The biggest HR software investment for organizations is in talent management tools; the top functionalities sought are around recruiting, onboarding and performance management. That's not surprising given that organizations spend a lot of time and money getting people to work for them. Getting good people on board is important but keeping them is even more so—the experience and morale functionality play into retention efforts.

Managing payroll and benefits costs is a top priority for all organizations, given that salaries, payroll taxes and benefits are generally among the largest line items. HR management systems provide human resources teams with a number of ways to save, without cutting back on the employee experience.

Automating payroll is a high-value area for small businesses because manual data entry results in the most payroll errors. Besides the time required to correct mistakes, errors in tax withholding open the company up to IRS penalties.

Making sure the business is complying with regulations at the state and central level has long been the responsibility of human resources—and that job is only expanding in scope. HR must now account for HR compliance violations borne of everything from cybersecurity breaches to entirely new work models and changes to labor laws brought on as a result of the pandemic. Organizations report a high rate of success in using their HR systems to monitor compliance needs, and report on compliance.

Timecard fraud happens, and it costs organizations time and money. Fraud can run the gamut from taking long lunch breaks, to "buddy punching," when a friend clocks in for an employee running late, to billing for hours that weren't actually worked. Time clock systems require employees to swipe their employee IDs to punch in, which eliminates some of those issues. They add another layer of security by requiring manager approval and can also be configured to send alerts to managers if timelines aren't adding up.

The process of designing and managing employee benefits is complex, even for small companies. Keeping up with changing government rules and regulations and the time required for administration and paperwork are also challenging. Benefits administration functionality in HR software automates calculations of benefits eligibility, allows self-service by employees to pick coverage and integrates with payroll to make sure the correct amount is deducted from the employee's paycheck. This is more accurate and saves time.

HR, working with the internal communications team, must ensure that relevant security policies are kept up-to-date and that employees know how to identify and what to do with, for instance, phishing emails that contain malicious attachments or links. HR software processes keep policies current and ensure employees have signed off. On the HR side, the system provides role-based access and rules in the system that guard against unauthorized access to employee data in the first place.

Access to metrics for analysis is critical for HR cost management, compliance risk management and improved employee engagement. The top source of that information is the HR system. In fact, research shows that HR may be overtaking finance as an analytics-driven function. HR teams are using data to determine future workforce plans and predicting turnover in critical roles. Easy access to data that is both accurate and that can be viewed in real-time helps the business connect metrics to business goals. For instance, organizations trying to rein in recruiting costs can easily track crucial metrics, such as time to hire and cost per hire, alongside voluntary and involuntary turnovers. This helps tie costs to quality of hire.

When HR professionals aren't spending lots of time on administrative tasks and can trust that day-to-day benefits, payroll and personnel administration are accurate, they can focus on improving the overall employee experience. If the benefits administrator isn't mired in trying to ensure compliance and providing reporting, she can look for new ways to educate and engage the workforce on the benefits available to them—thereby raising morale and aiding in retention.