.9 billion. Salesforce's acquisition of Rypple in 2011 even indicates some appetite for entering this space by vendors not traditionally associated with HR technology.

Emergence of Human Capital Management Suites

The debate between best-of-breed and complete suite solutions is a perennial one in many software categories, not just HR. But as customers increasingly look for product suites with a broad range of interconnected capabilities in order to avoid the difficulties of having to integrate software from different vendors themselves, the appeal of software suites is easy to understand, particularly as strategic analytics take off, and offering a smooth employee/candidate experience and employee self-service become table stakes. In the HR software world, convergence of capabilities has lead to the creation of a relatively new HR software category: Human Capital Management (HCM). Vendors from many different categories are attempting to broaden outwards from their core competency. Several traditional Core HR vendors are adding talent management capabilities, while a number of talent vendors are adding back-end Core HR functionality. For example Oracle, Ultimate Software, SAP, Kronos, and ADP all offer some level of talent management capabilities. Conversely, SilkRoad, which started out as a talent management vendor, added Core HR functionality to the suite in 2009. Even on the small business side of the market, vendors like Namely and TriNet offer some talent management capabilities like performance management within their Core HR platforms, and are actively building out new features or acquiring small point solutions and building them into their platforms.

Workday integrates all elements of HR and financials into a single cloud-based ERP application. Integration with financials enables financial metrics to be included in HR planning so that, for example, during the annual planning and goal alignment process, employees goals can be aligned to support the overall corporate goals, and financial targets can be included as a part of this planning process. Workday's ambitions go beyond HR—their ultimate goal is to create a top-tier cloud ERP platform that may compete with SAP and Oracle.

Human Capital Management systems increasingly span the entire spectrum of capabilities from back end administrative HR to talent management capabilities, and even including Applicant Tracking Systems (ATS) and Learning Management Systems (LMS). Few HCM suite platforms provide equally strong capabilities in all areas, but convergence is nonetheless a real phenomenon. Ultimate Software and Workday HCM are included in both this guide and our Buyer's Guide to Talent Management, as their HCM products are robust enough to compete on both fronts, and we have substantial reviewer feedback on both their talent management and Core HR features. Oracle HCM Cloud, which includes full Core HR and Talent Management capabilities as well, is featured in that guide as well—we plan to incorporate them into future editions of this guide as well once we collect more reviewer feedback on their Core HR functionality. However, note that neither Ultimate Software nor Workday sells talent management as a standalone product; though their talent management offerings are evaluated alongside pure-play talent suites, they are only available along with Core HR, as integrated HCM platforms.

End-to-End HCM vs. App Ecosystems and Open APIs
System connectivity has become essential, but companies are achieving connectivity in different ways, depending on company size and business needs. On the one hand, having an end-to-end platform for all areas of Talent Management, Core HR, or both continues to be a strong value proposition, particularly for global enterprise use cases. On the other hand, vendors are opening up their platforms with APIs so that customers can set up integrations between systems more easily, or offering app networks of pre-built partner integrations (in some cases to “competing” functionality) that can be turned on right away. One example is ADP Workforce Now, which has its own recruiting module, but also offers a Jobvite app through the ADP Marketplace that can be used instead. Experts see this proliferation of options and approaches as a win for buyers, and don't necessarily think the market will settle down anytime soon.

