6 Steps to Finding the Best HR and Payroll System for Your Business

by | Feb 23, 2021


The process of finding the best HR and Payroll system in the Philippines could be difficult. After all, HR and Payroll systems being used by Philippines businesses nowadays are much more advanced compared to old-fashioned HR spreadsheets. HR and Payroll packages are sophisticated and flexible.


  • Gather Key Requirements for your New HR and Payroll System
  • Decide Which Delivery Method Suits Your Needs
  • Build Your Budget and Calculate Return on Investment (ROI)
  • Reach Out to Potential Vendors
  • Evaluate Your Shortlist and Start Demos
  • Decide and Finalize a Contract

There are clear advantages of upgrading your system. An advanced system can improve HR efficiency and even boost your employee engagement. The key here is no longer affordability but choosing the right software so this makes the software selection a sophisticated and delicate process in which all the benefits would only be available if you make the right choice for your business.

This guide will help you go through the selection process considering the needs of your business. You will be able to confidently choose the best system for your unique business requirements.

Gather Key Requirements for your New HR and Payroll System

It is essential to know how the new HR and Payroll system in the Philippines is going to affect the organization. To do this, you must determine what the HR system must specifically accomplish by doing a “needs analysis”. The three following strategies can help you.

  • Look at what you have – Despite this being a key element, looking at what you already have is often ignored. Before going into a new process, it’s important to review your current one first. This will provide insight of how the current HR and Payroll system is being used, what the disadvantages are, and to provide a basis for what other functions your organization needs.
  • Gather information on what you want – The HR department shouldn’t compile by themselves the list of requirements the new system should handle. The system reports might be required by the higher-ups, self-service functions could be necessary for employees, and payroll integration is definitely a must for your accounting team. Focus groups, surveys, and interviews with the different members of the organization can greatly help.
  • Make a key stakeholder checklist – Include the HR Department, Senior Management/C-Suite Executives, Department Managers, Employees, Outsourced employees, Payroll and benefit providers, Centralized reporting teams, Downstream system owners, and Retirees.
  • Identify your specific needs – Specificity is the key when it comes to gathering requirements. Once these details have been gathered, you’ll be faced with requirements that include a lot of specifications, but this is necessary to help you because now you know exactly what you need.

Decide Which Delivery Method Suits Your Needs

One of the biggest concerns is whether to go with a cloud-type HR and Payroll system or not. A cloud-type system, like other systems, carries advantages as well as disadvantages. It’s crucial to examine these before coming to a final decision.

For a cloud system, security may be an issue. A traditional HR and Payroll system that is hosted internally might carry more reassurance as it is hosted internally. Access risks such as unauthorized logins are less likely to happen.

Third-party system providers are quite good when it comes to data security as their business depends on it. Your organization system would be hosted on facilities with high security.

Now you need to ask yourself if your on-premise security is strong enough to be of benefit and if you could implement suitable mobile device security when it’s necessary.

If you have all the necessary hardware and a dedicated team to handle the implementation of the new system, then the implementation should be a fast process. However, if you don’t have the necessary hardware, then the cloud system may be the best for your organization. Self-service, Bring Your Own Device (BYOD), and other similar processes may be used in a cloud system. This type of system can be more user-friendly, thus reducing the training time needed to acquaint employees to the new system. Ask yourself if you need to upgrade your hardware, how much upgrading it would cost, if you need to integrate, and how easy it would be with an on-premise system.

Cloud subscriptions are usually a “pay-as-you-go” model of payment. On the matters of accounting cloud systems are more cost-efficient. Ask yourself how long this new system would last and when would subscription payments break-even when there is an upfront licensing fee.

There are advantages and disadvantages on both sides. The key question for the future does not only involve deployment but also agility, capacity, and collaboration.

Build Your Budget and Calculate Return on Investment (ROI)

The ROI for your new system may be presented in terms of cost, staff benefits, handling of management data, or a mix of all three.

What’s important is to identify specific metrics you can measure before and after implementation. These metrics have to be consistent or else the results would be inconclusive.

For the financial aspect of the ROI, the current cost of the existing system should be clear, and you should also be able to calculate the total cost of ownership of the new system. Keep in mind the hidden costs.

Staff gains may be calculated by considering full-time equivalents (FTEs) required and measuring the real staff savings allowed by the system. This probably means you should focus on self-service functions. You could do this by passing routine tasks to employees and managers. The HR staff’s workload may be reduced so that they could have more room for specialized work.

Not all costs of HR systems are overt. There is more to maintaining an HR system than just the presented license fee. These hidden costs (System installation, system upgrade, direct non-labor costs, direct labor costs, maintenance costs, indirect labor costs) must be taken into consideration when calculating the TCO and ROI.

