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What Is HRIS?
HRIS is a digital software platform that provides an easily accessible centralized repository for managing employee data. For example, your employee’s contact details, hours worked, and pay rate can all be stored securely within an HRIS.
HRIS vs. HRMS vs. HCM
Do you need an HRIS, HRMS (Human Resource Management System), or HCM (Human Capital Management) platform? These systems have distinct features, but the terms describing them are sometimes used interchangeably.
- HRIS: Often the first type of HR software purchased by an organization, it replaces traditional recordkeeping practices, like paper files. These platforms store and manage employee data in one central repository. It’s common to start with HRIS software and later integrate with strategically focused reporting software.
- HRMS: This software merges the data management features common to an HRIS with strategic outputs like reporting and analytics. Because an HRMS tends to offer a wide range of features and tools, it’s a good choice for businesses looking for an all-in-one solution.
- HCM: These platforms focus on strategic outcomes, offering robust reporting and analytics aimed at clarifying the value and results of HR initiatives. Companies that start with an HRIS sometimes purchase HCM software later when they’re ready to invest in more strategic resources.
Types of HRIS
HRIS software comes in many varieties to suit different organization sizes and structures. The type chosen typically depends on how the system is housed and maintained.
The three main types of HRIS are:
- Cloud-based: These systems operate on remote servers accessible through the internet. As a result, they require no hardware installation. Cloud-based HRIS allows for real-time updates and accessibility from anywhere. They suit organizations seeking remote access and quick implementation. Pricing models are usually subscription-based.
- On-premises: This type of HRIS software operates locally on a company’s hardware and servers. It offers complete control over data and infrastructure but requires substantial initial investments in hardware and dedicated IT support. An on-premises setup suits organizations that prefer data control, customization, and stringent security measures.
- Hybrid: Combining elements of both cloud-based and on-premises systems, hybrid HRIS models offer a middle ground. They provide the flexibility to store sensitive data on-site while leveraging the cloud for scalability and remote access. This model suits organizations with data privacy needs or compliance requirements that impact only some parts of the business.
What Are the 8 Top Components of an HRIS?
Building stronger HRM practices can be simplified with the help of HRIS software, but expect to find variations in features across different platforms. Below we look at the main components of an HRIS so you can choose the product that best suits your needs.
Employee Information Management
All HRIS platforms will enable you to gather, store, and retrieve employee data. The software brings employee information into one centralized database that is secure and accessible. Look for options that cut down on manual input and provide a user-friendly interface.
Recruitment Assistance
Some HRIS platforms include features that help manage job postings, application screening, interview scheduling, and candidate tracking. These features streamline the hiring process and often enhance the candidate experience.
Time and Attendance Tracking
In addition to storing an employee’s details, some HRIS platforms have features that monitor employee work hours, breaks, and absences. Automated tracking minimizes errors, which helps make sure your payroll is accurate. Having access to this data can also facilitate better workforce management by offering insights into attendance patterns.
Payroll Calculation
HRIS platforms will occasionally include payroll calculation tools, or they may integrate with other payroll software. Whether built-in or through integration, payroll calculation tools streamline employee payments and ensure compliance with tax regulations.
Swift and trustworthy payroll services also boost employee satisfaction alleviating concerns about being paid correctly or on time.
Benefits Management
Health insurance, retirement plans, and other benefits can often be selected and modified by employees directly through HRIS platforms. This reduces the administrative burden of these offerings and gives employees greater autonomy over their choices.
Some HRIS programs will also include reports that analyze which benefits are the most popular with employees or analytics that measure the effective cost of each benefit offered.
Employment and Tax Law Compliance
Employment and tax laws are subject to change and can vary in different locations. HRIS software makes it easier to stay compliant by automating tasks. When regulations change, the HRIS vendor can update your system to reflect new requirements.
Alerts and reminders are often included to ensure the correct employee data is gathered and stored appropriately. Having these features in place minimizes the risk of non-compliance penalties.
Reporting and Analytics
Robust reporting and analytics are more commonly found in HRMS or HCM platforms. However, some HRIS platforms include insights into HR metrics. These tools help identify trends, forecast workforce needs, or evaluate employee performance. Reporting and analytics are a significant aid in strategic HR planning, providing data to back up your decisions.
Integration With Other HR Software
As we already mentioned with payroll calculation, it’s common for HRIS platforms to integrate seamlessly with other HR software or third-party applications. This allows greater flexibility in how you build your HR support systems.
Common integrations include performance management tools, learning management systems, or talent acquisition platforms. Putting together complementary software builds a cohesive HR ecosystem as long as the integrations work as intended.
Benefits of an HRIS
HRIS software can improve your organization’s effectiveness in a number of ways. These benefits can have both an immediate and long-term impact on the business, let’s look at how.
Reduce Manual HR Tasks
HRIS software automates repetitive and time-consuming HR tasks. It also allows self-service options for employees, which reduces the need for HR intervention in routine changes. For example, an employee who has moved to a new address can update their information without the need to contact the HR team or fill out a manual task request.
