# Intro to Human Resources: The Basics of HR and Beyond | Capterra > Intro to Human Resources: The Basics of HR and Beyond | Capterra Source: https://www.capterra.com/resources/human-resources --- HR BasicsHuman Resources # Human Resources: The Basics and Beyond Written by: Sierra Rogers Sierra RogersAuthor Sierra Rogers is a senior content writer at Capterra, covering human resources, eLearning, and nonprofits with expertise in recruiting and learning and devel... [See bio & all articles](https://www.capterra.com/resources/author/srogers/) Published November 13, 2023 22 min read Table of Contents - [What is human resources (HR)?](#what-is-human-resources-hr) - [Why is human resources important?](#why-is-human-resources-important) - [What are some HR best practices?](#what-are-some-hr-best-practices) - [What are some emerging trends in human resources?](#what-are-some-emerging-trends-in-human-resources) - [Download Capterra’s free skills gap analysis template](#download-capterras-free-skills-gap-analysis-template) Today’s HR leaders oversee a wide range of responsibilities. From essential tasks like making sure that workers get paid on time to more complicated initiatives that help their organization prepare for the future, the role of modern HR departments is critical for business success. Whether you’re an experienced Chief Human Resources Officer ([CHRO](https://www.capterra.com/glossary/chief-human-resources-officer-chro/)) or a new HR associate, the insights packed into this guide will help you brush up your knowledge of this critical business function. Ahead, we’ve collected an assortment of information and resources on all things HR, from the foundational duties of a typical department to the [latest technology](https://www.capterra.com/human-resource-software/) and trends defining the future of human resources. ## What is human resources (HR)? [Human resources](https://www.capterra.com/glossary/human-resource-management/) is a business function responsible for supporting the ongoing recruitment, development, and management of talent. Historically, the purpose of an HR department was to compensate and administer benefits to the workforce as well as ensure compliance with employment laws. However, today’s HR departments go beyond this by taking on more strategic tasks that help organizations stay competitive and resilient (such as [succession planning](https://www.capterra.com/glossary/succession-planning-and-management/) and [employee development](#talent-development-upskilling-training-and-developing-employees)). ### Foundational HR Content [What is Human Resources? Exploring the Functions and Significance of HR](https://www.capterra.com/resources/what-is-human-resources/)October 26, 2023 by [Raul Mercado](https://www.capterra.com/resources/author/raul-mercado-guest-contributor/) [What is Workforce Planning? Examples and Tips for Small Businesses](https://www.capterra.com/resources/examples-of-workforce-planning/)August 2, 2022 by [Lauren Spiller](https://www.capterra.com/resources/author/lspiller/) [Friends at Work? Today’s Employees Aren’t Interested](https://www.capterra.com/resources/friends-at-work-research/)March 3, 2022 by [Brian Westfall](https://www.capterra.com/resources/author/bwestfall/) [Change Fatigue is Making Employee Burnout Worse](https://www.capterra.com/resources/change-fatigue-in-the-workplace/)June 6, 2022 by [Brian Westfall](https://www.capterra.com/resources/author/bwestfall/) ## Why is human resources important?  A strong human resources function is a critical part of any organization for the following reasons: ### 1\. HR is responsible for talent acquisition HR shapes the future of an organization by attracting and recruiting high-quality talent to it. They have to ensure that the right fit is hired for the right role as well as create an [onboarding process](https://www.capterra.com/glossary/onboarding/) where new hires feel supported from day one. ### 2\. HR oversees employee satisfaction, engagement, and productivity HR is tasked with tracking and improving metrics that impact business outcomes such as talent retention and [productivity](https://www.capterra.com/glossary/employee-productivity/). They achieve this by carrying out different initiatives, whether it be introducing a formal performance review process or mapping out potential [career paths](https://www.capterra.com/resources/what-is-career-pathing/) for different departments. ### 3\. HR takes the lead in cultivating a positive work culture Promoting and communicating what’s unique about an employer’s brand is one aspect of a mature recruiting strategy. Because of this, HR is often tasked with setting the tone for their organization’s company culture. There are many ways they accomplish this; for example, they may introduce [diversity, equity, and inclusion (DEI) initiatives](https://www.capterra.com/glossary/diversity-and-inclusion-d-i/) or encourage executives to sponsor [employee resource groups (ERGs)](https://www.capterra.com/resources/what-are-employee-resource-groups/#what-is-an-employee-resource-group). ## Key responsibilities, roles, and functions of HR The [full range of responsibilities for a modern HR department](https://www.capterra.com/resources/how-hr-supports-employees/) depends on the size and maturity of the organization they’re supporting. With that in mind, we’ve identified six standard areas of focus for a typical HR department: ### Employee compensation and benefits One of HR’s most important duties is to **develop and manage compensation plans** for employees. Compensation plans include information about what an employee is paid to do, how and when they will be paid (such as hourly, salary, etc.), and to what extent their pay is related to their performance. Typically, compensation management is accomplished through a payroll system like the [top-rated examples featured here](https://www.capterra.com/resources/top-rated-payroll-software/)**.