Find the right HR software for your small business

HR software is a digital tool that helps businesses manage their employees and HR tasks in one place. You can use it to handle staff records, payroll, onboarding, compliance and holiday and absence tracking, saving time and reducing manual errors.

Businesses of all sizes and structures can use HR software, including startups, SMEs and larger companies, although very small businesses may not need it. 

Some of the key benefits of using HR software include: 

• Saves time – HR software automates manual and repetitive tasks, such as payroll and holiday requests, reducing paperwork and saving your business time

• Helps you stay compliant – It keeps employee records organised and up to date, supporting statutory requirements and reducing the risk of costly mistakes

• Streamlines hiring and onboarding – HR software manages job applications, contracts and new-starter processes, making it easier to employ someone

• Consolidates employee information – All details are kept in one place, recorded consistently and held securely

• Visibility of workforce – You have clear insights into headcount, absence, costs and trends, so you can plan and manage staff effectively

If you’re running a very small team with limited needs and a small budget, opting for free HR software may be sufficient. With this, you’re likely to get basic payroll tools and it should handle simple tasks such as employee records and annual leave. 

However, many free options lack robust security measures and have limited functionality, making them a poor fit as your business grows. 

Paid-for plans can be the better option if you have a growing team and require full payroll tools as well as advanced features such as recruitment and onboarding, advanced analytics and global compliance. Paid-for options also tend to offer dedicated customer service and training, as well as better integration with existing tools used by your business. 

The price of HR software depends on the features it offers and the type of subscription. Typically, you pay a monthly or annual fee that’s calculated in one of two ways: 

• Per employee, per month – This is a common type of subscription and means you pay a set fee, say £3 to £10, for each employee you manage in the system each month

• Business size and need – Different pricing options are available depending on the size of your business and the features you require

Many HR software platforms come with tiered plans where you need to pay extra to unlock more advanced features. There might also be a range of add-ons that you pay for separately, so you can pick and choose the features and tools you’re likely to find most useful – for example, managed payroll, employee benefits or recruitment tracking. 

Because costs can seem a little complex and some providers don’t even publish their prices online, it’s sensible to sign up for a free trial or demo first, so you get a good grasp of what each includes and which features you may be able to do without. Trials can last anywhere from a week to a month.

The following tips can help you successfully set up your new HR software:

• Create a plan – Decide what processes you want to set up first, whether that’s holiday requests or storing employee documents, and create a realistic timeline. This is much easier to manage than doing everything at once

• Start small – Use the features that are most valuable to your business first. Once you’ve grasped how they work, you can decide whether more advanced tools are genuinely needed

• Provide basic training – It’s important that your staff know how to use the software, so set up some training sessions to guide them through the key features they need

• Review after a few months – Once you’ve been using the software for a few months, assess whether you might need additional features, or whether you could drop some if they are not proving useful