What is an HRIS?
A human resources information system (HRIS) is standalone or SaaS-based software designed to aid HR departments in managing people, policies and procedures. HRIS solutions feature data entry, data tracking, data analysis, and information-related capabilities to address a wide range of human resources department needs, including applicant tracking, onboarding, payroll, performance management and accounting functions. In general, the majority of HRIS software vendors cater to businesses that employ U.S. citizens.
HRIS vs. HRMS vs. HCM
HRIS is sometimes used interchangeably with the term human resource management system (HRMS), but there’s one key difference: an HRMS includes modules for monitoring and managing qualitative employee information, such as employee satisfaction and engagement.
A human capital management (HCM) solution, on the other hand, encompasses the full spectrum of employee performance and engagement, both quantitative (what an individual has done, for how long, in which roles and how they have performed) and qualitative (how engaged and motivated they are within those roles and within the organization).
While each HRIS solution offers slightly different capabilities and features, they all have many functionalities in common, including the following:
- Management of employee information: Data such as names, titles, addresses, and salaries are a basic start. Salary and position history, reporting structures, performance appraisal histories, and other critical employee information are also included.
- Company documents: This includes items such as employee handbooks, emergency evacuation procedures and safety guidelines, for example.
- Recruiting/ATS (applicant tracking system): This includes information about applicants, available roles, interviews, salaries, job descriptions, and the like. Often, HRIS will integrate with other recruiting and hiring software so that recruiters can quickly and easily transfer applicant information.
- Benefit administration/open enrollment: An HRIS will often include enrollment status changes and personal information updates for benefit administration. In an ideal system, you can allow employees to look up and review their own information, including vacation tracking, beneficiaries, and other such data.
- Absence management: In some systems, this is included under benefits administration capabilities; in others, it’s separate. Absence management includes vacation time, sick time and personal time, as well as family and medical leave and related time-off benefits.
- Compensation management/payroll: This is a critical piece of HRIS, and it includes salary history, paychecks, raises, bonuses, tax information and other financial and compensation functions. HRIS will integrate with other company financial software and accounting systems.
- Training and development/performance management: This capability allows organizations to centrally record training, learning and personnel development plans, which can follow employees as they progress within the organization. Senior leadership can run reports to see what roles people are filling and what their performance means in terms of success planning, as well as identify high-potential talent. But it’s also useful for determining underachievers; who’s been demoted, suspended, put on a personal improvement plan, etc., even when those employees leave. When another company requests a reference for one of your former employees, it's easy for the HR department to report on an individual’s suitability for hire or rehire. This is especially critical in a company where certifications and licenses are required.
Most HRIS offer broad self-service functionality to streamline HR functionality and ease the administrative burden. Within certain modules, such as benefits management and absence management, for example, employees can manage and modify their own information, make changes to their benefits, request time off, or shift the allocation of their direct deposit information. Within the performance management module, managers can input feedback, appraisal results, performance notes and other information about their direct reports, for example. Analysis and reporting, too, is often self-service within HRIS. Employees, managers, recruiters and executives, for instance, can all access and run reports based on the data contained in HRIS software.
Benefits of HRIS
An effective HRIS provides information on just about anything a company needs to track and analyze data about employees, former employees, and applicants, from their first application, through their tenure on the job, to resignation or retirement. It’s a one-stop-shop for individuals, employees, managers and hiring and recruiting professionals to find information when they need it.
As such, a comprehensive HRIS enables a company to more effectively project and budget its HR costs, and it can improve efficiency when it comes to decision making. Because all information and analysis are in one place, and because of integrated analysis and reporting capabilities, an HRIS makes it easy to find and analyze all available HR-related data, thereby facilitating an organization’s ability to make decisions about hiring, firing, pay, promotions, headcount, turnover and retention rates, and other personnel decisions.
In most situations, an HRIS leads to increased efficiency in HR decision-making. While it’s harder to qualify, these decisions could also increase in quality, thereby improving the productivity of employees and managers, as the administrative burden is lightened.
An HRIS can also improve privacy and security by securing information digitally. This is preferable to the easily accessible, difficult-to-protect paper records and spreadsheets, which are also prone to deterioration or destruction in the event of a natural disaster or a fire. These systems can also play a role in enabling compliance by storing regulatory data, such as U.S. equal employment opportunity information.
HRIS can free HR administrators from handling non-strategic, mundane HR tasks such as data entry so they can focus on more human-related tasks, such as interviewing and personnel development. In addition, because an HRIS provides a centralized location for company information, announcements, links, policies and procedures, employees can find this information themselves and avoid asking HR redundant questions.
For example, when employees wish to complete frequently recurring activities such as requests for time off, changing direct deposits, electronic pay stubs and changes in W-2 or W-4 forms — such procedures can be automated and performed independently, without the need for human supervision or intervention. As a result, there’s far less paperwork, and approvals can be obtained more efficiently.
Finally, managers can more easily access the information they need to plan, develop and support the success of their direct reports. This can help with engagement, morale, and with employee retention, as well as developing succession plans that can further company growth and innovation.
The global human resources management market is estimated to reach $30 Billion by 2025, with a compound annual growth rate of 10.4 percent over the next six years, according to Grand View Research. Some of the most popular HRIS vendors include:
- Oracle HCM Cloud
- Infor CloudSuite HCM
- Kronos Workforce
- SAP SuccessFactors
- Ultimate Software UltiPro
Key considerations for choosing an HRIS solution
With so many HRIS options, it can be daunting to figure out which one is right for your organization. It all comes down to the unique needs of your business, and which features and capabilities will be most helpful at making your HR functions most effective and efficient.
Don’t trust the word of software salespeople alone; look for recommendations from peers, other customers, online discussion groups, LinkedIn, software review sites and organizations such as Society for Human Resources Management (SHRM) to give you the full picture, as well as pros and cons of each solution.
Make sure that the solution you choose can accommodate growth. Even if your company is small today, in the future, it could double, triple or grow by a factor of ten or more. You need to be able to scale any HRIS system to grow along with your business.
You should also take integration and compatibility into account. Some HRIS solutions are only able to accomplish their stated purpose in conjunction with other existing systems; payroll, for example. That means you should ensure that the components of the HRIS you choose integrate seamlessly with any legacy systems you have in place, and make sure future add-ons or upgrades will work flawlessly.
Check to see what training and ongoing support are available for your staff, and make sure that training and follow-up are written into your sales contract. You should also confirm that the HRIS vendor you choose has a solid, consistent track record when it comes to support and service — even if they claim to provide service and support, if they have poor reviews or fail to meet your needs, you’ll be left trying to figure it out yourself.