Human Resource Management System (HRMS)

What Is an HRMS?

An HRMS brings together HR functions and tasks across your organization into one unified platform. It serves as a centralized database for employee-related information and can often facilitate strategic decision-making with targeted reports and analytics.

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What Is Human Resource Management (HRM)?

Before we dive into the tools and benefits of an HRMS, let’s take a closer look at what these systems help manage. HRM is a broad term for all the tasks involved in overseeing the people within an organization. This includes recruitment, training, performance management, employee relations, and strategic workforce planning.

The goal of HRMS software is to make the many aspects of HRM more organized and successful. By automating manual and repetitive tasks, HR managers have more time for strategic efforts that make an impact, such as employee engagement studies or leadership development.

HRMS vs. HRIS vs. HCM

The terms HRMS, HRIS (Human Resource Information System), and HCM (Human Capital Management) are sometimes used interchangeably, but they actually refer to different types of systems.

  • HRIS: This software is focused on managing employee data. This type of system was the first to offer an alternative to manual data tracking. While HRIS software has grown more sophisticated, it’s still typically focused on providing a central repository for employee information. Businesses experiencing rapid growth or those looking to replace outdated software often start with an HRIS to build the backbone of their HRM recordkeeping.
  • HCM: This software tends to focus on strategic output. For example, an HCM may include talent management tools that help forecast hiring needs or analytics that evaluate the return on investment from staffing changes. It’s less common for HCM to focus on data storage and organization, though some platforms will include these tools. Many organizations that choose to invest in HCM software are integrating the strategic features with legacy employee data storage software already in use at their organization.
  • HRMS: This software tends to fall between an HRIS and an HCM. These systems combine data management capabilities with strategic HR functions. Customers who benefit from an HRMS are often looking for an all-in-one solution that can both house their employee data and provide analytics for strategy decisions.

Vendors don’t always align their products with these definitions, so it’s best to focus your search on the functionality your business needs rather than relying solely on the software label.

Main Functions and Benefits of HRMS Software

An HRMS can bring a wide array of tools that improve the efficiency and effectiveness of HR operations. Look for the features below, depending on which areas of your HRM need strengthening.

Centralized Employee Data Management

An HRMS serves as a centralized repository for employee-related information. This makes it easier to store and access personal details, employment history, performance evaluations, training records, and more. It also saves time by reducing manual administration hours.

Employee Self-Service Portals

With employee data stored within HRMS software, a reasonable next step is to empower employees to manage and review the information held about them. These self-service portals enable staff to do just that.

Employees can engage with the system to facilitate leave requests, view their pay stubs, and participate in training programs, thereby reducing the administrative burden on HR staff.

Automated Administrative Tasks

An HRMS automates routine administrative tasks, such as payroll processing, leave management, and benefits administration. For example, an HRMS may allow for employee hours to be tracked accurately and then converted into payroll calculation without manual effort.

Automation reduces manual errors and frees HR personnel to focus on more strategic initiatives.

Recruitment

Between managing job postings, reviewing candidate applications, and scheduling interviews, the recruitment process creates a lot of work for HR personnel. HRMS software streamlines hiring with features like applicant tracking systems, automated screening, and calendar integrations.

These tools take the manual effort out of recruitment and make it easier to come to an objective hiring decision faster.

Onboarding

Some HRMS products integrate onboarding workflows that help guide new hires during their first few weeks or months with the company. Information and paperwork required for all employees can be easily shared consistently with these tools, ensuring a smooth transition into the organization.

For example, a digital orientation can be shared with all new hires, whether they work in-office or remotely. The system can set reminders to confirm new hire paperwork is completed as required. Once collected, the HRMS appropriately stores employee information securely.

Performance Management

An HRMS facilitates performance management and helps ensure that useful practices are followed through. The system can set performance goals, conduct evaluations, and track employee progress.

This provides useful data and also sets reminders so employees get the feedback they deserve. It also aids your business by identifying high performers, addressing skills gaps, and aligning individual goals with company objectives.

Training and Development

HRMS software often provides tools for managing training programs. These can include module creation for digital training, employee participation tracking, and employee feedback surveys.

Training and development can be a significant investment, so having the option to streamline efforts and assess training effectiveness can provide a solid return on investment. Improving training efforts helps contribute to the continuous growth of the organization as a whole.

Employee Relations

Some HRMS products include case management portals for employee relations. These portals allow workplace investigators to gather notes and evidence into a secure, confidential database.

Workplace investigation reports and evidence can form the backbone of an organization’s legal defense if an employee complaint becomes a lawsuit. It also helps streamline investigations and enables prompt responses to employee concerns.