Photo of Matt Charney - Executive Editor at Recruiting Daily“One major trend seems to be toward marketplaces. Oracle's actually done this for a while, through a preferred partner program. A lot of these vendors (this is categorically true of HR tech companies), because they are a backside venture and are expected to grow, rather than build a longterm product, are plugging capability holes with point solutions, through marketplace models. They're starting to take the tack of integrating other solutions through an API, not a one-off custom-built integration. It's kind of plug and play. They're able to then offer themselves like a palate or suite, where you're able to also work with all of your other vendors with a single sign on. This move to marketplaces is changing the dynamic, especially of how people select the core software, because a product doesn't need to check every box on an RFP as long as it integrates with other software that will.”
Matt Charney, Executive Editor at Recruiting Daily
Photo of Laurie Ruettimann - Founder of LFR LLC“Every business has unique needs, and I am an advocate of collaboration between HR professionals and HR technology vendors to determine what makes sense. But HR professionals shouldn't let the market dictate their choices. Is it an open API-based ecosystem? Is it an end-to-end platform? If you ask me to bet one a future, I will decline the bet. I think it's a false choice.”
Laurie Ruettimann, Founder of LFR LLC (HR, marketing, and technology trends consultancy)
Photo of George LaRocque - Principal Analyst and Founder, #HRWins“The debate about Core HR vs. Talent Management vs. HCM sounds a lot like the conversation about platforms vs. point solutions. I think that choice will be irrelevant in a few years. I don't see any real examples of a platform vendor who can do payroll all the way to learning at a best of breed level. So when you go for a suite, you're making a decision to focus on a certain area. The decision to do that has been because companies didn't want to deal with integration, and working with a single vendor meant less moving parts. It used to be that integration was incredibly difficult—a customer to customer project—but now we're living in an API world. So the customers have really won, not the point solutions or the platforms. One of the biggest frustrations historically for HR users has been that platforms don't talk to each other. Technology has finally caught up to where newer products, launched after 2010, generally came to the market with a more open approach to getting data in and out. That's something that puts the power in the buyer's hands.”
George LaRocque, Principal Analyst & Founder, #HRWins

All of these solutions address the reality that siloed people data is now considered an unacceptable roadblock to HR productivity. Note that solutions are not yet perfect, but user expectations are rising and reviewers are particularly harsh about difficult to configure integrations, an inability to report on combined data from different areas of HR, or forced bundling of features they don't want to use.

Core HR for SMBs and Start-Ups

Several of the products included in this 2016 edition are aimed primarily at SMBs and/or start-up companies. This market is much newer than the enterprise and mid-market segments, which have long been using HRMS or HRIS solutions, and the small business TrustMap is new to this edition of the guide. These are all online SaaS products. Many products have received quite a bit of funding recently, and the space is extremely fragmented, with point solutions like Gusto (formerly ZenPayroll) and Zenefits, which both provide HR management, payroll, benefits, and services, though Gusto is stronger on the payroll side and Zenefits is stronger on the benefits side, gaining enormous traction with both investors and the SMB market. Gusto was founded in 2011 and has raised $155M and has 30,000 small business customers so far; Zenefits was founded in 2013, has raised $583.6M and has over 10,000 customers so far. Many other point solutions under the HR technology blanket have cropped up as well, focused on learning, performance, scheduling, or analytics.

However, some experts have observed that HR technology start-ups are feeding primarily off of their investor networks—meaning that start-ups choose to use software from other start-ups funded by the same investors, sometimes selecting products they wouldn't have otherwise considered (either because they wouldn't have bought an HR platform at all, or because they might have gone with a more established vendor). This is not to say that those solutions are less valuable, innovative, or noteworthy, but buyers should be aware that some of the hype around them may be investor-led, and that there are always risks involved in working with emerging products/companies who may still be developing their business model.

There is also an important distinction in this segment between pure software vendors (like Namely) and technology-enabled services vendors (software + PEO, like TriNet or Zenefits). Pure software products require companies to have in-house HR administrators, and tend to serve the upper end of the SMB and mid-market segment. Depending on the level of HR resources in house, the complexity of the company's HR-related policies and processes, and the desire for employees to interact with an HR technology platform (either as admins or self-service users), it may make sense to select a vendor that offers robust services in addition to an online platform. Some reviewers said this kind of product is a particularly good fit for startups in growth phases.

Scalability is key for companies that expect to grow, in terms of number of employees the system can handle and features available to add in the future as their use case becomes more complex. While many of these products serve both small businesses and mid-sized companies, a company will likely have to switch to a more heavy-duty product as it approaches the 500-1,000+ employee range. Buyers should also pay attention to pricing structure around this topic, and make sure to ask vendors about the brackets for increasing cost around technology and/or services. 

We have already collected enough data to compile full profiles on TriNet, Paylocity, Paycor, APS, and Namely, which are included in this guide.

We do not yet have enough data to cover other interesting products in the SMB segment, like BambooHR, TribeHR, Paycom, and Zenefits, in great detail, but we have included ratings data and some initial reviewer feedback below. Note that this early summary is based on very limited data and may not be representative of all customer use cases.
 