** **Benefits administration** is another aspect of employee compensation that’s managed by HR. [Employee benefits](https://www.capterra.com/benefits-administration-software/) often include things like health insurance, retirement and pension plans, and paid leave. HR professionals work with different providers to manage benefit plan options, which employees can enroll in via a [benefits administration platform](https://www.capterra.com/benefits-administration-software/shortlist/). According to Capterra’s Employee Benefits Survey, **a majority of HR leaders (57%) say employee benefits are extremely important to retaining top talent.** Among large businesses (1,001+ employees), that number jumps to 67%.[\*](#methodology) ### See more Compensation and Benefits Guides [How To Set Up Payroll for a Small Business](https://www.capterra.com/resources/steps-to-setting-up-your-small-business-payroll/)March 2, 2026 by [Bruno Peláez](https://www.capterra.com/resources/author/bruno-pelaez/) and [Parul Sharma](https://www.capterra.com/resources/author/parul-sharma/) [HR Compensation and Benefits: How To Create a Competitive Package](https://www.capterra.com/resources/employee-benefits-package/)November 7, 2023 by [Toby Cox](https://www.capterra.com/resources/author/tcoxguest/) [Employee Benefits Lack Choice. A New Trend Called “A La Carte” Benefits Can Help.](https://www.capterra.com/resources/a-la-carte-benefits/)April 7, 2023 by [Brian Westfall](https://www.capterra.com/resources/author/bwestfall/) ### Ensuring compliance [HR compliance](https://www.capterra.com/glossary/compliance/) refers to the process of developing policies and procedures that help businesses abide by labor laws and employment regulations. Failing to comply with local and federal laws can result in fines, penalties, and even lawsuits—meaning HR leaders have a lot of pressure on them to make sure workplace policies align with relevant regulations. **There are four main types of HR compliance:** 1. **Statutory compliance:** Any government legislation related to employment (such as minimum wage laws or working age requirements) falls under statutory compliance. 2. **Regulatory compliance:** This kind of compliance is dictated by various regulatory agencies. For example, the Federal Trade Commission (FTC), the Centers for Disease Control and Prevention (CDC), and the United States Environmental Protection Agency (EPA) all have different laws that may apply to a business. 3. **Contractual compliance:** Contractual compliance is specific to a business, its employees, and any partnering organizations. 4. **Union law compliance:** If a company employs union workers, they are required to adhere to the rules set by the union. ### Recruiting talent From attracting talent to the organization to sending offer letters to candidates, every stage of the recruitment process is managed by HR. When an organization has an open role to fill, recruiters within the HR department take on this responsibility. They draft and publish job listings, source and screen candidates, and [schedule interviews](https://www.capterra.com/video-interviewing-software/). In smaller organizations, recruiting may be handled by a single hiring manager or recruiter, while larger organizations typically have entire teams dedicated to recruiting. ### Read more on Recruiting [Hiring the Right Talent](https://www.capterra.com/resources/hiring-the-right-talent/)July 7, 2022 by [Laurenzo Overee](https://www.capterra.com/resources/author/loveree/) [It's Comeback Season: Here's How to Recruit Boomerang Employees](https://www.capterra.com/resources/how-to-recruit-boomerang-employees/)February 22, 2023 by [Sierra Rogers](https://www.capterra.com/resources/author/srogers/) [5 Key Recruitment Software Features With Top Products That Offer Them](https://www.capterra.com/resources/recruiting-software-key-features/)February 27, 2026 by [Barkha Bali](https://www.capterra.com/resources/author/bbali/) and [Parul Sharma](https://www.capterra.com/resources/author/parul-sharma/) ### Talent development: Upskilling, training, and developing employees Talent development—which encompasses any initiatives that support employees’ learning and growth—is another area of focus for HR. There are two goals for talent development: First, to help the workforce gain the skills needed to accomplish business goals, and second, to improve the employee experience by providing individuals with opportunities that align with their personal career goals. [Learning management systems (LMS)](https://www.capterra.com/learning-management-system-software/) and [eLearning authoring tools](https://www.capterra.com/elearning-authoring-tools-software/) are frequently used to support development initiatives. Some LMS platforms come with pre-built course libraries that employees can use to access learning materials on demand; in other cases, training specialists use these platforms to build their own custom courses. ### ON THE TOPIC OF TALENT DEVELOPMENT [The 6 Stages of Career Development, and How To Guide Employees Through Them](https://www.capterra.com/resources/stages-of-career-development/)June 9, 2022 by [Sierra Rogers](https://www.capterra.com/resources/author/srogers/) and [Carolyn Santa Maria](https://www.capterra.com/resources/author/carolyn-santa-maria/) [What is Talent Analytics?](https://www.capterra.com/resources/what-is-talent-analytics/)June 8, 2022 by [Andrew Conrad](https://www.capterra.com/resources/author/aconrad/) [Looking For a Career Pathing Template? The Search Ends Here](https://www.capterra.com/resources/career-pathing-template/)June 9, 2022 by [Sierra Rogers](https://www.capterra.com/resources/author/srogers/) and [Carolyn Santa Maria](https://www.capterra.com/resources/author/carolyn-santa-maria/) Download Now [](#signup) ### Performance management HR’s role in [performance management](https://www.capterra.com/performance-appraisal-software/) is to guide the organization through a standardized process. This includes determining