Selecting the Right Human Capital Management System for your Organization

October 11, 2023

How to Choose HCM Software

A critical Human Resources decision revolves around choosing a suitable Human Capital Management Software that goes beyond payroll and integrates the latest HR technology.

Human capital management (HCM) software is a critical tool for businesses of all sizes. It can help you streamline and automate HR processes, improve employee engagement, and make better data-driven decisions.

The HR software market size in the U.S. is $14.8 billion, and it will grow by 4% in 2023. In addition, 60% of global midmarket and large enterprises will have invested in a cloud-deployed HCM suite for administrative HR and talent management by 2025, according to Gartner.

HCM software can offer several benefits to businesses, including:

  • Improved efficiency and productivity. HCM software can automate many routine HR tasks, such as payroll, time tracking, and benefits administration. This frees up HR staff to focus on more strategic initiatives.
  • Improved employee engagement. HCM software can provide employees with self-service tools and easy access to information about their benefits, pay, and performance. This can help employees to feel more valued and engaged in their work.
  • Better data-driven decisions. HCM technology can collect and analyze HR data to provide insights into employee trends, performance, and engagement. This information can be used to make better decisions about hiring, training, and compensation.

However, choosing the right HCM software for your organization can be a daunting task. There are many factors to consider, such as the size of your business, your industry, and your specific needs. In this article, we review the six key steps to follow when selecting a new HCM software.

1 ) Identify the Needs and Goals of the Organization

The right human capital management (HCM) software can help you save time, protect your data, scale your business, and make better decisions. When choosing an HCM system, it is important to consider your budget, human resources recruiting needs, ease of use and layout, customization options, and reporting needs.

A good HCM system can automate many routine HR tasks, such as payroll, time tracking, and benefits administration. This can free up your HR staff to focus on more strategic initiatives.

When choosing an HCM system, it is important to consider whether you want a cloud-based or on-premise system. On-premise HCM systems are installed on your servers and may offer more direct control whereas cloud based HCM systems are accessible from anywhere, making them ideal for businesses with remote employees and allow HR managers more flexibility in using the system.

Most likely, you already have some HR technology in place. Today there are some good all-in-one HCM systems available which is a great option for businesses who want all of their data in one place. Another key factor for you to consider is – do you scrap what you currently have to go all in for a fully integrated system? Or do you find one that can integrate with the pieces you have now but also has modules that you can add overtime as you phase out your current technology, eventually getting you to that all-in-one system?

2 ) Research and Evaluate Options

Once you have identified your needs and goals, the next step is to research and evaluate different HCM software options. There are several factors to consider when evaluating HCM software, including:

  • Features and functionality: Does the HCM software have all the features and functionality that you need? This includes considering the features and functionality that are important for your business, such as recruiting, onboarding, performance management, compensation and benefits, payroll and time tracking, employee self-service, and reporting and analytics.
  • Customization: How flexible is the system? Can you customize certain modules or features to suit the specific needs of your organization?
  • Ease of use. Is the HCM software easy to use and learn? This is important for both your HR staff and your employees. The HCM software should be user-friendly and intuitive so that it can be used easily by people with all levels of technical experience.
  • Scalability. Can the HCM software scale with your business as it grows? The HCM software should be able to accommodate a growing number of employees and data. This is important for businesses of all sizes, but it is especially important for businesses that are growing rapidly.
  • Security. Does the HCM software have adequate security features to protect your sensitive employee data? This includes features such as data encryption, access controls, and audit trails.
  • Integration. Does the HCM software integrate with other HR or business software that you use? This is important for businesses that want to have a seamless HR system. The HCM software should be able to integrate with other HR software that you use.
  • Cost. How much does the HCM software cost? This includes the cost of the software itself, as well as the cost of implementation and maintenance.

You can research and evaluate HCM software options by reading online reviews, talking to other businesses that use HCM software, and attending human resources trade shows and conferences. You should also request demos of different HCM software solutions to get a firsthand look at how they work.

3 ) Run a Rigorous Demo Process with Shortlisted Vendors

Once you have shortlisted a few vendors, it is important to run a rigorous demo process to see their systems in action. This is a crucial step in choosing the right HCM software for your business, as it will give you a chance to see the software firsthand and ask questions about specific features and functionality.