BambooHR (19) 8.6 out of 10
  • Strengths: Onboarding, user-friendliness, and basic reporting
  • Areas for improvement: Setting up more complex tasks, approvals, custom reports, and printable org charts
TribeHR (2)
  • Strengths: Time tracking, employee social recognition, organizing company policies
  • Areas for improvement: Notifications and reminders
Paycom (3)
  • Strengths: Payroll management
  • Areas for improvement: User-friendliness, training, custom reporting, and talent functionality
Zenefits (7) 7.4 out of 10
  • Strengths: Intuitive UI, attentive support, pre-made reports
  • Areas for improvement: Kinks in new feature releases, re-hiring, and having one centralized employee profile

Many of these solutions are built around simplicity, following the thinking that small companies with limited resources are managing only the basics of payroll and benefits as well. However, some HR professionals at SMBs are starting to take a more strategic approach to talent, and think about how systems of engagement beyond payroll and records management—rather than being a nice-to-have, or an enterprise luxury—can actually help with their primary objectives, such as scalability and employee retention. For example, Mike Cilla, formerly an HR generalist at Victory Marketing Agency and now Learning and Development Manager at GasPedal, has experience with various Core HR products, including TriNet and Namely (read his review here). In an interview, Cilla shared some advice for peers, based on his experience using Core HR tools as an HR department of one:

“In my opinion, the number one thing buyers should ask themselves while evaluating HR technology is: ‘Is this going to help me with my job?’ My top priorities right now are talent strategy and company culture—a big part of this is employee engagement. Especially if you're an HR department of one, getting employees to use the platform is important, because it drastically cuts down the amount of work you have to do. In an HR department of one, people often talk about compliance as one of their top priorities—but in my opinion, if you have a good Core HR solution, that should be managing all of it for you.”
Mike Cilla, Learning and Development Manager at GasPedal

Cilla also said that at Victory, where he managed HR for a company with mostly millennial employees, having a platform for employee self-service with a more social feel, and where payroll, benefits, tax info, and performance records were combined, made a big difference in employee satisfaction. Beyond Cilla's own productivity, using a more talent and engagement-focused product improved employees' perception of the company overall, as well as their relationship to the HR department.

Factors to Consider when Selecting Core HR Software

On-premise vs On-Demand or SaaS

Traditionally, on-premise licensed software was the most common deployment model for this category of products, but more recently the cloud deployment model has become pervasive. For example, Workday and Kronos Workforce Ready were originally architected as a cloud solution, and Ultimate Software made the switch from on-premise to cloud technology in 2002 by completely re-architecting their product, making them the first vendor to deliver HR and Payroll solutions in the cloud. But virtually all other vendors including Oracle, SAP and ADP now offer cloud solutions, though some of their offerings are a patchwork of on-premise and cloud solutions without the advantage of having designed their systems specifically for the cloud.

The advantages of cloud software are well understood:

  • No CapEx expense: No outlay for infrastructure and software. Instead, software is paid for monthly on a pay-as-you-go plan
  • Access the software from anywhere: Users can access the software from anywhere they have an internet connection
  • Document control: Software acts as a central repository for all documents, regulatory forms, etc.
  • Fewer upgrade or patch worries: Vendor updates the software and all customers are automatically on the latest version. However, for buyers making a switch from on-premise or in-house solutions to a cloud product, reviewers say adjusting to these updates and to the lower volume of documentation/control over them, can be somewhat of a shock—although it is a net-positive, there can be negatives along the way, such as new feature roll outs before granular user permissions can be set.

User experience

Many users of back-end HR systems, such as payroll and benefit administrators, may not have a technical orientation, and it is vitally important that these systems be very intuitive and easy to learn and use. User experience has become a key buying criterion, and companies like Ultimate Software are bringing cutting- edge science and usability engineering techniques, such as eye-tracking technology, into the design process in order to deliver engaging and enjoyable user experiences. Oracle has invested in end-user labs and focus groups to hone the HCM Cloud's updated, consumer-like interface as well. Newer products like Workday have the advantage of building from the ground up with a consumer-like user interface that non-technical staff can learn on their own with very little training.

The idea of switching from “systems of record” to “systems of engagement” was initially proposed by Geoffrey Moore, but has now become mainstream as vendors endeavor to build products that people will actually want to use.