which performance management techniques make the most sense for the organization as well as defining what high performance looks like for different roles. Typically, team managers will work with HR to learn how to measure and deliver feedback on their reports’ performance. One of the most common performance management approaches is to deploy a [360-degree feedback process](https://www.capterra.com/glossary/360-degree-feedback/). With this method, employees receive confidential, anonymous feedback on their performance from their managers and coworkers—usually through a [360-degree feedback platform](https://www.capterra.com/360-degree-feedback-software/). ### RESOURCES RELATED TO PERFORMANCE MANAGEMENT [3 Effective Employee Performance Tracking Strategies](https://www.capterra.com/resources/employee-performance-tracking/)June 27, 2023 by [Sierra Rogers](https://www.capterra.com/resources/author/srogers/) [Category Compare: Performance Management Software vs. Talent Management Software](https://www.capterra.com/resources/performance-management-vs-talent-management/)August 18, 2023 by [Barkha Bali](https://www.capterra.com/resources/author/bbali/) [A Guide to Effective Employee Performance Management](https://www.capterra.com/resources/hr-role-employee-performance-management/)November 3, 2023 by [April Khan](https://www.capterra.com/resources/author/april-khan-guest-contributor/) [3 HR Benchmarking Examples From a Real HR Pro](https://www.capterra.com/resources/hr-benchmarking-examples/)April 12, 2022 by [Sierra Rogers](https://www.capterra.com/resources/author/srogers/) ### Onboarding and offboarding When employees join or leave an organization, certain tasks must be completed. Creating standardized processes for these situations is an essential HR responsibility. In the case of [onboarding](https://www.capterra.com/glossary/onboarding/), HR specialists typically collect information from new hires through forms (such as W-4s or I-9s) and share resources like employee handbooks or benefits guides. [Onboarding software](https://www.capterra.com/onboarding-software/) is frequently used to support the orientation process. Offboarding is a little different; especially because the steps in an offboarding process vary depending on whether an employee resigned, retired, or was terminated. In most cases, the offboarding process will involve requisitioning feedback from the departing employee and providing a means for them to return any loaned equipment. In some cases, departing employees may have to sign a nondisclosure or noncompete agreement. ### SEE OUR RESEARCH ON OFFBOARDING RISKS [An Offboarding Ordeal: HR Departments Say Departing Employees Consistently Ghost Exit Interviews, Steal Company Equipment](https://www.capterra.com/resources/offboarding-best-practices/)January 31, 2023 by [Brian Westfall](https://www.capterra.com/resources/author/bwestfall/) ### Succession planning As an organization grows, there’s a need to identify leaders within the workforce who have the potential to take on an executive role in the future—this is [succession planning](https://www.capterra.com/glossary/succession-planning-and-management/), a practice that’s commonly seen in strategic HR. While succession planning is often associated with enterprises, small businesses and startups can benefit from this practice as well. For example, if the owner of a small business expressed a desire to retire, having a succession plan in place would help ease the transition by identifying team members qualified to fill the gaps left by their absence. [Succession planning software](https://www.capterra.com/succession-planning-software/) is often used to support this HR function. These tools are built to assist with succession planning through features like competency modeling, internal talent pools, performance dashboards, and training plans. ### SEE HOW CAREER PATHING HELPS SUCCESSION PLANNING [Retain Talent and Reduce Turnover With Career Pathing](https://www.capterra.com/resources/what-is-career-pathing/)June 8, 2022 by [Sierra Rogers](https://www.capterra.com/resources/author/srogers/) **Explore more HR topics:** - [Human Resources (HR) Basics: Functions, Roles, and Responsibilities](https://www.capterra.com/resources/hub/human-resources-basics/) - [Employee & Performance Management Resources for HR](https://www.capterra.com/resources/hub/employee-performance-management/) ## What are some HR best practices? Below, we’ll take a look at four HR best practices. ### Ensuring fair compensation for employees Making sure employees get paid is one of the most important responsibilities for HR. But even beyond ensuring that paychecks are delivered on time to all employees, HR is accountable for [compensating employees](https://www.capterra.com/resources/payroll-industry-trends/) fairly and equitably—an undertaking that’s not always as easy as it sounds. In the United States, there is a series of legislation related to pay discrimination that HR professionals must abide by, including **The Equal Pay Act (EPA), The Age Discrimination in Employment Act (ADEA)**, and **The Americans with Disabilities Act (ADA).** Additionally, several states (such as California, Colorado, New York, and Washington) have implemented laws requiring employers to include salary information in job listings to improve pay transparency. Many HR departments have their own strategies for improving compensation fairness amongst employees. For example, [performance-based compensation](https://www.capterra.com/glossary/incentive-compensation-management/) is a popular approach that rewards employees who have met or surpassed their job’s requirements (usually in the form of a year-end bonus). Some HR teams may also conduct yearly pay audits to compare the salaries of those who do similar work and address any discrepancies. If you’re interested in learning more about the latest trends in employee compensation, check out these resources:  - [To Attract Talent, 65% of Companies Are Increasing New Hire Pay—And Frustrating Tenured Employees in the Process](https://www.capterra.com/resources/new-hire-pay-research/) - [HR Expert Explains How Pay Transparency Can Benefit Your SMB](https://www.capterra.com/resources/pay-transparency-for-small-businesses/) ### Creating an appealing Employer Value Proposition (EVP)  **Employer value proposition (EVP)** refers to the aspects of a company that make it an attractive place to work. Defining and [promoting an organization’s EVP](https://www.capterra.com/resources/how-to-recruit-boomerang-employees/#:~:text=4.