How to Choose the Best HRIS for Your Business

Key points about how to to choose an HRIS provider:

  • To identify the features and services you need from HRIS software, first outline your project goals and constraints.
  • After your evaluation process, calculate the ROI of your chosen software to persuade key decision-makers that an HRIS is worth the investment.
  • You can use our free How to Choose the Best HRIS for Your Business Checklist to navigate each step in the process.

An HRIS, or Human Resources Information System, can be a helpful tool for almost any organization’s HR department. If you want to adopt an HRIS, though, it can be difficult to know where to start. There are hundreds of vendors on the market, and they each have their own features and services. Finding the right provider among them, and then persuading your company leaders to invest, can be a challenge. 

The following guide will help you navigate the selection process, determine ROI, and ultimately choose the right HRIS for your business.

How to Choose an HRIS: Before You Begin

Choosing an HRIS may seem like a daunting process. Doing some background work and deciding how to choose an HRIS for your business will make the actual selection process much easier. It’ll also help you save time and make a well-informed decision.

Set organizational goals

Firstly, think about what you want to achieve with an HRIS. What problems are you trying to solve? What do you want to achieve?

Then review your HR processes and set related goals to help you identify what you need from the software. You might want to: 

  • Centralize your employee data and company documents
  • Make the applicant and hiring processes mobile-friendly
  • Track metrics for things like turnover, absences, and performance management
  • Ensure compliance with all Federal, state, and local laws

If you can attach specific numbers to your goals (like reducing turnover by 5%), it’ll be easier to evaluate the success of your software later on.

Identify essential features

Afterwards, determine the software features that will help you achieve your goals. Most solutions offer similar features like onboarding, but the specifics differ by provider. Because of this, it’s important to determine which features you need before researching or selecting providers. Purchasing a system only to realize that it doesn’t have all of the features you need (or has a lot of features you won’t use) can be a waste of time and resources. 

Depending on your goals, features you might need include:

You may require more specific functionality within each of these features. For example, within Talent Management, you may need the ability to set individual and company-wide goals, create performance reviews, and assign employees to training programs. Be sure to note these additional requirements on your list of desired features. 

If your list is getting too long, divide it into two categories: essential and non-essential. Essential features are those you need to complete your daily processes. Non-essential features are “bonuses.” They would be nice to have but aren’t necessary to your operations.

Determine project constraints that could limit how you choose an HRIS

HRIS implementation is a large-scale project that affects multiple aspects of your business. As such, project constraints are both realistic and unavoidable. If you can identify these early on, you can find a vendor who will work within your limitations.

Budget

The cost of an HRIS depends on the features you need and the vendor you choose. Define a realistic budget that will allow you to purchase your essential features without financial hardship. 

It’s important to note that not every HRIS provider includes the same features and capabilities in their “basic” packages. Some providers charge extra for core HR functions like payroll. Many others charge additional fees for ancillary services like benefits management. Take these differences into account when defining your budget. 

Technology

Without the right technological support, an HRIS may not have the impact you want. To determine where you may need support, ask:

  • Is your internal IT team ready to take on a project of this scope?
  • Do you have the server space and infrastructure needed to support an HRIS?
  • How comfortable are your employees with technology? How will you train them?

Time

Researching, evaluating, implementing, and adopting an HRIS can take several months. Assess your schedule and plan around any time commitments. You might want to ask:

  • Are your HR and/or IT teams understaffed? 
  • When is your business the busiest? At the end of the calendar year? During the holiday season? 
  • How many other projects are ongoing?
  • Are you in the middle of open enrollment, performance evaluations, or another time-consuming process?

Assemble stakeholders

Insight from other internal stakeholders can also help you choose the best provider. These key decision-makers will vary depending on your business structure, HR department, and processes. Your evaluation committee might include members from:

  • IT
  • Payroll, accounting, or finance
  • Performance
  • Training
  • Recruiting
  • Operations

Research & Evaluate HRIS Providers

Keep your project needs and limitations in mind as you research vendors. When determining how to choose an HRIS, consider each provider’s:

  • Features
    • Do they have all of the essential features you need? 
    • How many of your “bonus” features do they have?
  • Pricing
    • How much does this solution cost? Is it within your budget? Are there any additional fees? (An internet search can usually give you an estimate, but to get the most accurate pricing, you’ll often have to contact the vendor.)
  • Customization capabilities
    • Can you customize the workflows for your own HR processes?
    • Is the system regularly updated and improved with new features and capabilities?
    • Does it integrate with other software programs you plan to use?
  • User experience & employee experience
    • What is the user experience like? 
    • Is the software easy to use?
    • Is the design intuitive and visually appealing? 
    • Does the software guide employees through each process?
  • Data security 
    • How does each provider store and protect your data?
    • Who has access to your organizational and personal data?
    • What safeguards do they have in place? 
    • Do they have risk management, high availability, and disaster recovery?
    • Is the software compliant with all relevant guidelines and legislation?
    • Can you set different authorization levels for different people in your organization?
  • Customer support
    • How do you contact customer support? Are there multiple ways to contact them (phone, email, live chats, etc.)?
    • Is customer support responsive?
    • Is the provider located in a different time zone than you? Do you or your employees frequently travel to areas in different time zones? Will that affect your ability to get in touch with support?
    • What resources and training materials does the vendor provide? Which learning methods work best for you and your employees (live training sessions, videos, written walkthroughs, articles, etc.)? 
    • Are their current customers satisfied with the support they’ve received? What do their online customer reviews say?