Here are some tips for running a successful demo:

  • Prepare a list of questions. Before the demo, take some time to prepare a list of questions that you have about the software. This will help you stay focused during the demo and make sure that you get all the information that you need.
  • Ask for a customized demo. If possible, ask for a customized demo that is tailored to your specific needs. This will give you a better understanding of how the software can be used to meet your specific business challenges.
  • Pay attention to the user experience. During the demo, pay attention to the user experience of the software. Is the software easy to use and navigate? Is it intuitive and user-friendly?
  • Ask about integration and scalability. Ask the vendor about how the software integrates with other HR systems that you use. Also, ask how the software can scale with your business as it grows. Do they have add-ons and modules that you can add at a later date as needed or wanted?
  • Get a feel for the vendor. During the demo, pay attention to the vendor’s presentation and communication style. Are they knowledgeable and responsive to your questions? Do they seem like a good fit for your business culture?

4 ) Compare Features and Benefits

Once you have seen the shortlisted systems in action, it is time to start comparing features and benefits. This is a crucial step in deciding, as you need to choose a system that has the right features and functionality for your business.

Here are some factors to consider when comparing features and benefits:

  • Customer support. What is the vendor’s customer support like? This is a critical difference amongst HCM software companies. A larger company may offer a less expensive price but that often comes at the expense of service after you buy. Ask exactly what kind of service and support is included? Will you have an assigned support person or team who will be available to answer your questions as you use the system – or is their support merely a call center where help is limited?
  • Industry. Does the system have features that are designed for or can be adapted to fit your specific industry?
  • Integration. Does the system technology integrate with other HR systems that you use?
  • Intuitiveness. Is the system easy to use and navigate?
  • Contingent workers. How does the system manage contingent workers?
  • Scalability. How does the system cope with scalability including growth in a new market or a merger which can cause the employee count to suddenly double?
  • AI and machine learning. What elements of AI, machine learning, and automated chatbots are incorporated into the system?
  • Employee self-service. Does the system allow employees to self-manage their time off requests, tax forms, pay statements, and benefits?
  • Training. Does the system enhance the training process and make it easy for HR personnel to track employee progress?
  • Onboarding. Is the system known for offering a quality onboarding process? Companies with a structured onboarding program keep 58% of employees for three years.

5 ) Test and implement the software

Once you have chosen an HCM software solution, the next step is to test and implement it. This is a key step to ensure that the software is working properly and that your employees can use it effectively.

Here are some tips for testing and implementing HCM software:

  • Create a test plan. Before you start testing the software, it is important to create a test plan. This plan should outline the different modules of the software that you will test, as well as the specific features and functionality that you will test.
  • Test in a sandbox environment. If possible, test the software in a sandbox environment. This is a test environment that is isolated from your production environment. This will help to prevent any disruptions to your production data.
  • Involve your employees. Involve your employees in the testing process. This will help to ensure that the software is easy to use and meets the needs of your employees.

6 ) Drive widespread adoption

Once you have implemented the HCM software, it is important to drive widespread system adoption. This means getting all your human resources to use the software effectively.

Here are some tips for driving widespread system adoption:

  • Secure stakeholder buy-in early on. It is important to secure stakeholder buy-in for the HCM software early on. This includes getting the support of your senior management team, as well as the support of the employees who will be using the software.
  • Offer robust training on how to use it. Offer robust training to your employees on how to use the HCM software. This training should be tailored to the specific needs of your employees.
  • Provide ongoing support. Provide ongoing support to your employees on how to use the HCM software. This can be done through online documentation, training videos, or live support.
  • Communicate the benefits of using the HCM software to your employees. It is important to communicate the benefits of using the HCM software to your employees. This will help them to understand why it is important to use the software and how it can benefit them.

By following these tips, you can ensure that your HCM software is implemented successfully and that your employees can use it effectively.


Choosing the right HCM software for your organization is a major decision. By considering the factors above, you can choose a software solution that meets your specific needs and helps you to achieve your business goals.

What Commonwealth Payroll & HR offers you:

We seamlessly integrate your HR tasks with ONE system, simplifying and streamlining your daily operations so you have more time to focus on the things you want to do.

Technology: We offer the latest HR Tech platform that automates and streamlines even the most complex payroll and HR needs

Human Touch: Technology with that human touch. You’ll have a dedicated person who knows and cares about your business, helping to put our tools to your best use.

Employee Experience: Empower your employees with online recruitment, onboarding, access to paystubs, learning and collaboration tools and more.

Contact us today to learn more about our HCM system and our customizable plans


*The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information is for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information. This article may contain links to other third-party websites provided only for the convenience of the reader.




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