Photo of Steve Boese - HR Technology Conference Co-Chair and Technology Editor at LRP Publications“There's a running joke in HR tech - how often do you really change your address or add a life event? Although some vendors talk about their employee self-service features as having an engagement benefit, the truth is that Core HR platforms do not have a significant impact for most employees at a company, because they don't use them very often. In general, getting people to adopt technologies that are not part of their normal workflow is a tough ask. There are some exceptions, such as platforms that allow employees to recognize their peers, or provide some other kind of immersive, social experience to the user.”
Steve Boese, HR Technology Conference Co-Chair and Technology Editor at LRP Publications

There is no escaping the fact that Core HR and Payroll systems are fundamentally systems of record used for back-office administration, mainly by members of the HR department. However, even within these systems there is increasing focus on employee empowerment through self-service abilities delivered through employee portals. Products are increasingly being designed around a user engagement model that makes people want to use them rather than simply having to use them. Josh Bersin wrote in an article on this subject that in a recent survey “58% of surveyed organizations said that they would consider Workday because of its user interface”1. Another example of this focus is Ceridian Dayforce, which introduced Engage in 2013 as a new ‘social’ user interface designed to encourage collaboration and a much better user experience. Oracle HCM Cloud has similar social and collaboration features embedded into its new UI. Namely is notable here, too, for its especially modern UI that some reviewers described as social media-esque, likening it to Facebook. Yet one more example is Ultimate Software, which is building all its solutions to be mobile-ready using responsive design to match the experience to the type of device being used whether it's a laptop, tablet or smartphone. Though HR administrators too are beginning to demand more mobile admin functionality, across the category mobile is most important for employee self-service and manager dashboards/approval features.

User interface design will grow more and more important as consumer-like expectations become the norm in business product decisions.

1 http://www.forbes.com/sites/joshbersin/2012/08/16/the-move-from-systems-of-record-to-systems-of-engagement/

HR Data and Analytics

Another recent trend is the importance of HR data, and an increased focus on reporting tools. The data revolution has probably affected almost every facet of modern business except for the HR department. HR has been slow to understand the value of data, but as the shift from administrative support to strategic leadership continues, data has become more and more crucial as a lever of competitive advantage.

HR technologies are pushing data boundaries to provide companies with more coherent, useful analytics that connect data from across different Core HR and talent management pillars, linking payroll, benefits, performance, etc., as well as combining internal and external data. Many of the majorHR technology vendors like SAP, Oracle, Ultimate Software and, more recently, Workday have made stridesin building powerful data analysis capabilities, sometimes even incorporating predictive analytics, to helpHR leaders make decisions informed by good data. Ultimate Software has a predictive analytics tool that identifies an employee's flight risk and performance potential; Oracle, too, offers flight risk predictions and performance forecasting for individuals/teams.

In a different vein, Kronos is building analytics to help recruiters and hiring managers make better hiring decisions—for example, utilizing location data of terminated employees to calculate turnover percentages based on distances, and display data on current applicant map using a heat layer map. Generally, the trend across the category is toward data for decision-making. Insights are being surfaced earlier, more clearly, and to a broader group of roles (like line managers, hiring managers, and executives).

Just as in other business functions, new vendors are starting to pop up focused entirely on HR analytics. HR analytics allow HR staff to analyze data to see, for example, a list of promotions for a particular division over the last two quarters at the press of a button. More broadly, HR analytics are vitally important in quantifying the bottom line impact of HR processes and identifying workforce trends like employee turnover before they negatively impact the organization. According to vendors, more prospects have started to ask about predictive analytics in sales conversations recently; however, utilization of these tools is still relatively limited across their existing customer bases.

The next step already being taken by some vendors is towards more actionable insights that leverage machine learning—for example, not only predicting flight risk but recommending what steps to take to prevent it. Experts have pointed out that testing this kind of technology is a long game investment, since a) the algorithms are designed to improve over time and b) the impact will be unclear until the recommendations and results have had a chance to play out at an individual and aggregate level.

Photo of Steve Boese - HR Technology Conference Co-Chair and Technology Editor at LRP Publications“The two most interesting things I've seen in this realm this year are: contextual benchmark analytics and recommendations. For example, one big provider with access to lots and lots of data—because they are cloud based, with many customers—is doing interesting things with anonymizing data and then extracting insight and providing decision support more in line with the business process, in context of decision opportunities. If I was about to extend an offer to an accounting manager in Boston, the tool provides me with benchmark data on what should be in that offer, in terms of compensation, bonuses, etc. based on thousands or millions of available data records. The shift here is that practitioners are able to apply insights proactively, rather than after the fact, and it doesn't force them to go to some other place in order to try to leverage that insight, because the data is surfaced in context of the offer letter creation. Longer term, that's the key to organizations having more success with data. It needs to be more a part of the process flow, inside transactions.

