# Types of HR Software For Your Tech Stack | Capterra > Discover the main types of HR software—payroll, HRIS, ATS, LMS, and more. Learn adoption trends and tips to build the right HR tech stack for your business. Source: https://www.capterra.com/resources/types-of-hr-software --- # Types of HR Software: Build The Right Tech Stack For Your Business Written by: Barkha Bali Barkha BaliAuthor Senior Writer Experience I’ve been writing for Capterra since August 2021, providing expert insights to help small and midsize businesses (SMBs) find the rig... [See bio & all articles](https://www.capterra.com/resources/author/bbali/) and edited by: Parul Sharma Parul SharmaEditor Content Editor Experience I have been an editor at Capterra for over two years, contributing to curating and enhancing content for various niches, including ... [See bio & all articles](https://www.capterra.com/resources/author/parul-sharma/) Published December 10, 2025 11 min read Table of Contents - [Deep dive into each HR software type](#deep-dive-into-each-hr-software-type) - [How do these HR software tools integrate and work together?](#how-do-these-hr-software-tools-integrate-and-work-together) - [Choose the right type of HR software for your business](#how-to-choose-the-right-type-of-hr-software-for-your-business) HR leaders handle multiple priorities—from attracting and developing talent to retaining employees and keeping them engaged and supported. To manage these demands, many businesses turn to HR software. But finding the right mix isn’t easy. HR tools vary widely, so building the right tech stack starts with understanding the different types available. Capterra’s 2025 HR Software Trends Survey\* reveals that businesses typically use an average of four HR tools, though this varies by company size. The six most common categories include  - Payroll - Time tracking or employee scheduling - Human resources information systems (HRIS) - Recruiting or applicant tracking systems (ATS) - Performance management - Learning management systems (LMS)  In this guide, we’ll explain what each software type does, share adoption trends, and highlight which tools businesses plan to invest in next—so you can make informed decisions for your HR tech stack. ## 6 most common HR software categories: adoption vs. purchase intent **HR Software Category** **Using for more than a year (%)** **Planning to purchase in next 12 months (%)** Payroll software 51% 15% Time tracking/employee scheduling software 44% 18% Human resources information systems (HRIS) 39% 21% Recruiting/applicant tracking software (ATS) 35% 23% Performance management system 33% 23% Learning management system (LMS) 29% 26% _Source: Capterra’s 2025 HR Software Trends Survey_ _Q: What is the status of each of the following types of HR software within your organization?_ _n: 155 HR leaders of small businesses, 980 HR leaders of midsize businesses, 121 HR leaders of large businesses._ _Notes: The percentages presented correspond to the answers, “We purchased this software more than 12 months ago” and “We plan to purchase this software in the next 12 months.”_ ## Deep dive into each HR software type ### Payroll software Payroll software helps businesses automate salary calculations, tax deductions, and compliance reporting, ensuring accurate and timely financial management. It reduces manual errors, ensures timely payments, and streamlines year-end processes, such as tax form generation. For SMBs, payroll is often the first HR tool adopted because it’s essential for meeting legal requirements and maintaining employee trust. #### 3 key features of payroll software Here are the three highly important features identified by payroll software reviewers\*: - **Payroll management:** Automate salary calculations, tax deductions, and compliance tasks to reduce manual errors. - **Payroll reporting:** Generate detailed reports on wages, taxes, and deductions for audits and regulatory compliance. - **Direct deposit:** Enable secure, automated salary transfers to employee bank accounts, minimizing paperwork and delays. #### Payroll software adoption and trends\* - **How common is it?** Payroll software is present in 75% of small business HR tech stacks, 81% of midsized stacks, and 79% of large company stacks. - **Usage and purchase trends:** Survey data indicate that 27% of businesses have purchased payroll software within the past 12 months, while 51% have used it for more than a year. Looking ahead, 15% plan to buy payroll software within the next 12 months, and only 6% neither use nor plan to purchase it in the near future. For SMBs weighing AI versus traditional HR software reviews, this guide outlines [what to consider when selecting HR tools](https://www.capterra.com/resources/ai-vs-hr-software-reviews-what-smbs-should-consider-when-selecting-hr-tools/). **_Key insight\*:_** _Over the next 12 months, organizations worldwide