How lean HR teams should evaluate HR and payroll software


Mar 22, 2022

The use of HR software tools was on the rise even before the pandemic started. Now, over two years in, workplaces have fundamentally changed. Remote and hybrid work is here to stay. Company demographics continue to skew younger. And companies are waging an international search for talent. 

Businesses need HR systems—especially their HRIS—to be dynamic, flexible, and user friendly.

The right HRIS partner can ensure that new hires have the best possible onboarding experience. It can also ensure that your business stays ahead of compliance issues in multi-state and international scenarios, and it can provide workflow tools that adapt to your business’s ever-changing needs.

How does one sift through a crowded marketplace with limited time and resources? These are the steps I encourage my clients to follow to find the systems that best fit their needs:

Step 1: Assemble your project team 

First, get your team together and bought in on the project.

The last thing that you'll want to do is spend hours falling in love with a certain software platform, only to find out that your teammates aren't on board with the decision.

We always recommend having a kick-off call with your cross-functional stakeholders. This meeting allows you to hear all the opinions early on. It also makes the project real for everyone involved.

In this meeting, ask each member of the project team three questions:

  • What do you hope to get out of this transition?
  • What do you need to see from a vendor to be comfortable enough to move?
  • What time-consuming processes should ask vendors if they can automate?

By the end of this meeting, you should have a clear idea of what the team’s priorities are and who your project advocates will be. You’ll also know which team members are skeptical and what they need to see.

Step 2: Determine your priorities   

If you don’t create clear objectives early in the process, then it will be difficult to discern between different options and you'll open yourself up to being sold unnecessary features and functionality.

We always recommend our clients boil their needs down to five key outcomes. If this project could only succeed in five areas, what would those be? Often those outcomes are: 

  • Better integrations
  • Better reporting
  • More responsive support
  • Fewer systems
  • More scalability

Most buyers make the mistake of starting their requirements-building process by creating a long list of features and functionality that they will need. And while there is some merit in this action, the problem is that almost every major HRIS vendor will be able to mark ‘Yes’ when you ask if they can offer that feature. 

We always recommend our clients boil their needs down to five key outcomes. If this project could only succeed in five areas, what would those be?

Remember, you’re trying to decide how easy actions are to complete, how integrated the HRIS is with the rest of your tools, and what support is available to you when you get stuck.

Get your key outcomes together and agreed upon first, then start to think through functionality and features. 

If one of your key outcomes is “reducing the time to onboard each new hire from 5 hours to 1 hour” you can stay open-minded about how that’ll be accomplished. My clients are rarely looking for an integrated IT solution, but Rippling’s ability to provision software licenses automatically for new hires often achieves their desired outcome of reducing time to onboard, in a way my clients didn’t envision for themselves.

And if you need help building those requirements, this Requirements Builder tool can save you time.

Step 3: Cast a wide net

When looking for potential vendors, don’t be afraid to gather quite a few names. Most people build their initial list by canvassing review websites and blogs, as well as reaching out to colleagues and peers to see which names pop up the most. Ask your insurance broker, accountant, and other third-party advisors you already work with. 

It may seem counterintuitive to start with a longer list, but it will be easier to feel confident in your final decision if you've already ruled out a number of competing options.

There’s nothing worse than getting to the end of an evaluation process and not having an answer for a stakeholder when they ask, “Why didn’t we look at Vendor X?” 

Also keep in mind that there are free services that can recommend the right vendors for you, based on your requirements and goals.

Step 4: Eliminate vendors quickly 

The key to building a targeted list is learning how to rule out options without demos. Here are four ways to do that:

  1. Missing functionality: Visit software vendors' websites to see if any of them are missing key modules that are in your requirements (i.e., vendors that can’t process payroll, vendors that don’t have an ATS, vendors that can’t support asset management).
  2. Size match: Visit software review websites and see the size of companies reviewing these platforms. If all of the reviews come from companies with fewer than 50 employees, you'll know the tool is designed for SMBs and might be too limiting. If all of the reviews are from companies with 1,000+ employees, you'll know the tool is designed for enterprise-scale companies.
  3. Scalability: While your short-term needs are most important, check for functionality that will grow with you over the next few years. Expect to grow your team? Expand into additional states? Make sure your vendor is a good fit both for where your company is today and where you’re headed.
  4. Vendor company’s trajectory: Ensure the vendors you evaluate are continuing to invest in improving the quality of their product and support so that two years from now you’ll still be using the best software on the market. 

Step 5: Create a demo guide

The next step is to ensure you don’t arrive to demo meetings empty-handed—your job is to be the one driving the evaluations. Set a meeting agenda and create questions to support your key criteria.

Let’s say your key criteria include: integrations, employee experience, payroll & tax filing support, and scalability. You should send your potential vendors an agenda outlining how you want the meetings structured. Here’s an example:

  • Initial overview covering company history & trajectory
  • Demonstration of a day-in-the-life for employees
  • Admin experience including the build-out of custom workflows
  • Overview of support and implementation model (including how integrations are built)

While your short-term needs are most important, check for functionality that will grow with you over the next few years. Expect to grow your team? Expand into additional states? Make sure your vendor is a good fit both for where your company is today and where you’re headed.

Create follow-up questions. For example, instead of asking, “Can you integrate with Vendor X?” Instead ask, “How is that integration built? Who is responsible for building it—us or your team? Will we have to maintain the integration over time?”

Sharing your criteria and questions in advance will also give the vendor time to prepare to give you meaningful answers in the moment. A little preparation will go a long way in ensuring you get everything you need out of your 60-90 minute demonstrations.

Step 6: Get the best deal 

The final step in the process is often one that is most underutilized: negotiations. Most buyers just assume that a list price is fixed and can't be moved. But in our experience, almost every single buyer who negotiates ends up with a better deal.

We've built a guide detailing how to negotiate, but a few of the key things to keep in mind are:

  • It's a give and a take, so if you want better terms, you'll likely have to agree to signing a contract by a certain date, or agreeing to a multi-year contract
  • Your sales rep is your ally, so arm them with what they need to bargain on your behalf. The best course of action is almost always to have honest communication with your salesperson about your priorities and your decision making process.
  • Many HR/payroll vendors will operate on a monthly payment model but some offer annual billing terms where you pay your entire software fees upfront for the year and can negotiate a further discount

The software your HR team chooses will dictate how long many of your team’s recurring tasks like payroll, employee onboarding, open enrollment, and more will take you. Your time is your most valuable asset. It’s easy to get bogged down in feature or price comparisons, but at the end of the day, don’t lose sight of the most valuable comparison: how much more can your team accomplish for your organization with one software platform vs another? 

Brett Ungashick is the founder of OutSail, a Denver-based company that provides free services to help HR teams research, evaluate and select new technologies.

last edited: March 26, 2024

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