The second trend I've seen are platforms trying to move beyond just presenting data and numbers, and on to presenting recommendations. For a while there have been predictive analytics on metrics like likelihood for churn, etc. Recently I've seen specific recommendations around what to do to mitigate that flight risk, once you know it exists. Should I provide development opportunities, a raise, or move the employee to a new group? Now some vendors are trying to use machine learning to understand and suggest interventions. But in terms of how well these interventions work, the software will have to learn over time—so it's a long tail play, because companies will need a feedback loop in sufficient volume that trends in the data are relevant.”
Steve Boese, HR Technology Conference Co-Chair and Technology Editor at LRP Publications

As HR analytics becomes more complex and far-reaching, experts predict concerns about data privacy will grow, from both ethical and legal standpoints. HR technology vendors and HR professionals will need to be wary of how collecting employees' personal data may influence trust between the employee and the employer, and whether external data sources are reliable. They will also need to stay on top of international data governance regulations (i.e. Safe Harbor), especially as they attempt to use big data to inform a unified global HR strategy.

Photo of Laurie Ruettimann - Founder of LFR LLC“Personally, I'm afraid that HR collects too much personal data that has no applicability to the business world. We are scanning resumes, reviewing LinkedIn profiles, managing benefit plans, and trying to quantify performance to justify salaries. At some point, the data security levee will be breached. HR will have to answer why we're stalking the workforce like the NSA and why we've been collecting unreliable and invalid web-based data on applicants, candidates, and employees.

There are great vendors out there with bold ideas, but at the time of this guide, nobody has figured out a way to predict the human heart.”
Laurie Ruettimann, Founder of LFR LLC (HR, marketing, and technology trends consultancy)
Photo of Matt Charney - Executive Editor at Recruiting Daily“Increasingly, as companies are going global they are buying global solutions—that's a change, because normally a guy in India is going to buy a separate instance and then figure out how it works with the corporate office in Sunnyvale. Data privacy/integrity is going to become the next big thing, because historically HR companies have sucked at that. There have been high note breaches and denials of service with major vendors, combined with global growth. While vendors seem to be adding new data streams and more predictive capabilities, is the information in the cloud secure? How do we make this as secure as the rest of your proprietary data? I think these companies are going to run into trouble with data governance, as they combine information from different systems in the cloud, like CRM + Marketing Automation + HR. Different data is governed quite differently. Localized data storage laws, like Safe Harbor in Europe and Brazil, for example, are going to be tricky in global situations. Companies need to plan more for that. Vendors are aware of this problem and are taking precautions, but I know of a couple of issues in the works where users and/or vendors may get dinged on data storage laws.”
Matt Charney, Executive Editor at Recruiting Daily

HR Staff Size

The HR staff required by a company depends entirely on the size of the company. Companies typically do not even think about hiring an HR leader until they have more than 50 employees. The kind of software required is strongly related to number of employees. Talent management is probably less critical for small, growing companies than the ability to handle pay and benefits for each employee. But small, growing companies need some level of talent management functionality, particularly recruiting automation. Conversely, smaller companies, may outsource pay and benefits to a specialist HR pay and benefits provider. But eventually many companies bring these back-office functions in-house once they reach a certain size. For this reason, there is a wide range of Core HR products serving different segments of the market. For example, Paylocity customers tend to be considerably smaller than Workday customers. Having a clear sense of what features and functions are required is the first step to choosing a solution appropriate to the size of organization. Payroll management is the most basic function for all companies, but leave management and asset management might not be necessary for a 100-person company.