are prioritizing new HR software purchases in areas that support workforce development and engagement. The most commonly planned investments are in succession planning (28%), HR and talent analytics (26%), LMS (26%), talent management, workforce management (WFM) or human capital management (HCM) (26%), and employee engagement tools (25%)._  ### Time tracking/employee scheduling Time tracking and scheduling tools help businesses manage employee work hours, shifts, and attendance efficiently. These systems reduce manual errors, improve workforce planning, and ensure compliance with labor regulations. For SMBs, they’re essential for balancing productivity and labor costs while supporting flexible work arrangements. #### 3 key features of employee scheduling software Here are the three highly important features identified by employee scheduling software reviewers\*: - **Mobile access:** Allow employees and managers to view schedules, clock in/out, and request changes from any device. - **Employee database:** Maintain accurate records of employee details, roles, and availability to facilitate streamlined scheduling. - **Schedule distribution:** Share updated schedules instantly via email, SMS, or app notifications to avoid confusion. #### Time tracking/employee scheduling software adoption and trends\* - **How common is it?** Time tracking and scheduling software is present in 71% of small business HR tech stacks, 72% of midsize stacks, and 75% of large company stacks. - **Usage and purchase trends:** Survey data show that 29% of businesses purchased this software in the past 12 months, while 44% have used it for more than a year. Looking ahead, 18% plan to buy it within the next 12 months, and only 9% neither use nor plan to purchase it in the near future. ### Human resources information systems (HRIS) HRIS software acts as the central hub for employee data, storing and managing information such as personal details, job history, benefits, and compliance records. It helps HR teams streamline processes such as onboarding, payroll integration, and reporting, thereby reducing manual work and enhancing data accuracy throughout the organization. #### 3 key features of HRIS software Here are the three highly important features identified by HRIS software reviewers\*: - **Employee database:** Maintain accurate, centralized records for all employees, including personal details, job roles, and benefits. - **Compliance management:** Automate record-keeping and reporting to ensure compliance with labor laws and regulatory requirements. - **Integration capabilities:** Connect with payroll, time tracking, and performance tools for a unified HR ecosystem. #### HRIS software adoption and trends\* - **How common is it?** HRIS software is present in 65% of small business HR tech stacks, 69% of midsize stacks, and 74% of large company stacks. - **Usage and purchase trends:** Survey data indicate that 31% of businesses have purchased HRIS software within the past 12 months, while 39% have used it for more than a year. Looking ahead, 21% plan to buy it within the next 12 months, and only 10% neither use nor plan to purchase it soon. If your organization is scaling and needs to address growth, skills, and retention, this article on building an [SMB HR tech stack offers practical direction](https://www.capterra.com/resources/build-your-smbs-hr-tech-stack-to-address-growth-skills-and-retention/). **_Key insight\*:_** _56% of organizations prioritize integrations, and 54% look for AI features when buying HR software. Choose tools that connect with your existing systems and offer AI-driven insights for recruiting, analytics, or employee engagement._ ### Recruiting or applicant tracking systems (ATS) ATS software helps businesses streamline the hiring process by managing job postings, tracking applicants, and consolidating candidate information in a centralized location. It reduces manual work, enhances collaboration among recruiters, and improves candidate experience. For SMBs, ATS tools are critical for scaling recruitment without overwhelming HR teams. #### 3 key features of recruiting/ATS software Here are the three highly important features identified by ATS software reviewers\*: - **Candidate tracking:** Monitor applicants through every stage of the hiring process, from application to offer. - **Candidate profiles:** Store detailed candidate information, including resumes, skills, and communication history, for easy reference and review. - **Application management:** Automate job postings, application collection, and status updates to keep hiring organized and efficient talent. #### Recruiting/ATS software adoption and trends\* - **How common is it?