What if you can’t afford to make a major technology purchase? What if you’re a small business or startup, and buying the latest incarnation of Peoplesoftsounds about as realistic buying all of your employees Teslas for their Christmas bonus?

Despite tighter budgets and limited IT resources, small businesses still need to centralize workflows and be efficient, especially when it comes to HR. In this article, we’ll take a look at some of the best HR software for small business—modern, cloud-based systems with industry-leading functionality at an affordable price point.

Small Business Pain Points

In a 2016 Special Expertise Panel, the Society for Human Resource Management, SHRM members identified some of the top challenges facing HR departments today: steeper competition for talent, new developments in technology, a rising sense of insecurity, demographic shifts, and the economy ranked high on the list.

Businesses of every size are impacted by the need for better hiring practices and talent management, and the software industry itself has evolved to meet these demands. At the industry level, things are looking up. But small businesses still face a number of more nuanced challenges:

No dedicated HR staff: Many small businesses either assign HR responsibilities to a cross-functional manager or to a single, in-house HR administrator. In either scenario, a single person handles payroll and benefits, time tracking, grievances/disciplinary action, hiring, promotions, and so forth.

Record-keeping and regulatory compliance: HR regulations are in a constant state of flux. Small businesses must balance record-keeping etiquette with healthcare reform, tax codes, and labor laws. Armed with only a file cabinet and the Sunday paper, this is sure to result in mistakes, processing delays, and, in worst cases, legal fines.

Employee attrition: According to a Jobvite survey of over 2,000 adults, 51 percent of employed workers are actively seeking or at least open to a new job. Without a strategy for investing in talent and building an attractive work culture, small businesses lose good employees to competitors that offer higher salaries and better benefits.

Performance gaps: On smaller teams, it becomes quickly apparent if certain employees aren’t pulling their weight. But without a formal performance management or training system in place, how do you orchestrate consistent improvement?

Key Software Features

The right HR software can help small businesses alleviate these pain points by automating administrative tasks, record-keeping, and compliance, and by giving HR coordinators tools to find and retain the best talent. In the current market, most solutions are moving toward mobile access, multi-channel talent management, internal collaboration models, and self-service access.

In order to get the highest return on your investment, it’s important to choose a solution that offers modern capabilities and intuitive access. Although solutions vary from vendor to vendor, a full-featured HR management platform will offer some combination of the following features:

• Employee self-service
• Applicant tracking and onboarding
• Compensation and succession planning
• Benefits administration
• Performance management
• Time/attendance tracking
• Social recruiting
• Collaboration tools (newsfeeds, internal messaging)
• Reporting/analytics
• Mobile access (through native app or web interface)

Types of Systems

There are many different ways to package HR software. Most small business solutions are cloud-based, which saves upfront cost and eliminates the need for IT infrastructure. Beyond deployment models, there are three primary classes of HR software structured around use intent:

1. Core HR: Core HR solutions help businesses perform the administrative functions of managing a workforce—payroll, benefits administration, time and attendance tracking, workforce planning, and regulatory compliance. The self-service portal—which lets employees access their work-related data and enter updates and requests—is also an integral feature for most core systems.
2. Strategic HR: The primary focus of strategic HR solutions is to hire, retain, and develop the best employees, for which reason it’s often referred to as “talent management.” These solutions mostly address recruitment, performance management, training and development, and succession planning. Some may even be best-of-breed applications designed to address a specific aspect of talent management, such as the hiring process.
3. Integrated HR suites: These solutions provide end-to-end functionality across most or all areas of HR management including administrative aspects as well as recruitment, talent management, and e-learning (or learning management systems). Some product suites are sold in modules, which can be purchased discretely, according to need.

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