By streamlining these tasks, HR teams can focus on more strategic initiatives, reduce errors, and improve overall efficiency.
Enhance Employee Experience
Self-service portals empower employees to access and manage their information and request leave. If an employee wants to know the amount of paid leave they have available, they can find that information without needing to first discuss it with their supervisor or HR. This ease of use can improve employee satisfaction and company perception.
Scale With Business Growth
Scalability is a significant advantage of an HRIS. Many HRIS platforms focus on core employee data storage, which means the starting price is lower than many HRMS and HCM platforms. Core features remain effective as the organization grows, while integrations with other software allow you to add functionality when you’re ready.
Therefore, it’s possible to start with a less expensive platform that organizes employee data and streamlines payroll calculations. Later, you can add workforce planning analytics to improve efficiency when the business can afford to expand its tech.
Stay Compliant With Changing Regulations
HRIS software includes built-in compliance features that automatically update with changing labor laws. For example, if the state you operate in changes how overtime is calculated, your HRIS software can be updated by the vendor to match the new calculation method.
This ensures the organization remains compliant, minimizing legal risks and penalties. Alerts and reminders are often built in to keep HR teams on track with compliance activities.
Base Strategic Decisions on Accurate Data
With the benefit of accurate and centralized data, your business is better informed and able to engage in data-driven decision-making. For example, attendance tracking in an HRIS can provide data on days or seasons when the business experiences more employee call-outs.
This information can help inform staff scheduling needs to avoid understaffing. Insights obtained from HRIS-generated reports and analytics aid in strategic workforce planning, talent management, and more. All of this facilitates informed decisions aligned with your organization’s overall objectives.
When Should I Invest in an HRIS?
Whether you’re considering HRIS as your first HR software investment, or integrating with existing platforms, keep an eye out for these five signs that your business is ready to commit.
1. Your Employees Are Overly Reliant on HR for Routine Tasks
Self-service portals are a game changer in HRIS software. If your employees need assistance from the HR team for every routine request or update of personal details, then an HRIS platform can save significant administrative effort.
HRIS platforms reduce manual input and repetitive processes. This cuts down on the need for extraneous admin personnel and frees up time for HR team members to focus on strategic initiatives that boost employee satisfaction and productivity.
2. Your Employee Data Is Not Centralized
If you rely on paper files or inconsistent digital storage for employee data, it’s easy for important details to be lost. This has become increasingly problematic in recent years as the rise in remote work arrangements means that employees are more spread out than ever.
An HRIS platform will bring employee data into one centralized system that is often accessible from any location. Centralizing your data storage makes it easier to audit and ensures the right people can access data when needed.
3. Legal Compliance Is Too Hard
Legal compliance can be a challenge to understand, and regulations change often enough that keeping up isn’t a straightforward task.
If your business is expanding to new locations with different employment laws or you’re not confident in collecting all the required data from employees, then HRIS software can make compliance simpler. Take advantage of features offering data-gathering guidance and auto-updates that reflect local or changing laws.
4. Employees Don’t Have Visibility of Their Data
As technology advances, more of your employees will expect to have direct access to their information. HRIS platforms make it easy for your workers to connect to their data and make adjustments as needed. These platforms also help employees place time-off requests and access benefits information when convenient.
5. You Don’t Have the Data to Back up Strategic Decisions
Strategic HR initiatives function best when they’re data-driven. HRIS software can help gather evidence of effectiveness or areas for improvement.
For example, finding out how many employees have accessed a new perk over the past six months could help determine whether continuing it makes sense for the business. Meanwhile, high employee turnover data might highlight the need for a new focus on retention efforts.
How To Choose an HRIS
Your HRIS software must align with your organization’s needs. Keep these factors in mind to find the best solution:
- Scalability: Look for a platform that meets your current needs but can also accommodate future growth.
- Integration: If this is your first HR software, look for systems with easy integration to avoid limitations when you want to expand later. If you already have other systems in place, make sure your HRIS software will work with those systems.
- Vendor reliability: Prioritize working with a vendor that has gained positive reviews and is responsive to your needs. This is essential for ongoing support and system maintenance and will prevent headaches down the line.
- User-friendly interface: Look for a system that is intuitive for both HR teams and employees. This will encourage effective utilization of the platform and provide your organization with the greatest benefits.
The Final Word on HRIS
HRIS software is often one of the first and most critical purchases an organization can make to improve HR management. Whether in response to compliance hurdles, scaling for growth, or seeking an improved employee experience, an HRIS can improve HR efficiency and accuracy. By reducing the need for manual data tracking, your organization can minimize the risk of errors and incomplete records.
Unlike HRMS or HCM software, an HRIS typically offers solutions focused on data gathering and organizing. If you want to pair this functionality with greater strategic tools in the future, be mindful of software integration limitations. Consider vendor reliability and the components offered to ensure that your purchase will serve you now and in the future.