As discussed in the Core HR for SMBs and Start-Ups section above, tools like TriNet, Paycor, Paylocity, and Namely are geared towards companies with very small HR departments (often an HR department of one), or companies that don't have any dedicated HR resources in house—especially in a start-up context, HR-related things may be managed by a co-founder, CFO, or office manager who has other responsibilities as well. Vendor expertise in the form of customer success about issues like multi-state tax compliance, managing international employees, etc. is important to companies of this size. Scalability is also important, because growing companies do not have time to evaluate new HR technology and migrate platforms. So Core HR tools for small businesses often serve a mix of small and mid-sized use cases. While the transition from being a mid-sized company to an enterprise certainly warrants a more complex HR management system, companies with fewer than 500 employees are usually more hesitant to make a switch.

Mobile

Mobile capabilities are becoming mainstream in the HR sector after a relatively slow start. But even still, vendors are at very different stages with their mobile development and are taking different approaches to mobile. Some are starting to design everything mobile-first, others are thinking about how to integrate with mobile apps (like a Calendar) that people already use regularly, and many are building dedicated tablet and smartphone apps that allow employees to submit time-off requests, and even punch in and out. Kronos Workforce Ready is an example of a product with strong mobile timeclock capabilities, according to reviewers. Some apps also provide access to payroll and HR data, employee directories, and expense report submission.

Some of the more innovative uses of mobile in the HR sector are in the area of performance management, where managers can send kudos to an employee, which is automatically logged in the performance management system. For example, Ultimate Software's partnership with Yammer allows employees to praise peers in Yammer and have it automatically display in in the Talent Management solution for managers to use during performance reviews. Learning management systems present another good use case for mobile access, where content can be downloaded to a tablet for study at home or when traveling. For systems that include time and attendance, and depending on the industry, users consider good mobile functionality absolutely vital—for example, for employees that need to clock in at different sites, or for managers that need to approve timesheets from a factory floor.

Recruitment is perhaps the area getting the most attention as recruiting processes are gradually moving to a mobile environment. A large percentage of job seekers now use mobile devices to search jobs, fill out applications, and even attend video interviews, so companies are starting to use mobile as a candidate sourcing strategy and connecting mobile candidate outreach to more traditional applicant tracking systems.

When evaluating product profiles, it is important to keep in mind that user expectations are often ahead of product development around mobile, since mobile is table-stakes for users (candidates, employees, and HR professionals) in most other aspects of their lives. Where vendors do not offer fully mobile-friendly solutions, they will certainly get dinged in user feedback—mobile is one of the top areas for improvement across products. Simultaneously, experts caution that vendors who tout their mobile capabilities may be over-compensating, either because they lagged in development but have now realized it needs to be a priority, or because they've invested a huge amount of time and money in developing a mobile solution and now feel compelled to “sell” it as a value point.

Photo of Matt Charney - Executive Editor at Recruiting Daily“As a consumer, do you ever ask for a ‘mobile solution’? No. I think the industry is not up to consumer expectation. A simple responsive design built in HTML5, which is now 5-8 years old, is very easy to do and normally involves pushing a button. If vendors are selling an app or mobile solution, if users have to have special software for mobile, I have serious questions because it probably means that the product doesn't have a very flexible code base—and who knows what kind of devices we'll need to be programming for in two years? I think mobile is de facto. Vendors who are selling mobile are usually doing it because they've put a lot of money into reinvigorating a poor code base. Otherwise, they're way past mobile and it's just a diagnostic. That talking point has basically become the new ‘Cloud,’ now HR buyers just expect it's there.

The one mobile category, though, that I think no one has paid much attention but to that's going to change everything is virtual reality. That could completely take away the need for workplace assessments or situational interviews, because you can actually have candidates or employees do the job. It could also take away the need for onsite visits, performance reviews, etc. That's the ‘mobile’ climate companies need to start preparing for, as opposed to just building an app for the iStore.”
Matt Charney, Executive Editor at Recruiting Daily

Moving forward, experts say HR users will at least expect to be able to do everything they might do from the online or desktop interface, including complex things like reporting and running payroll, from their mobile phones.

As vendors are already aware, mobile functionality for employee self-service and for managers (with performance reviews/continuous feedback, for example) is crucial to facilitating adoption across the organization, which in turn ensures that the system captures high quality data. This is really important for vendors' value propositions as they look to increase traction and be part of the way employees work on a day-to-day basis, rather than just limited to administrative functions within the HR department – or “trapped in a window-less basement,” as one vendor put it to me in an interview.

Product Capabilities

The following table summarizes the capabilities offered by each product across a few HR categories.

Core HR Software Product Capabilities