How to choose the right HR and Payroll software

You’ve just identified some problems in your business that relate to your HR and payroll software (or lack thereof). You might struggle to connect with your workforce digitally, or perhaps your basic HR admin - like distributing employee payslips or administering leave - is too time-consuming, costly and cumbersome. Once you’ve identified problems like this, the next step is to start exploring all possible solutions at your disposal. When it comes to HR admin, those solutions are usually twofold: either you continue with manual, paper-based processes or you elect to use one of the various HR systems at your disposal in the market: Jem, Oracle, Sage etc. In one of our previous articles, we spoke about some of the key problems with manual HR systems and some of the solutions that can address them.

There are an overwhelming number of solutions available, so how do you ensure you make the best decision? We've found that having strict criteria to guide your decision makes this task far easier to do. In this article, we outline the five most important criteria to consider when selecting which HR systems you plan to use to solve some of the problems you're facing.

1. Workforce: Where does the majority of your workforce do the work?

Your workforce is either predominantly office-based or deskless. A deskless workforce is one where the employees conduct their work away from a desk or office setting, for example, people who work the shop floor in a manufacturing company. If you're working in manufacturing, hospitality, agriculture, retail, construction or mining, you have a deskless workforce. In fact, deskless workers make up 97% of the South African workforce so we'd be surprised if you didn't have a deskless workforce of some sort. Deskless workers rarely use a computer for work and have far less access to email than their office-bound counterparts. We learned that even though the vast majority of working people are deskless, only globally, only 1% of enterprise tech spend is allocated to these groups. The same problem exists regarding technology developers: only 1% of venture capitalists' investment is going toward companies that solve problems for deskless workers. This means these deskless workers simply don’t have access to the same technology as the rest of the workforce, creating a host of problems for HR professionals.

In essence, and inexplicably, the deskless majority of workers are overlooked and underserved, but companies increasingly recognise the impact technology has on boosting deskless worker productivity and job satisfaction. 70% of deskless workers reported that more technology would help them do their jobs better. The parts of their work that they feel would benefit most from additional technology include communications, operations & logistics, onboarding, and training. Most of these workers have stated that they’re dissatisfied with the technology they’re being given, with dissatisfaction rates especially high among construction, education, healthcare, manufacturing, and retail employees. There is clearly an incentive for employers and employees to utilise more technology purpose-built for deskless workers; the ultimate result is more productive, embedded and satisfied employees.

HR systems are no exception to this phenomenon. Almost every big-name HRS you can think of is built with the desked worker in mind. Like other enterprise software, it simply isn't working for the deskless employee. The biggest challenge, in this case, is that the traditional channels to reach and engage employees - email, SMS and in some cases custom-built applications - are either ineffective channels for HR admin or ineffective channels for reaching and engaging deskless workers. Most deskless workers either do not have company email addresses or rarely use them; SMS has meagre engagement rates, is very difficult to track and doesn't allow for interactivity and dialogue; and custom-built applications are expensive and have exceptionally low usage rates. Very few companies that build enterprise software are keenly aware of these barriers and build solutions to overcome them. Jem is one of them.

So the first question you should ask yourself to assess the possible solutions is where does the majority of your workforce do the work? Are your employees desk-based or deskless? If your workers are mainly deskless, and your HR system requires them to interact with it via email, app or a desktop computer, then you shouldn’t even consider it. You need to find an HR system that caters specifically to the needs of deskless employees

2.Functionality and Compatibility: Do you need a turnkey solution or a modular one?

The size of your organisation and the particular HR activities you conduct will be key determinants of your solution and should inform your criteria. In general, there are 2 worlds to HR: admin HR and strategic HR. The admin side is typically reactive and includes payroll management, discipline, compliance, communications and attendance registers. The strategic side of HR is usually proactive. It includes payroll planning (from a budgetary point of view), recruitment, appraisals, training and development and retention. You will normally find that smaller, less digitally transformed businesses only perform the admin functions. In comparison, larger more transformed companies conduct both.

Figure 1: The 2 worlds of HR

Once you’re clear on your particular needs, you can start to consider the various solutions from a product point of view. Some brands offer complete or holistic solutions, which digitise every system from recruitment to appraisal, while others offer office modular solutions which work with your existing software. Sage, Oracle, SAP, Zoho, and Bamboo are typical examples of all-in-one software, while Jem, Payslip, Payspace and BCX offer modular solutions. Generally speaking, if your business mainly conducts Admin HR, then a holistic solution probably doesn’t make sense for you - not to mention the cost and complexity of setting up and maintaining these systems, which we’ll cover further on.

Whether you go for a modular solution or an all-in-one solution, there will be implications. All-in-one software tend to be far costlier to set up, license and maintain, not to mention that you’ll need to completely discard your current systems to accommodate them. On the other hand, modular software are usually designed to work with your existing systems and can set set up quickly. For example, Jem offers a number of modular solutions, all of which are payroll agnostic meaning they work with any payroll across the world. One of them is the paperless payslips module which simply plugs into your existing payroll software to help you deliver employee payslips to your employees via WhatsApp. Set up can take as little as 2 hours, giving businesses the opportunity to get up and running very quickly and without disruption.