%20Improve%20your%20employer%20value%20proposition) is an HR best practice that supports talent acquisition efforts. Offering competitive compensation, benefits, and perks is a must in order to have a [strong EVP](https://www.capterra.com/resources/how-to-build-a-company-culture/). It’s also a good idea to call out any unique aspects of the [employee experience](https://www.capterra.com/employee-engagement-software/) at your organization; for instance, highlighting ongoing DEI initiatives or existing ERGs is a good idea. One factor that makes promoting your EVP difficult is that employees’ preferences are constantly changing. For instance, flexible work arrangements are in demand post-COVID, which caused many businesses to include mentions of hybrid or remote work opportunities in their EVP. ### Aligning HR objectives with business goals [Strategic HR](https://www.capterra.com/resources/strategic-hr-planning/) is a term that encapsulates the idea of using HR initiatives to support business goals. In practice, this looks like: - Aligning business and HR strategies - Defining HR priorities relative to critical business initiatives - Adjusting the execution of initiatives as business conditions change In a sentence, **strategic HR ensures that HR resources are allocated to projects and initiatives that will have a positive impact on the business’s bottom line.** In order to accomplish this, CHROs must work with other executives to identify the most pressing business priorities and how HR can support them. ### Using analytics to inform talent decisions From compensation reports to performance metrics, every aspect of HR comes with its own comprehensive dataset that HR leaders have to understand and use to their organization’s advantage. Today, nearly every kind of HR software is built with its own workforce analytics dashboard. In many cases, these dashboards can be customized to track the metrics that are most relevant to the users who regularly access them. Plus, there’s a whole category of tools (HR analytics platforms) that are designed to help HR practitioners make sense of their disparate workforce metrics and turn that information into action. For example, [attrition data](https://www.capterra.com/glossary/attrition/) can help shed light on which business functions, teams, or roles are the most at risk for voluntary turnover, allowing HR leaders to strategically focus their retention efforts. Forecasting, modeling, or benchmarking are all techniques that HR teams may use to make data-driven business decisions—the latter of which we’ve covered in a series of content on our blog: ### RELATED ARTICLES [What Is HR Data Analytics? 7 Useful Applications](https://www.capterra.com/resources/data-analytics-in-hr/)February 7, 2024 by [Mabh Savage](https://www.capterra.com/resources/author/mabh-savage-guest-contributor/) and [Ayush Mohan Dixit](https://www.capterra.com/resources/author/ayush-mohan-dixit/) [Human Resources Benchmarking: A Beginner’s Guide](https://www.capterra.com/resources/human-resources-benchmarking/)April 8, 2022 by [Sierra Rogers](https://www.capterra.com/resources/author/srogers/) and [Stephanie Sandoval](https://www.capterra.com/resources/author/stephanie-sandoval/) [8 HR Benchmarks You Should Be Tracking and How to Calculate Them](https://www.capterra.com/resources/hr-benchmarks/)April 4, 2022 by [Sierra Rogers](https://www.capterra.com/resources/author/srogers/) [3 HR Benchmarking Examples From a Real HR Pro](https://www.capterra.com/resources/hr-benchmarking-examples/)April 12, 2022 by [Sierra Rogers](https://www.capterra.com/resources/author/srogers/) ## Internal vs. External human resources: When and what to outsource There are many reasons why an organization might choose to outsource some or all of its HR functions to a third party. For example, an enterprise with a large, geographically dispersed workforce may choose to outsource payroll administration so that they don’t have to keep up with tax laws in each location they operate in. Alternatively, a small, growing business with only one or two HR employees may outsource recruiting to an [RPO](https://www.capterra.com/resources/what-is-rpo-recruiting/) so they can focus on core administrative duties. Below, we’ll take a look at the pros and cons of internal and external HR, and we’ll also provide a brief overview of the main options for outsourcing talent. ### Internal HR: Managing a workforce with an in-house team Managing your organization’s HR function in-house is a challenging but rewarding undertaking. In large businesses, in-house HR teams stay efficient by building a team of professionals who each have specific roles or areas of expertise. For instance, they may have a director of employee experience, an onboarding specialist, a benefits administrator, a technical recruiter, and more. Alternatively, small businesses with in-house HR teams typically have a few HR associates who handle a broader range of responsibilities. It may come as a surprise to learn that most businesses with an in-house HR team still outsource some processes to professional service providers. For instance, [payroll outsourcing](https://www.capterra.com/services/payroll/) is frequently provided by [payroll software vendors](https://www.capterra.com/payroll-software/) when an organization adopts a new system. #### Internal HR: Managing a workforce with an in-house team **Pros** **Cons** **More control over HR processes:** Fully managing the HR function internally gives businesses complete control over how they carry out every task, initiative, and process. **High costs:** Recruiting, training, and retaining your own team of HR professionals can be cost-intensive—especially for small businesses with limited resources. **Stronger connection to company culture and values:** Having an internal team of HR professionals immersed in your organization’s culture and values enables them to align their efforts with business priorities. **Heavy administrative burden:** Executing the basic tasks required to keep a business running may require your team to forego some of the strategic HR initiatives that aren’t as essential.  **Faster execution:** Internal HR departments have the advantage of speed. They can quickly take action to modify policies or contact employees as needed without conferring with a third party first. **Increased risk/liability:** Staying in compliance is easier for businesses when they outsource the responsibility to a third party whose job it is to stay informed and up-to-date on ever-changing legislation. ### External HR: Outsourcing aspects of talent management Outsourcing HR can provide many advantages to businesses, from allowing them to tap into new talent pools to helping them provide competitive benefits and perks to their workforce. A business may choose to outsource all of its HR to a full-service provider, or they may opt to have an external agency handle only specific aspects of the HR function (such as [recruitment](https://www.capterra.com/services/recruiting/) and [staffing](https://www.capterra.com/services/staffing/) or risk management and compliance). #### External HR: Outsourcing aspects of talent management **Pros** **Cons** **Access to specialized and experienced providers:** This is a huge benefit of outsourcing HR—you can work with providers who have years of industry-specific knowledge on their side. **Lack of control over HR processes:** As we covered in the prior section, fully managing the HR function internally gives businesses complete control over every task and process. This is not the case for outsourcing, which requires ongoing back-and-forth communication to refine and adjust processes. **Increased scalability:** As a business grows, so does the strain put on the HR department that supports it. Outsourcing can help ease these growing pains by allowing businesses to quickly add or remove services as needed. **Less confidentiality:** Outsourcing HR requires trusting a provider with sensitive information about employees and the business at large, which increases the risk of a data breach or leak. **Decreased costs:** Compensating, recruiting, and training an in-house HR team is expensive, which is why outsourcing HR is often the more cost-efficient option. Plus, HR service providers typically invest in the latest technology and strategies, so businesses who partner with them get the benefits of innovation without being responsible for the costs associated with it. **Potential communication and coordination issues:** Partnering with a third party requires effective two-way communication, so the potential for interruptions of service or misunderstandings is high. ### INTERESTED IN HIRING A SERVICE? READ MORE [PEO Vs ASO: Which HR Outsourcing Method Is Right For Your Business?](https://www.capterra.com/resources/aso-vs-peo/)June 14, 2023 by [Sierra Rogers](https://www.capterra.com/resources/author/srogers/) ### Contract and contingent workers: When to hire  There’s another kind of outsourcing relevant to HR, and that’s the outsourcing of talent. When a business hires temporary, freelance, contract, or contingent workers, this is considered outsourcing talent. Organizations may choose to outsource talent to save money, close skill gaps, or meet seasonal demands. To learn more about the pros and cons of outsourcing with contingent workers, watch this short video: ### RELATED ARTICLES [Do Contract Employees Get Benefits?](https://www.capterra.com/resources/do-contract-employees-get-benefits/)February 15, 2022 by [Sierra Rogers](https://www.capterra.com/resources/author/srogers/) and [Stephanie Sandoval](https://www.capterra.com/resources/author/stephanie-sandoval/) [What Is a Talent Marketplace Platform?](https://www.capterra.com/resources/what-is-a-talent-marketplace/)February 11, 2022 by [Sierra Rogers](https://www.capterra.com/resources/author/srogers/) [7 Top-Rated Payroll Software for Independent Contractors](https://www.capterra.com/resources/best-payroll-software-for-independent-contractors/)August 28, 2023 by [Preksha Buttan](https://www.capterra.com/resources/author/pbuttan/) and [Stephanie Sandoval](https://www.capterra.com/resources/author/stephanie-sandoval/) ## What are some top human resources tools and software in 2023? Most organizations have multiple tools in their HR tech stack to help them handle all of the different aspects of modern human resource management. Capterra’s HR App Sprawl Survey revealed that on average, SMBs (small to midsize businesses) use approximately **five** different software systems for HR purposes.