How to choose the best HR compliance software

Published: September 4, 2024 | by Natasha K. A. Wiebusch, Marketing Content Manager at Brightmine

What capabilities do you need in your HR compliance software? An employment law guide? State-by-state guidance? Do you need policy templates?

The questions may never end, especially with all that HR software can offer. Today, it might feel like there are literally too many options to choose from.

The key is to evaluate your software options carefully and holistically. This article provides detailed guidance on how to do just that. Learn how to evaluate HR compliance software and choose the best one for your organization.

What is HR compliance software?

HR compliance software provides tools and resources to help HR teams ensure compliance with employment laws and regulations. It streamlines compliance-related HR processes and reduces legal risks associated with employment practices.

Advanced compliance software can automate tasks, like reviewing handbook policies, drafting documents and completing compliance research. Some can also provide recommendations unique to the organization.

Compliance software’s role in HR

Generally, the purpose of HR compliance software is to reduce the risks of noncompliance with employment laws and regulations.

Because of advances in data and automation, however, its role has transformed in recent years. Now, instead of acting solely as a resource, HR compliance software has become a partner to HR professionals. Beyond providing resources, these partners automate certain tasks, provide detailed insights, and in some cases, offer recommendations.

Companies now typically customize software to meet an employer’s unique needs. For this reason, professionals often refer to them as HR compliance solutions or HR compliance software solutions.

For example, traditional software tools provided pay leaders with resources teaching them how to identify and remove pay discrimination. Advanced pay analytics software, on the other hand, automates this process. It ingests employee data, identifies pay inequities and allows the user to model interventions, such as pay adjustments. Some provide a combination of resources and automation.

In addition to acting as a compliance management partner, HR compliance software supports strategic HR initiatives. For example, an employee handbook management system can offer recommended policies in addition to flagging missing required policies.

Who uses HR compliance software?

Typically, and organization’s HR operations managers, compliance specialists and in-house counsel use HR compliance software. Depending on their role, they may use certain features more than others.

This type of software is also essential to HR consultants, who generally provide a variety of HR services to their clients that require some level of compliance.

Types of HR compliance software

Today, there are many different types of HR compliance software with varying capabilities and functions. The following are some of the most common functions:

• Employee benefits management.
• Employee data privacy.
• Employee handbook management.
• Document management.
• HR and compliance information (e.g., employment law guide).
• Payroll management.
• Reporting and analytics.
• Training and development.
• Unemployment claims management.

How to choose the best HR compliance software

Choosing the best solution for your organization is an important responsibility. When analyzing your software options, review the following steps:

1. Understand your needs

Organizations have unique compliance needs depending on their makeup. Specifically, the following factors will likely influence your organization’s needs:

• Industry.
• Places of operation/where your employees are based.
• Workforce size.
• HR team size and structure.
• Types of workers (employees, contractors, etc.).
• Skills needs.
• Existing software.

When considering new software, take some time to understand the above factors. These will help you answer important questions about your organization’s needs, such as:

• Which laws and regulations apply to your organization?
• Which specialty areas of compliance do you need assistance with? For example, do you need compliance guidance on immigration law, labor unions or employee benefits?
• Do you have any industry-specific HR compliance needs? For example, do your employees have specific safety needs? Do they work in an industry with unique employment laws?
• Who on your team will be using the software, and what do they need access to?
• What role will HR compliance software play in your team?
• Which other software solutions will the new software need to integrate with?

When determining whether a new software solution will meet your needs, evaluate the above factors so you can answer these and other important questions.

2. Review your internal objectives and goals

Next, review your HR team’s internal objectives and goals. Beyond ensuring compliance with applicable law, these objectives may include improving diversity, equity and inclusion; (DEI); pay equity or employee engagement. They may also include reducing the amount of time or money the organization spends on legal research or lawyers.

3. Evaluate your options

Now that you’ve determined what your needs and objectives are, you can evaluate your options. This is the most important step in choosing your HR compliance software and it requires a holistic approach.

When evaluating your software options, review the following:

• Capabilities.
• Quality.
• Security.
• Fit.
• Support.
• Experience.

Evaluating HR Compliance Software

Capabilities

As with any new technology investment, you have to determine which capabilities you want. You also have to set priorities by deciding which capabilities you need. The best way to make this decision is to start with the “non-negotiables.” These are capabilities required to solve the problems that created the need for your new software solution.

Once you have your non-negotiables, you can consider additional capabilities and features that your team might want. These can help you distinguish between close competitors that have the same or similar solutions.

Experience

Ensuring the software you choose has a great user experience is key. With a great user experience, your team will be more likely to use the software to its full potential. Importantly, they won’t spend as much time onboarding, or contacting your provider for support.

To help evaluate a software’s user experience, invite your most likely users to the table from the beginning. Including the user voice will help you select software that has both the capabilities and usability you need.

Also, set time aside to allow your users to test the software and provide feedback. You can either allow them to explore or you can go a step further and provide hypothetical tasks for them to complete.

Security

More and more, HR compliance software needs access to sensitive data to function properly. This may include pay data, employee health and benefits information or internal documents. When evaluating your options, evaluate the steps the vendor has taken to ensure their software is safe. You’ll also want to ensure that your provider complies with applicable data privacy laws.

Additionally, be sure to confirm that the software has access controls. These will help you minimize the exposure of sensitive data, keeping access on a truly “need-to-know” basis.

Quality

Ensuring your HR compliance software is high-quality may be a no-brainer. However, accurately evaluating quality in a short period can be challenging. In addition to testing as much as possible, consider the vendor’s reputation. You can glean insights from your network or review ratings on HR tech rating sites like TrustRadius.

If you’re evaluating AI-powered technology, be sure to ask where they source their data from and how they train their AI tools. To help you evaluate AI-powered technology, partner with your IT or cybersecurity teams.

Support

Software support or customer success teams aren’t there just to handle tech issues. They also onboard your team and provide ongoing training so that users get the most out of the software. In addition to evaluating the customer support experience, be sure to ask about their onboarding process. If they have one, review their support center resources and training materials.

Support specialists should also understand the HR compliance space. Without the right knowledge base, they may not be able to answer specific questions. To evaluate their expertise, ask whether they have subject matter experts available on staff.

Fit

Finally, you’ll need to determine whether the software is the right fit for your organization. Whether a software is the right fit will depend on your budget, needs, current technology and more.

Most importantly, you’ll want to make sure that the software is a good fit not only now, but also in the future. Be sure to determine whether your HR compliance software can grow with your organization while remaining affordable.

4. Choose your software

Once you’ve evaluated your options, you can choose the HR compliance software that works best for your organization. Before signing on the dotted line, review feedback from those who will use your software and other stakeholders.

You’ll also want to review the vendor’s reputation in the market. Though your own evaluation will be thorough, it helps to know what others have experienced with your potential vendor.

After you’ve chosen which software to invest in, consider creating a system to collect and retain feedback from users. This will help you communicate with the software provider should you have any issues or unique needs.

Considering HR compliance software?

Investing in the right HR compliance software is a critical decision for any organization. It not only ensures legal and regulatory compliance, but it also enhances HR processes. And with the right investment, it can become a strategic partner for your team and enable HR transformation.

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