The second question you should ask yourself to assess the possible solutions is: do you need a turnkey solution or a modular one? In other words, do you need a complete new system, or do you simply need to upgrade existing systems? If it's the former, be prepared to change all of your systems - and the cost and lengthy implementation that’ll follow. If it's the latter, you can expect a quick, low-cost implementation that allows you to results almost immediately.

3. Cost: How much will licensing, implementation and administrating cost?

This is an obvious question and one that’s usually underestimated. While most buyers only consider the licensing costs, several other costs are involved in implementing a new HR system including training, customization, data migration, implementation and administration.

The fact that most HRMS brands have opaque pricing should be the biggest telltale sign that not only are these systems expensive to licence but that they are also costly to set up and run too. When it comes to big brand name systems, a consultant is usually involved.

For example, if you were to implement Oracle’s HRMS, basic licensing starts at $13 per employee per month, which excludes any additional software modules you might need for your requirements (the Talent Management module is an additional $8 per month). Some packages include set-up and implementation, while others do not. The cost of the analytics module is $80 per user per month. To get the most out of a system like this, you are also strongly advised to utilize the services of a consultant who will assess your needs and advise you on which modules to select, and they typically charge per hour. While this is just using one big brand as an example, the approach is similar to most of the alternatives: to even know what you need and later get the most out of the system you need to hire a consultant, license the software and pay both a basic fee and additional fee for the specific modules you want.

The time cost involved in these systems is also significant. On average, it takes six months to implement a new HRMS, and that's if you throw all the resources at it that they suggest, which we’ve learned, most SMMEs and SMBs do not readily have at their disposal. A system like Jem, on the other hand, can be set up and ready to use in less than 24 hours, which means you start benefitting from it immediately.

The third question you should ask yourself is how much will licensing, implementing and administration cost? A turnkey solution is likely to be expensive and time consuming, but a modular one is likely to be less expensive. Find out more about Jem’s modular pricing here.

3. Usability: How easy is a new HR system to use and do I have the technical expertise needed to set it up?

Before you even consider whether a certain system is usable for the end users in your organisation, you need to consider the technical expertise involved in setting it up. When it comes to most HR systems, implementation is no small feat, and very few offer‘ plug and play’ capabilities. You will typically need in-house technical expertise - like developers - to execute a successful implementation. If you don’t have this expertise in-house, you’ll need to outsource the job (remember to add this to your total system cost). Smaller businesses prefer modular systems because they usually require less technical expertise to implement.

Once you’ve determined whether you have the technical expertise to implement a system correctly, you need to consider its usability for end users: is your workforce actually skilled enough to operate the new system? Computer literacy is essential, but most custom-built HR systems are significantly more complex to use than Microsoft Office applications.

This also applies to the administration of your system. If a process needs to be updated, data migrated, user permissions changed etc., you need to have someone in the organisation trained to carry out this work. In larger corporates where turnkey enterprise solutions are used, they normally appoint an HRMS/HRS/HRIS manager, a dedicated resource responsible for administrating the system. In smaller companies, the administration, maintenance and troubleshooting will likely be done by the same person who uses the software daily. Whether or not that is a reasonable expectation comes down to your particular workforce and context; however, we suggest using HR systems that have usability closely matched to your workforce skill level.

The fourth question you need to ask is how easy is a new HR system to use and do I have the technical expertise in-house needed to set it up? In simple terms, make sure your systems aren’t too complex for your staff to use; and if you do opt for a complex system, make sure you have dedicated in-house resources to maintain and troubleshoot the systems.

4. Support: What happens when things go wrong?

This is one of the most overlooked questions for evaluating an HR system. We should clarify that even the best enterprise software will have issues after implementation. Things will break, updates will change familiar layouts, and new people will join companies who missed the training that took place during implementation. It is a certainty that you will need after-sales support, and most businesses only realise whether their appointed system meets their needs when it's too late: once a problem has occurred.

The unfortunate truth is that even the most established brands have poor after-sales support. Many do not have call centres and work on ticketing systems. Many that have call centres require you to book a call that's usually a few days and sometimes weeks ahead. When something goes wrong, it is surprisingly uncommon to be able to pick up the phone and get immediate support, and in the workplace, where we simply cannot afford to wait weeks or days for help, this is a major failing. In Jem’s case, we offer Customer support in 2 forms: support for the employer and support for the employee. The latter is a unique offering when it comes to HR systems, and ensures that you don’t get bogged down with unnecessary employee queries when it comes to our systems.

A critical question for your HR system should be how long it takes to get support and the channels at your disposal because if you do not have a full-time HRMS administrator or highly technical staff, not having instant access to support can be crippling to your systems.

There might be additional questions that you want to consider - such as the system's scalability - but the above five are what we believe are the most important. You can use the template below to evaluate the solutions you’re looking at.