[\*\*](#methodology) Visit Capterra Shortlist to find the most common types of and highly rated [HR tools](https://www.capterra.com/human-resource-software/shortlist/). This research ranks 1,500+ products based on verified user reviews and ratings. Tools include:  - [HR software](https://www.capterra.com/human-resource-software/shortlist/) (such as HR information systems and human capital management suites) - [Payroll and benefits administration software](https://www.capterra.com/payroll-software/shortlist/) - [Time and attendance management tools](https://www.capterra.com/attendance-tracking-software/shortlist/) - [Recruiting platforms and/or applicant tracking systems](https://www.capterra.com/recruiting-software/shortlist/) - [Workforce management software](https://www.capterra.com/workforce-management-software/shortlist/) Of course, there are many more kinds of tools available to support HR efforts, many of which are designed to perform specific tasks (such as [360 degree feedback software](https://www.capterra.com/360-degree-feedback-software/)). Ahead, we’ll give an overview of five categories of HR systems. But before we do, here are some considerations to keep top of mind if you’re in the process of [selecting HR software](https://www.capterra.com/resources/human-resources-software-buyer-insight/) for your business: **The size of your workforce:** Small businesses can usually get by with one or two HR tools that offer a wide range of features, while larger businesses may have to invest in three to five different systems that each excel at supporting different tasks or processes. Here are some of the top HR tools depending on your business size: - [5 Top-Rated Applicant Tracking Software for Enterprises](https://www.capterra.com/resources/enterprise-applicant-tracking-software/) - [5 Top-Rated Payroll Software for Small Businesses](https://www.capterra.com/resources/payroll-software-for-small-businesses/) - [5 Top-Rated Human Resources Software for Small Businesses](https://www.capterra.com/resources/human-resources-software-for-small-business/) - [5 Top-Rated Talent Management Software for Small Businesses](https://www.capterra.com/resources/top-rated-talent-management-software-for-small-business/) **Which (if any) of your HR functions are handled by a service partner:** If you’re not outsourcing any aspects of HR at your business, you will need to invest in more tools. If you _are_ outsourcing, there’s a high probability that the provider you’re working with already has software to support the delivery of their services. For example, if you are outsourcing [recruiting](https://www.capterra.com/services/recruiting/) or [staffing](https://www.capterra.com/services/staffing/) to a third party, you will likely not need to invest in an applicant tracking system or recruiting platform. ### Related software systems **See a full list of HR systems that could be a fit for your business:** - [Human Resources Software](https://www.capterra.com/human-resource-software/) - [Recruiting Software](https://www.capterra.com/recruiting-software/) - [Applicant Tracking Systems (ATS)](https://www.capterra.com/applicant-tracking-software/) - [Talent Management Software](https://www.capterra.com/talent-management-software/) **Your available budget:** Budget significantly influences your choice of HR tools. There's a spectrum of free solutions spanning all the way to high-end ones.  An expensive tool isn't necessarily better. For the best results, compare the cost of a system against potential benefits (such as improved efficiency or faster time-to-fill). And if you’re on a tight budget, start your search with [free HR tools](https://www.capterra.com/resources/free-hr-software/). Capterra has compiled several pricing reports for key HR software categories:  - [Capterra Value Report: A Price Comparison Guide for HR Software](http://www.capterra.com/resources/hr-software-pricing-report/) - [Capterra Value Report: A Price Comparison Guide for Recruiting Software](https://www.capterra.com/resources/recruiting-software-pricing-report/) - [Capterra Value Report: A Price Comparison Guide for Onboarding Software](https://www.capterra.com/resources/onboarding-software-pricing-report/) ### Human Resources Information Systems (HRIS) and Human Capital Management Suites (HCM) [Human resources information systems (HRIS)](https://www.capterra.com/human-resource-software/) and human capital management suites (HCM) are two foundational types of [HR software](http://www.capterra.com/resources/free-hr-software/) built with features that help businesses manage their workforce. At the core of HRIS and HCM suites are features that support administration tasks such as administering benefits, cataloging employee data, and running payroll. These systems also help automate some processes; for example, many are built with time tracking and attendance features that allow employees to manage their own schedules and request time off. Further, many of these systems have available add-ons that support other aspects of HR. For instance, some HRIS or HCM platforms offer talent management features that streamline recruiting and onboarding efforts. Most businesses need an HRIS or HCM platform, and some can even get by with only this type of tool in their HR tech stack if they choose a vendor that offers features beyond the basic administrative functionality. ### Payroll, benefits administration, and attendance tracking tools [Payroll software](https://www.capterra.com/payroll-software/), [benefits administration platforms](https://www.capterra.com/benefits-administration-software/), and [attendance tracking tools](https://www.capterra.com/attendance-tracking-software/) are all solutions that accomplish aspects of what an HRIS or HCM does. [Payroll software](https://www.capterra.com/resources/top-rated-payroll-software/) helps businesses accurately and efficiently manage their payroll processes in compliance with relevant laws and regulations. Typical [payroll software features](https://www.capterra.com/resources/payroll-software-features/) include tax calculation, direct deposit, and employee self-service portals. Plus, most payroll tools are easy to integrate with other HR software so that compensation information is easy to access elsewhere. Benefits administration software is designed to help employees and HR professionals manage insurance elections, 401(k) plans, and retirement contributions in one secure location. Businesses can also use these tools to track their spending and ensure compliance with benefits eligibility regulations. [Attendance tracking tools](https://www.capterra.com/time-clock-software/s/free/) deal with all aspects of an employee’s time. For instance, these platforms have [absence