** Recruiting/ATS software is present in 55% of small business HR tech stacks, 65% of midsize stacks, and 70% of large company stacks. - **Usage and purchase trends:** Survey data indicates that 29% of businesses have purchased ATS software within the past 12 months, while 35% have used it for more than a year. Looking ahead, 23% plan to buy it within the next 12 months, and only 14% neither use nor plan to purchase it soon. To strengthen employee retention strategies, explore this resource on [improving retention through HR tech stacks](https://www.capterra.com/resources/how-to-improve-employee-retention-hr-tech-stack/). ### Performance management software Performance management software helps businesses track employee goals, monitor progress, and conduct structured reviews. It enables HR teams and managers to provide continuous feedback, align individual objectives with company goals, and identify opportunities for development. For SMBs, these tools are essential for improving productivity and engagement without adding administrative burden. #### 3 key features of performance management software Here are the three highly important features identified by performance management software reviewers\*: - **Performance review management:** Streamline annual and quarterly review cycles with templates and automated reminders. - **Ongoing performance tracking:** Monitor goals and KPIs in real time to support continuous feedback and coaching. - **Employee management:** Maintain centralized records of performance history, achievements, and development plans for informed decision-making. #### Performance management software adoption and trends\* - **How common is it?** Performance management software is present in 56% of small business HR tech stacks, 66% of midsize stacks, and 68% of large company stacks. - **Usage and purchase trends:** Survey data indicates that 30% of businesses have purchased performance management software within the past 12 months, while 33% have used it for more than a year. Looking ahead, 23% plan to buy it within the next 12 months, and only 14% neither use nor plan to purchase it soon. **_Key insight\*:_** _Implementation and user training are among the top challenges for HR software adoption. Select vendors that provide clear onboarding, training resources, and support for AI features to ensure a smooth adoption process._ ### Learning management systems (LMS) software LMS software helps businesses deliver, track, and manage employee training programs. It supports onboarding, compliance training, and professional development by centralizing learning resources and progress tracking. For SMBs, LMS tools are critical for upskilling employees and maintaining a competitive workforce without adding administrative complexity. #### 3 key features of LMS software Here are the three highly important features identified by LMS software reviewers\*: - **Content management:** Store and organize training materials, videos, and documents in a centralized library. - **Course management:** Create, assign, and monitor courses with automated scheduling and progress tracking. - **Learner portal:** Offer employees a self-service portal to access courses, track their progress, and complete assessments. #### LMS software adoption and trends\* - **How common is it?** LMS software is present in 50% of small business HR tech stacks, 58% of midsize stacks, and 65% of large company stacks. - **Usage and purchase trends:** Survey data indicate that 28% of businesses have purchased LMS software within the past 12 months, while 29% have used it for more than a year. Looking ahead, 26% plan to buy it within the next 12 months, and only 17% neither use nor plan to purchase it soon.  For broader buyer insights into HR software adoption and purchasing trends, see this [HR software buyer insight report](https://www.capterra.com/resources/human-resources-software-buyer-insight/). ## How do these HR software tools integrate and work together? HR tools don’t operate in isolation. They form an interconnected ecosystem that streamlines workflows, enhances accuracy, and improves the employee experience. Here’s how the six core HR software categories typically work together: - **Payroll software** pulls employee data (job title, hours worked, benefits) from HRIS and time tracking systems to calculate accurate pay, taxes, and deductions. - **Time tracking and scheduling tools** collect attendance and shift data, which is then fed into payroll for wage calculations and into the HRIS for compliance and workforce reporting. - **Human resources information systems (HRIS)** act as the central hub, storing employee records and syncing with payroll, ATS, performance management, and LMS to ensure consistent data across all HR processes. - **Recruiting or applicant tracking systems (ATS)** transfer candidate details into HRIS once a hire is made, enabling smooth onboarding and linking to payroll for compensation setup and LMS for training. - **Performance management software** integrates with HRIS to track goals, reviews, and development plans, while sharing insights with LMS to assign relevant learning paths. - **Learning management systems (LMS)** connect with HRIS for employee profiles and with performance tools to deliver targeted training based on skill gaps or review outcomes. **Why it matters:** These integrations reduce manual work, prevent data silos, and help businesses maintain compliance while improving efficiency and employee engagement. ## How to choose the right type of HR software for your business? Selecting HR tools isn’t just about features—it’s about solving your most pressing challenges. Here are four steps to guide your decision: - **Assess your HR pain points.