Optional: Provide a Request for Proposal

After researching vendors, you may want to send some of them a Request for Proposal (RFP). A RFP defines the goals and limitations of your project. This document can help you solicit and compare bids from vendors. If you choose to provide a RFP, it should include:

  • Minimum project requirements (your list of essential features)
  • Project constraints (limitations due to your budget, technology, and time)
  • Target schedule or timeframe for implementation

Note: Most HRIS providers do not require RFPs. In fact, most vendors will reach out to you to discuss quotes and project parameters. Check with each provider to see what they prefer. 

Demo the Software

Once you compare quotes and providers, demo each HRIS software with a product expert. In most cases, the product expert will personalize the demo for your business. If you need advanced scheduling capabilities, for instance, they’ll be sure to show you that feature in detail. 

Demos give you the chance to see the software in action and ask any outstanding questions. You’ll likely think of new questions or concerns during the demo, too.

Prove the ROI of Your Chosen HRIS

After you demo the software and ask your questions, gather your committee of internal stakeholders to choose a solution. Once you’ve made your decision, present your choice to the key decision-makers and C-suite at your organization.

An HRIS can be a large investment—showing its ROI will be crucial to justifying your choice and obtaining approval from leadership. Online calculators can give you a good starting point, but ROI is dependent on a number of company-specific things such as your:

  • HR processes
  • Company size
  • HR professional’s salary
  • And more 

You can perform some basic calculations to get a more accurate ROI that takes into account your specific business.

To calculate your ROI, you’ll need:

  • The amount of money you’ll save with an HRIS (the amount returned)
  • The total cost of an HRIS (the amount invested)
  • The average hourly pay rate of your HR staff
  • The number of employees you have
  • The average number of hours per year that HR spends on tasks like:
    • Entering the same data in multiple systems
    • Maintaining and updating employee information (name, contact information, hire date, etc.)
    • Managing PTO and absences 
    • Identifying and scheduling training
    • Managing paperwork 
    • Maintaining compliance
    • Creating reports
    • Tracking applicants
    • Onboarding and offboarding
    • Managing performance and reviews
    • Managing employee benefits 
    • Maintaining carrier connections
    • Processing payroll and filing taxes
    • Calculating and tracking salary changes, garnishments, and deductions
    • Tracking time and time cards
    • Any other HR task (look for processes that are ineffective, non-compliant, or time-consuming)

To calculate the amount of money you’ll save with an HRIS (the amount returned):

  1. Add together the average number of hours spent on each task per year.
    • If you aren’t sure of the annual total, determine how many hours per week HR spends on each task. Add these hours together, then multiply that sum by 52 (the number of weeks in a year) to get the annual average.
  2. Multiply the total by the hourly pay rate of your HR staff.
    • The result is the cost of employee time spent completing tasks that an HRIS could perform.

To calculate the total cost of an HRIS (the amount invested), add the following together:

  1. The annual cost of the HR software itself, including any additional services or support fees
  2. Implementation or set-up costs, including data imports, custom configurations, and training

Most providers charge per employee per month, so be sure to take that into account. This calculation may vary slightly depending on whether additional fees are one-time charges or monthly fees.

To calculate the ROI:

Finally, take the amount returned and the amount invested to determine the ROI. You can also use an online ROI calculator.

By percentage:

  1. Subtract the amount invested from the amount returned
  2. Divide that result by the amount invested
  3. Multiply by 100

In dollars:

  1. Subtract the amount invested from the amount returned

With a concrete ROI to present to your decision-makers, it’ll be easier to persuade them that an HRIS is worth the investment.

Note: It can be difficult to calculate a precise ROI. Every business is unique, and benefits like improved employee morale and lower stress can be difficult to quantify. While you may not be able to include these items in your calculations, they’re still worth mentioning.

Example ROI calculation:

A company has 100 employees and one HR professional. They pay their HR professional an average rate of $20 per hour. Each year, their HR professional spends a combined 1086 hours completing various HR tasks like those listed above (entering data, processing payroll, etc.). Their HRIS provider gives them a quote that charges them $5 per employee per month, with a one-time set-up fee of $4000 (roughly $40 per employee).

Amount returned

Number of Hours Spent on HR Tasks Each Year × HR Professional’s Average Hourly Pay Rate = Amount Returned

1086 × $20 = $21,720

Amount invested

(Cost of HRIS Per Employee Per Month × Number of Employees × 12) + Any Additional One-Time Fees = Amount Invested*

($5 × 100 × 12) + $4000  = $10,000 

*This calculation may vary slightly depending on whether additional fees are one-time charges or monthly fees.

ROI

Amount Returned – Amount Invested = ROI $

$21,720 – $10,000 = $11,720

((Amount Returned – Amount Invested) / Amount Invested) × 100 = ROI %

(($21,720 – $10,000) / $10,000) × 100 = 117.2%

Evaluate Your HRIS Provider

Evaluating your HRIS (or any software you invest in) will ensure it’s meeting your needs and giving you a strong ROI. Once you’ve adopted your chosen HRIS, consider:

  • Has the software met your expectations? 
  • Have you achieved your initial project goals? 
  • How have your employees adjusted to the new technology? 

For more information about how to evaluate your HRIS post-implementation, check out our blog Everything You Need to Know about HRIS Implementation.

Use Our Checklist to Navigate the HRIS Selection Process

An HRIS like SentricHR can simplify your HR department’s day-to-day tasks and streamline your entire business operations in the process. Understanding how to choose an HRIS can be an involved process, but going through each step in depth will help you get the most out of your software.

Our free Checklist will help you keep track of each step so you can find the best HRIS for your business.


Recommended Posts