These hidden costs depend on the size and nature of your business. Of course, selecting your best HR and Payroll system is only the first step in making sure you get what you paid for.

Reach Out to Potential Vendors

The relationship you have with your vendor is crucial to the success of your project. The early part of your relationship will influence what kind of system you will choose, and even some factors in the implementation such as training and upgrading. In other words, a good relationship is important to a smooth implementation.

The key to a good relationship with your vendor is communication. You have to make your business needs clear.

A good vendor, with an idea of how your business runs, may recommend some functions for your system. But of course, as a buyer, you have to bear in mind that the seller will always have a bias towards their own product.

Here are some examples of popular HR and Payroll system functions:

  • Job and pay histories
  • Report writing
  • User-defined fields
  • Tracking on leave and attendance
  • Self service
  • Benefits
  • Performance management

Based on your outsourced functions, you may also be looking for the following:

  • Payroll
  • Benefits administration
  • Employee recruitment

If you don’t cover these functions within your organization, you would have to communicate with your suppliers’ systems. It all comes down to the vendor understanding how your business works and proposing an HR and Payroll system suitable for your needs.

Vendor communication is not just about you telling them what your business needs, but it is also about building a relationship where the vendor can trust you as well. For a potentially long-term relationship, you need to find information on the vendor’s business and products as well. At the end of the day, the ideal outcome is to create a successful partnership for both of your benefits.

What are your vendor options?

Now, you need to start finding potential vendors and products for your HR and Payroll System shortlist. The following are your options:

  • RFP – A detailed summary of your HR requirements that is sent to vendors/resellers inviting them to pitch their products to you
  • Recommendations – A recommendation for a specific HR and Payroll system can be beneficial if you are interested in seeking out endorsements from your trusted sources. Possible sources could be from your own network, or even advertisements.
  • Industry analysis – Reports and reviews from HR and Payroll software are openly available online. You could take advantage of this and compare different systems and features. This can help you decide which vendors to invite to pitch to you.
  • Direct vendor contact – This is a complete opposite of RFP, where you simply call different vendors. This could be a quicker way to build a shortlist. The more detailed examination can follow later.
  • HR and Payroll software consultant – a consultant can provide market and technology expertise for a fee. This can guide you to the best value for money you can get.

Evaluate Your Shortlist and Start Demos

Some systems you considered may be easier to eliminate from your shortlist due to the lack of indispensable features. For the other systems, formulate a criterion using a rating scale asking everyone to rate each system. The criterion may include accessibility, integration with the current and future systems, staff training required, security, configurability, and reporting.

To ensure your vendor demos are effective, you need to put the right people on your demo team. An HR representative should be present in the team, as well as someone with IT knowledge and experience to address more technical matters. A C-level executive can also add some senior endorsement. A way to keep control over your demo processes is to put the features you’re looking for into a script and using that script for each vendor. This is also to keep objectivity in your demos.

When it comes to assessment and the demos, your ultimate goal is to cross out systems that aren’t the right fit for your business.

Decide and Finalize a Contract

Once your shortlisting is over, it’s time to take the final decision.

It’s not ideal to be iffy about the price. Although price is important, the system’s fitness to your business needs is more important. Hopefully, while you were gathering requirements for your system needs, your HR and Payroll system selection team would have engaged with the stakeholders of your business. Before finalizing a contract, it is ideal to bring up your potential choice to the stakeholders first. After all, these are the people who will work around your choice.

Look into the C-level influencers for backing and system users for endorsement. Talking to C-suite executives can help you address troubles while system users are the source of everyday feedback from system use. Together, both can help you iron out wrinkles to avoid hurdles in the future.

All vendors in your shortlist will have provided references such as satisfied customers. It is crucial that you also follow up on their said references. See if these people have the same type of business as you do, or if their business needs were similar as you. Also check if they have anything to say about the vendor’s services.

When all the information is gathered, you may now decide.

You should be as sure as you can be. Once you’ve made your decision, you can now look to the next stage of your implementation.

Once you’ve selected a system, seek legal advice to know exactly what you’re signing for. Everything you have negotiated with the vendor should be found in the contract. Try not to zero in too much on the up-front cost, as there are several hidden costs as well. Also, ensure your future needs are being met.

Finally, some last words of caution: You may have a good relationship with the vendor of your chosen system but bear in mind that business is business. Review your contract carefully to avoid future disputes and to keep up your good relationship.

Is your company ready for an upgraded HR and payroll system? Please email us at customer.success@agentsofvalue.com

Also read, 5 Reasons To Upgrade Your HR and Payroll System Now

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