** Start by identifying where your HR team struggles most. For example, if payroll errors are frequent and time-consuming, payroll software should be your priority. If hiring delays are slowing growth, an applicant tracking system (ATS) can help streamline the recruitment process. Mapping these pain points ensures you invest in tools that solve real problems. - **Prioritize compliance-critical tools first.** Compliance is non-negotiable. Missing tax filings or labor law requirements can lead to penalties. For instance, payroll software automates tax calculations and filings, while HRIS systems maintain accurate employee records for audits and compliance purposes. These tools should be implemented before engagement or analytics solutions, as they protect your business from legal risks. - **Evaluate cost and pricing models.** Understand the pricing structure before committing. SaaS solutions typically charge per user per month, making them cost-effective for SMBs. On-premise systems often involve higher upfront costs for licenses and infrastructure. Planning for these costs ensures you avoid budget surprises and select tools that scale with your business. - **Consider integration with existing systems.** Adding new software without checking compatibility can create data silos. If you already use an accounting tool like QuickBooks, choose payroll software that integrates with it to avoid duplicate entries. Similarly, an HRIS that syncs with your ATS ensures smooth data flow from recruitment to onboarding. - **Use verified reviews to shortlist vendors.** Don’t rely solely on vendor claims. Verified reviews offer genuine insights into real-world experiences with implementation, customer support, and usability. For example, Capterra’s review filters enable you to view feedback from businesses similar to yours, helping you select tools that fit your specific size and industry. ## 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. * * * ### Was this article helpful? * * * ## About the Authors [### Barkha Bali](https://www.capterra.com/resources/author/bbali/) Barkha Bali is a writer at Capterra. She provides insights to help small and midsize businesses identify the right software for their needs by analyzing more than 550,000 Capterra user reviews and nearly 48,000 interactions between Capterra software advisors and buyers. [### Parul Sharma](https://www.capterra.com/resources/author/parul-sharma/) Parul is an editor at Capterra with over half a decade of experience curating news, IT, software, finance, lifestyle, and health content. She excels at simplifying complex terms into engaging content for SMBs. Parul has worked as a feature writer for DNA India, India’s premier media portal. 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The goal of the study was to understand the HR software that companies are buying, their benefits and challenges, and the impact of AI on HR. Respondents were screened for employment at companies with more than one employee, working in management-level roles or above. Respondents were also confirmed to be at least partially responsible for HR software purchase decisions within their organization. For the purposes of this report, small business is defined as having 2-250 full-time employees, midsize business as having 250-1,000 full-time employees, and large enterprise as having more than 1,000 full-time employees. **Key features:** To identify the key features of this article, we asked users to rate, on a scale of “low importance” to “critical,” how important different features are for the respective software category. The features showcased are those that the highest percentage of reviewers rated as “highly important” or “critical” over the past two years (as of Nov. 17, 2025). **Feature eligibility:** To be included in the set of features considered, a given feature had to have at least 200 user ratings within the past two years (as of Nov. 17, 2025), of which at least 20% must indicate the feature is “critical.” Eligible features were determined from two sources:  1. Our research team’s review of public information about the respective category’s usage, definitions, and associated features. 2. Reviewers’ indication of the features they use for the respective category.