Analytics and Reporting

Organizations often rely on an HRMS to generate insightful analytics and reports. This helps in identifying trends, making informed decisions, and forecasting future HR needs. Examples of analytics and reporting features include:

  • Employee turnover analysis: This type of report breaks down turnover by various segments, like department, location, tenure, and reasons for leaving. Insights from an employee turnover analysis can help identify patterns and opportunities to improve retention.
  • Compensation and benefits analysis: Salary benchmarks, benefits utilization, and cost projections can all be useful tools for designing competitive compensation packages. They can also be used to optimize benefits offerings by highlighting the perks employees appreciate most.
  • Diversity and inclusion metrics: Reports and analytics can help evaluate the ties between diversity initiatives and success metrics. In addition, they can be used to identify areas where representation doesn’t match the organization’s commitment to diversity.
  • Custom dashboards: Many HRMS platforms include customizable dashboards that can be configured to show key performance indicators (KPIs) and HR metrics at a glance. This customization helps ensure that the most important information is always readily available.

5 Signs That You Should Invest in an HRMS

Deciding when to invest in an HRMS depends on many factors, including organization size, complexity of HR processes, or the age of existing systems. It can be difficult to analyze all the contributing factors, but you are likely to encounter one or more of the signs outlined below if your business is ready to benefit from HRMS software.

1. Your HR Team Is Overwhelmed

If your HR team is struggling to keep up with administrative work, then it’s time to consider whether automating tasks with an HRMS would allow for better productivity.

Consider how much time the team is spending on manual tasks or repetitive processes. Investing in an HRMS may be more cost-effective than adding to your HR team headcount to keep up with manual work. It also frees up time for your team to focus on other efforts, such as initiatives designed to boost overall productivity and employee satisfaction.

2. Your Employees Are Spread Over Multiple Locations

Whether your organization has embraced remote working arrangements or has multiple business locations, you can benefit from a centralized system. Most HRMS platforms keep important employee documents and information in one place that is accessible from anywhere. This lets you streamline communications and make sure everyone can find what they need when they need it.

3. You Struggle With Compliance

Legal requirements are always subject to change and may differ across your business locations. If you find it hard to keep up, then an HRMS with built-in compliance measures can be a boon. These features help your organization comply with regulations in your area and are updated regularly to keep up with law changes.

4. Your Employees Complain

“It’s too hard to check basic data like available vacation leave.” “Benefits aren’t being managed correctly.” “Payroll keeps making errors.” Have you heard something like this from your employees? If so, it’s a good sign you need better systems.

HRMS platforms make it easy for employees to access their data and process adjustments, such as requesting time off or benefits changes. The HRMS can also help streamline hours tracking and payroll calculations, avoiding complaints and costly errors.

5. Your HR Leaders Don’t Have Time for Strategic Planning

When HR leadership is bogged down in managing administrative tasks, there’s no time for strategic planning or initiative development. An HRMS helps relieve the pressure by automating routine tasks, thus freeing up valuable time. It also provides access to insights that can measure the value of HR initiatives and highlight efforts that are most likely to provide real benefits to the organization.

How To Choose an HRMS

When it’s time to select the right HRMS software, it pays to carefully consider your organization’s unique requirements. Keep these factors in mind to aid your decision:

  • Scalability: The platform should match your immediate needs but also be able to keep up with where your organization will be in the future.
  • Integration with existing systems: Avoid system mismatches that require your organization to either throw out what’s working or take on manual effort to sync between systems.
  • Vendor reliability: Read reviews and take your time asking questions before you commit to a vendor. HRMS platforms often require ongoing support, making it vital that you choose a vendor who will be responsive to your needs.
  • Ease of use: Ensure the system will be intuitive for your HR teams and employees. The benefits of an HRMS only pay off when your employees are willing and able to use the system.

The Final Word on HRMS

Staying on top of employee data and simplifying HR workflows are easier goals to attain when you’re able to rely on HRMS software. HRMS platforms fit under an umbrella that brings in the best of HRIS data management and HCM strategic planning. With a range of cloud-based and on-premise services, it’s possible to find the custom option that suits your business needs.

By centralizing employee data, automating administrative tasks, and providing insightful analytics, HRMS software can improve and refine HR operations. It can empower employees, create smoother workflows, and enable informed decision-making. If you see the signs that your business can benefit from an HRMS, then don’t wait to reap the rewards.

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Victoria Pearce

Victoria's career has encompassed a range of roles, from employment law to numerous positions in human resources. She notably held a strategic HR role at The Walt Disney Company. As an experienced writer, Victoria has covered numerous HR topics, focusing primarily on employment law, and offers distinct perspectives valuable to businesses operating on a global scale.