management](https://www.capterra.com/glossary/absence-management/) functions that allow employees to calculate their leave balances and request time off. They also typically have a calendar feature built into the platform that provides a broad view of employees’ shifts, time off, and leave. ### Applicant Tracking Systems (ATS) and recruiting software  Recruiting teams use [applicant tracking systems](https://www.capterra.com/applicant-tracking-software/#buyers-guide) and/or [recruiting platforms](https://www.capterra.com/recruiting-software/#buyers-guide) to support talent acquisition efforts. The primary difference between an ATS and a recruiting platform is that the former is focused on applicant management while the latter deals with every aspect of recruiting, from posting jobs to preparing onboarding documents. [Recruiting mobile apps](https://www.capterra.com/resources/best-recruiting-apps/) are also another type of tool for on-the-go recruitment. The primary functionality of a typical ATS is candidate tracking in which recruiters can use these tools to check candidates’ progress from the first point of contact. Beyond candidate tracking, ATS can help recruiting teams parse resumes, schedule interviews, and build talent pools by organizing candidate profiles. Recruiting software generally offers a wider range of features for sourcing, selecting, and interviewing candidates. For example, candidate management is often a functionality of recruiting platforms, but they may also have job posting, sourcing, and onboarding features. ### Employee engagement software [Employee engagement software](https://www.softwareadvice.com/hr/employee-engagement-comparison/) is a type of HR tool that organizations use to motivate, recognize, and reward employees. Employee engagement platforms can be purchased as stand-alone platforms or as a feature set within a more comprehensive HRIS or HCM suite, and they are considered more of a “nice-to-have” than a “need-to-have” tool. Oftentimes, employee engagement software is built with features that help collect and analyze feedback from workers. For example, many of these tools include the ability to run employee pulse surveys. Further, they may have employee recognition capabilities such as a social media style feed where team members can publicly praise each other for their work. ### Workforce management and succession planning platforms [Workforce management](https://www.capterra.com/workforce-management-software/) and [succession planning platforms](https://www.capterra.com/succession-planning-software/) are tools built to support strategic HR efforts. Workforce management software has a lot of the features you’d find in an HRIS or HCM tool that support employee operations such as employee databases, scheduling tools, and time management functionalities. However, workforce management solutions also usually have advanced analytics capabilities that help with labor forecasting and productivity management. Succession planning software is built to assist with the process of identifying and developing employees with leadership potential. A key feature of succession planning software is competency modeling, a functionality that builds a framework of the skills, knowledge, and values needed for different key roles. Goal tracking and training management are two other features commonly found in succession planning solutions. ## What are some emerging trends in human resources? Human resources is an industry that’s constantly evolving. Innovations in technology (such as the recent explosion of [ChatGPT](https://www.capterra.com/resources/chatgpt-for-hr/)) as well as cultural flashpoints, like the Black Lives Matter movement and the COVID-19 pandemic, have a huge impact on the way we work, necessitating ongoing adjustments within the HR industry. Below, we’ll take a look at two trends that are shaping the future of human resources. ### The importance of a diverse workforce The bulk of today’s workforce—[millennials](https://www.capterra.com/resources/intergenerational-differences-in-the-workplace/#:~:text=Millennials%3A%20digitally%20proficient%20change%20agents)—want to work for organizations that prioritize diversity and inclusion.[\[1\]](#sources) This preference, along with recent events such as the Black Lives Matter movement, have pushed today’s organizations to take a hard look at how they approach [DEI](https://www.capterra.com/dei-software/). It’s long been recognized that there are real business benefits to [having a diverse workforce](https://www.capterra.com/resources/difference-between-diversity-inclusion/); for starters, it makes your business a more attractive place to work for underrepresented talent. But it can also improve collaboration and problem-solving when it’s done correctly because those with different ideas and perspectives within your workforce will feel empowered to speak up. ### RELATED ARTICLES [The Future of Talent Management is Diversity Tech, Continuous Learning, and Prioritizing Mental Health](https://www.capterra.com/resources/future-of-talent-management/)May 13, 2021 by [Brian Westfall](https://www.capterra.com/resources/author/bwestfall/) [What (If Anything) Should Employers Do About Side Gigs?](https://www.capterra.com/resources/side-business-conflict-of-interest/)August 21, 2023 by [Brian Westfall](https://www.capterra.com/resources/author/bwestfall/) [As Alternative Credentials Gain Value, Recruiters Say Validating Them Is a Challenge](https://www.capterra.com/resources/alternative-credentials/)July 20, 2023 by [Brian Westfall](https://www.capterra.com/resources/author/bwestfall/) [A Guide to Understanding Intergenerational Differences in the Workplace](https://www.capterra.com/resources/intergenerational-differences-in-the-workplace/)September 25, 2023 by [Sierra Rogers](https://www.capterra.com/resources/author/srogers/) ### AI in HR [Artificial intelligence (AI)](https://www.capterra.com/artificial-intelligence-software/) has been used in software to automate different HR processes for years now, but the recent explosion of generative AI is accelerating the application of this technology. In fact, only 6% of organizations expressed no interest in deploying AI in a 2022 Gartner survey.