Human resources teams play a critical role in organizations by hiring top talent, nurturing professional development and creating an inclusive workplace.
HR technology helps them reach these goals by streamlining processes, eliminating mundane tasks and giving them the time, tools and data needed to do their most important work.
What Is HR Technology?
HR technology is software that streamlines the work of human resources professionals by automating administrative tasks, simplifying complex processes and providing data insights that can improve the organization.
What Is HR Technology?
HR technology refers to software tools that allow HR teams to digitize, organize and analyze information about the workforce while also automating administrative tasks and streamlining time-consuming processes.
HR technology aims to simplify a wide range of HR activities, from payroll and recordkeeping to more nuanced work like increasing employee engagement, creating a more equitable workforce and improving the hiring process for job applicants.
Some software platforms offer an all-in-one HR solution with a wide range of capabilities, while other tools focus on a specific niche, like benefits administration or compensation management.
How Is HR Technology Being Used
Name a function of the HR department, and there’s probably a software solution that aims to modernize and optimize it. HR technology can be used to:
- Create efficient and equitable recruitment processes.
- Generate data insights that result in organizational efficiencies.
- Gather workforce feedback that can improve the employee experience.
- Develop salary benchmarks.
- Disseminate information to employees.
- Design a smooth onboarding process for new hires.
Related Reading AI in Recruiting: What to Know
Why Is Technology Use in HR Important?
HR teams are juggling multiple high-profile responsibilities, so they rely on technology to provide efficiencies, data and support across multiple domains.
Boosts Efficiency and Productivity
By streamlining processes and automating administrative tasks, HR technology allows teams to be more productive and focus on more strategic initiatives, like fostering talent development or employee engagement.
As HR technology evolves with AI, HR professionals will be able to “reorganize the content of your work to focus on those parts that are the most uniquely human, or let you connect more uniquely with the humans that you’re serving as an HR professional,” Alan Whitaker, head of AI at BambooHR, told Built In.
Recruitment, for example, has been drastically streamlined by technology that can sort through hundreds of resumes, identify the top candidates and automatically email the candidates to book an interview.
Reduces Errors
HR technology reduces data entry errors, which can pose serious risks when dealing with sensitive personnel information. HR technology also prevents compliance issues.
“There are just so many areas that you could fall down in HR without a good tool set,” Brandy Burch, CEO at personalized benefits platform Benefitbay, told Built In. “It’s hard to keep all of that information together in spreadsheets, notes or Word documents.”
Decentralizes Information
HR software can also distribute information and data across the organization, which is why it’s important that a payroll system or HCM platform integrates with other software tools. If an employee sees inaccurate information on company software, it could create confusion or distrust.
“We lose people through those small administrative oversights,” Burch said. “People will become demotivated and resentful.”
Provides Data Insights
HR technology can also provide HR teams with data that can be used to make smarter decisions.
Some HCM systems come with the capability to report simple metrics, like headcount, turnover and retention. Some recruiting platforms might offer a look into the time and cost expended to fill a position or the number of job offers that were accepted. More complex HR metrics, like predicting how many employees might resign or retire in a year, might require a special HR analytics software.
Regardless of the type of metrics or software involved, HR teams now have more data than they would have ever thought possible without HR technology. This data can help them identify potential issues, diagnose problems and gauge the effectiveness of HR initiatives.
Related ReadingA Guide to HR Tech for Effective People Teams
HR Technology Tools
The HR technology sector has evolved over the years from payroll and workforce management platforms to multi-faceted software suites that can handle everything from onboarding to employee engagement. However, companies still rely on specialty software solutions that cater to the needs of specific functionalities, like recruiting and employee training.
Core HR systems
Human resources information systems (HRIS) or human resources management systems (HRMS) are the cornerstone of any company’s HR tech stack. They are primarily used to store employee records, manage payroll and benefits and track employee attendance and absences.
In recent years, human capital management (HCM) systems have expanded beyond the core offerings of HRIS and HRMS systems, offering a suite of HR tech modules that includes talent acquisition, performance management and other functionalities.
Smaller companies may opt for a limited HRIS system that can be used for payroll and a few other functions, while larger companies with 500 employees or more may invest in a HCM platform that handles nearly every HR-related use case. Larger organizations with more than 5,000 employees are more likely to complement their HCM system with specialty software solutions.
“Oftentimes, the business case and return on investment is more justifiable at larger enterprise sizes,” Lisa Highfield, principal director of HR technology and AI at HR research and advisory firm McLean & Company, told Built In. “That’s where I see a lot of organizations getting into specific talent acquisition suites or other point solutions.”
ATS
An applicant tracking system (ATS) streamlines the recruiting and hiring process. It’s used to post job openings, schedule interviews with applicants and share interview notes with the rest of the hiring team. ATS software often ranks resumes by their compatibility with the job posting, and it allows recruiters to sort and filter candidates based on specific keywords or minimum requirements.
Talent Management System
A talent management system is a suite of software products designed to manage the employee lifecycle from onboarding to offboarding. It typically includes modules for recruitment, onboarding, performance management and employee learning. Some software companies focus specifically on performance management systems, which allow managers to evaluate employees’ performance, track the career development of employees and prepare them for senior roles in the company. Another popular module within talent management systems is compensation management, which develops data-informed salary structures that are competitive and equitable.
LMS
A learning management system (LMS) is used to support employee learning and development. HR teams might use them to deliver required training about cybersecurity, sexual harassment or compliance. It could also be used to upskill employees with new skills and technologies, often through integrations with online learning platforms.
Employee Engagement
Employee engagement software is used to gauge employee sentiment and gather employee feedback. HR teams can use this data to address issues, target areas for improvement and improve employee engagement. Employee engagement software might also encourage employees to recognize the contributions of other workers, which also contributes to employee engagement.
Related Reading HR Software Tools and Platforms to Know
HR Technology Trends
Here are a few trends in the HR technology landscape and a look at where it might be headed next.
Use of AI
In recruiting, AI can quickly scan hundreds of resumes and surface those that are most relevant to a job description. AI can also create sample job descriptions, automate the scheduling of candidate interviews and draft inclusive, job-specific interview questions.
Some large companies use AI to summarize the hundreds of comments they receive on employee engagement surveys. AI can find trends and themes from the employee feedback and refer HR teams to specific comments that address those themes.
“We don’t want that to replace the human side of it, but it can help you navigate the richness of the human feedback,” said Whitaker, the head of AI at BambooHR.
AI and machine learning are also used in HR analytics functionalities, such as classifying data, identifying trends and making predictions. Whitaker said HR software may eventually offer a conversational interface that allows HR professionals to ask questions about the data, like the attrition rate of a specific department.
Self-Service
HR technology is increasingly offering self-service functionality that allows employees to access their benefits, chart their career path or recognize a coworkers’ achievements. This technology not only improves the employee experience, but it also unburdens HR teams from administrative tasks like manually entering address changes for employees.
Conversational Interfaces
Some HR platforms are taking self-service even further with AI-powered chatbots that can field HR-related questions from employees. An employee might, for example, ask how many remaining days of vacation they have left. This provides employees with a quick answer to their question, but it also reduces the amount of time HR teams spend responding to commonly asked questions. Some platforms also allow employees to take actions, like requesting a vacation day, through the conversational interface.
Remote Work
HR technology has also been helpful in enabling HR teams to manage payroll and compliance issues that come with a distributed workforce — a trend that has increased since the pandemic. This functionality is especially important as different states and countries pass new legislation that pertains to paid family leave, salary transparency and the use of AI in hiring and recruitment software.
New Modes of Learning
A growing number of LMS and employee learning programs are incorporating audio and video content, creating more engaging learning experiences for employees.
“What we find is that people learn differently,” Highfield said, “so the more ways we can expose them to that material or create that material in a way that makes it relevant to them, the better the learning retention and the better experience overall.”
Learning experience software is also giving employees the tools to create their own learning materials, allowing them to share details of their workflow or technology tools with their colleagues.
Frequently Asked Questions
What is HR technology?
HR technology centralizes employee data, automates administrative tasks and simplifies complex practices. It is used for core HR tasks like payroll and benefits, as well as recruiting, workforce planning, employee development and employee engagement.
Can HR be replaced with technology?
HR professionals will not be replaced by technology because HR work involves building relationships, making strategic decisions and other tasks that require business acumen. HR technology streamlines the work of HR professionals so they can focus on these high-level initiatives.
What are the trending tools and technologies in HR?
HCM systems are expanding their capabilities to tackle a broader range of HR tasks, while more specialty software solutions emerge to solve specific challenges. More software tools are starting to utilize AI technologies, specifically generative AI chatbots that can answer employee questions through a conversational interface.