[\[2\]](#sources) Currently, the most common use cases for AI in HR are all centered around recruiting. For example, candidate sourcing was the most cited use case among organizations that currently use AI to automate tasks, with resume screening following closely behind.[\[3\]](#sources) [HR chatbots](https://www.capterra.com/resources/hr-chatbot-research/), which use a form of generative AI called Natural Language Understanding (NLU), are also growing in popularity. HR chatbots exist as an available feature in some HRIS and HCM systems, but they can also be standalone tools that integrate with other HR systems. HR chatbots act as assistants, providing information, answering questions, and processing common requests for employees and job seekers alike. ### Read more on the topic of AI in HR [Are HR Chatbots Ready for the Spotlight? Users Aren't So Sure](https://www.capterra.com/resources/hr-chatbot-research/)June 13, 2023 by [Brian Westfall](https://www.capterra.com/resources/author/bwestfall/) [HR Leadership Guru Says AI Will Accelerate Innovation in HR](https://www.capterra.com/resources/innovation-from-ai-in-hr/)July 21, 2023 by [Lars Schmidt](https://www.capterra.com/resources/author/lschmidt/) and [Kyle Rich](https://www.capterra.com/resources/author/krich/) [How Workers Can Stay Relevant in the Age of AI, According to Renowned Future of Work Leader](https://www.capterra.com/resources/artificial-intelligence-in-hr/)August 14, 2023 by [Dan Schawbel](https://www.capterra.com/resources/author/dan-schawbel/) and [Kyle Rich](https://www.capterra.com/resources/author/krich/) ## Download Capterra’s free skills gap analysis template As an HR professional, you know how important it is to identify and acquire the skills your organization needs to be successful now and in the future. Conducting a [skills gap analysis](https://www.capterra.com/resources/skills-gap-analysis/)—a process in which HR leaders identify missing skills in their workforce and develop a plan to fill them—is an effective strategy you can use to accomplish this. Below, download our free skills gap analysis template, a tool you can use to catalog the skills needed in a specific team or department and compare them to the ones current team members already have. ## Capterra's 2026 Software Buying Trends Report ### Download our 2026 Software Buying Trends Report to see how successful software adopters avoid disappointment and how your business can, too. * * * **Methodology** \*Capterra’s 2023 Employee Benefits Survey was conducted in February 2023 among 294 respondents to learn more about employee benefits usage and the benefits administration process overall. All respondents were screened to ensure they were a U.S.-based employee who works in HR and manages benefits administration for their employer. \*\*Capterra's 2023 HR App Sprawl Survey was conducted in March 2023 among 199 HR employees at small or midsize businesses with fewer than 1,000 employees and $500 million or less in annual revenue in the U.S. to learn more about their experiences with software application overlap and redundancies. Respondents were screened for influence over software purchase decisions (respondents must be a decision maker for their company's software purchases or have significant influence over software purchase decisions at their company). Sources 1. [The 2022 EY US Generation Survey: Addressing diverse workplace preferences](https://www.ey.com/en_us/diversity-inclusiveness/the-2022-ey-us-generation-survey#:~:text=Flexibility%20continues%20to%20be%20a%20priority&text=At%20the%20same%20time%2C%2029,things%20an%20employer%20can%20offer), Ernst & Young 2. [What HR Leaders Need to Know About AI](http://www.gartner.com/doc/4017295), Gartner 3. [2023 Recruiting Innovations Bullseye Report](http://www.gartner.com/doc/4254199), Gartner * * * ### Was this article helpful? * * * ## About the Author [### Sierra Rogers](https://www.capterra.com/resources/author/srogers/) Sierra Rogers is a senior content writer at Capterra, covering human resources, eLearning, and nonprofits with expertise in recruiting and learning and development strategies. With a background in the tech and fashion industries, she has extensive experience keeping her finger on the pulse of the latest trends and reporting on how they impact our world. Sierra enjoys cooking and dining out, collecting vintage designer goods, and spending time with her pets at home in Austin, Texas. ### RELATED READING - [What is a Job Requisition? Here’s Everything You Need to Know](https://www.capterra.com/resources/what-is-a-job-requisition/) - [AI in Talent Management Software: The Bridge Between Recruiting and Retention](https://www.capterra.com/resources/ai-talent-management-software/) - [Payroll Software vs. HR Software: What’s the Difference](https://www.capterra.com/resources/payroll-vs-hr-software-difference/) - [How AI Scheduling Software Helps Restaurants Reduce Overtime and Boost Staff Satisfaction](https://www.capterra.com/resources/ai-employee-scheduling-software-for-restaurants/) - [LMS Pricing Models Explained: Hidden Costs, Plans, And Comparisons](https://www.capterra.com/resources/lms-pricing-models-guide/) - [Payroll Pricing Explained: Flat-Rate vs Per-Employee Models](https://www.capterra.com/resources/payroll-pricing-models-guide/) - [Personalizing Recruiting and Onboarding With the Right HR Tools](https://www.capterra.com/resources/how-hr-software-personalizes-recruiting-onboarding/) - [AI vs. HR Software Reviews: What SMBs Should Consider When Selecting HR Tools](https://www.capterra.com/resources/ai-vs-hr-software-reviews/) - [7 Top-Rated AI Applicant Tracking Software](https://www.capterra.com/resources/ai-applicant-tracking-software/)