Are you baffled by the terms HRMS, HRIS, HCM and their functions? If so, you are not alone. Thousands of HR professionals struggle to unravel the mystery behind these cryptic terms, with the likeminded goal of improving the HR department's efficiency and productivity.
There are a plethora of software solutions available on the market for HR professionals, but it can be hard to distinguish them.
Investment in these software solutions is expensive and time-consuming. Therefore, it is important to perform due diligence to arrive at the right decision.
Here are some helpful insights on what these software solutions do, and how to choose the best one for your business needs!
HRIS, HRMS, and HCM, whats the difference?
High level, each of these abbreviations represents a software system to help the HR department manage their operations, and store data.
The terms HRIS, HRMS, and HCM are at times used interchangeably, however there are key differences between in each of these HR software solutions' features and functionalities.
Depending on the size of your organization, and operations you want for your HR team to manage, you should consider each of these solutions, and what you need as a business to operate at highest profitability.
In order to answer the question what are the differences, we should first understand the definitions of each of these solutions. Let's explore.
What is a HRIS?
HRIS stands for Human Resources Information System.
As its full form says 'information system', HRIS is a software solution that handles the information of the employees of a company.
In his book Human Resource Management: fresh perspectives, Kleynhans, (2006) defines the Human Resources Information System (HRIS) as a computerized system that enables human resource managers to gather, organize, store, update and retrieve the information needed for managing employees.
To keep things basic, the HRIS is the most basic and core system a small business might choose to use to manage their peoples information.
A HRIS manages four types of static employee information, otherwise known as "core functionalities". These core functionalities allow HR professionals to streamline their employee information, manage, and compensate them in an efficient way.
HRIS = Core functionalities.
The HRIS system covers the basic core functionalities that an HR professional may need to streamline their HR operations, those core functionalities include:
1- Personal and job information.
Employee name, titles, birth date, gender, contact details, job position, etc.
2 - Payroll integration.
Salary calculation and tax deduction.
3 - Administration and compliance of benefits.
(e.g., tax deduction, health insurance).
4 - Tracking working hours.
Time tracking, attendance, and absences.
What are the benefits of a HRIS?
It's easier to manage employee data in Excel spreadsheets when you have less than 50 employees. But, as your employee base grows beyond 50, manually handling HR information becomes cumbersome. This is when the need for an HRIS becomes indispensable.
Imagine all your HR data is stored, tracked, and updated in one location. Wouldn't that ease the administrative burden and save the time of your HR team?
How about if your business managers can also access this information from their devices? That creates more room for collaboration between employees, business, and HR teams.
Apart from the decrease in administrative burden and improvement in collaboration, there are more benefits of using HRIS:
More benefits of using HRIS:
- Faster completion of the tedious HR processes involving requests and approvals.
- Automatically track important data points leave accruals and balances.
- Create bandwidth to focus on driving the strategic initiatives.
- Offer self-service HR to your employees and managers.
- Keep your organization on top of compliance regulations.
These items are crucial not just for saving time and operations, but compliance is something that many HR departments and business owners fail to consider.
For example, it is mandatory by law that restaurant employees take regular breaks to avoid employee burnout. Manually tracking time is difficult. One of the secrets for scheduling employees is deploying an advanced time clock tracking to comply with the law.
All this data can be pulled into an HRIS system for safekeeping, and to avoid lawsuits.
What is a HRMS?
Introducing the HRMS or, Human Resource Managment System.
Just like HRIS, HRMS software is a technological application that helps organizations to manage and maintain their employees. The difference being HRMS is more comprehensive than HRIS.
To understand an HRMS system, you can consider the 4 basic core functionalities of the HRIS system, and add on top of them a layer of human management, and resources.
A HRMS solution delves deeper into talent management and focuses on the critical HR processes involved in an employee lifecycle.
Its three additional features are recruiting, onboarding, and performance management.
HRMS = Core functionalities + talent management.
The HRMS system covers the basic core functionalities that an HR professional may need to streamline their HR operations, plus additional people management tools.
HRMS Core functionalities:
1 - Personal and job information.
Employee name, titles, birth date, gender, contact details, job position, etc.
2 - Payroll integration.
Salary calculation and tax deduction.
3 - Administration and compliance of benefits.
(e.g., tax deduction, health insurance).
4 - Tracking working hours.
Time tracking, attendance, and absences.
HRMS Talent managment functionalities:
1. Recruiting and applicant tracking.
Automate postings for job openings, receive online applications, track candidates and manage hiring workflows.
2. Hiring and onboarding.
Automate paperwork, track training progress, and streamline the new hire process.
3. Performance management.
Establish KPIs, evaluate performance, appraisals, and promotions.
While HRIS is the most basic HR solution that automates the core HR administrative tasks, HRMS is an enhanced solution with additional features. It is at an intersection between HRIS and HCM – more comprehensive than HRIS but not as extensive as HCM.
What are the benefits of a HRMS?
HRMS offers all the benefits of an HRIS and some more. Apart from automating the tedious HR workflows, HRMS improves employee engagement right from the Time of hiring.
More benefits of using HRMS:
- Smooth onboarding - HRMS solution offers a smooth onboarding process that in turn creates a pleasant experience for the new hires. Imagine your new hires can complete all their paperwork even before their day of joining. Won't that make an excellent first impression?
- Encourage collaboration – HRMS comes with in-built social collaboration tools that are so crucial for engaging Millennials, and Gen Z. Employees can reward and recognize their peers, share work updates, and stay connected.
- Improved performance – When employees have greater clarity about their goals and the company's expectations, it helps them put their efforts in the right direction, leaving little scope for misses and errors.
And, of course, all this translates to a wonderful experience for your employees.
HRMS allows you to build a happy and confident workforce which is equal to better productivity and commitment. KayaPush HCM is an all-in-one HR platform that integrates Payroll, HR, Scheduling, and time tracking to manage the entire employee life cycle. You can hire and onboard, track Time and attendance, schedule and run payroll, manage KPIs, performance, and create reports from one or multiple locations.
What is a HCM?
Introducing HCM, or human capital management.
The HCM solution is the broadest in scope compared to the other two HR solutions – HRIS and HRMS. It resonates with the philosophy that employees are a valuable asset for an organization and strategically driving employee management to create business impact.
It includes all the HRMS features along with enterprise-level capabilities, including workforce management and optimization, such as budgeting, analytics, and compensation, and business intelligence tools to visualize current trends and predict future needs.
HMC capabilities and functions:
1 - HRMS functions.
Including core functions like payroll, time tracking and workforce, plus talent benefits such as benefits administration, onboarding, compliance management, and maintenance of employee data.
2- Workforce management suite.
Including recruitment, performance management, learning & development, and succession planning.
3- Workforce optimization and investment tracking.
Including workforce planning, scheduling, and budgeting. It aids decision-making related to deploying employees with the necessary skills to particular projects, departments, and regions.
4 - Service and support.
Service delivery including HR help desks, intranet portals, employee self-service, and manager self-service.
A Harvard Business Review research study highlights in the retail industry more stable scheduling increased sales and labor productivity by 7% and 5%, respectively. Retail companies using KayaPush HCM software solution integrated with their POS systems reiterates the above fact.
What are the benefits of an HCM?
For growing companies who are investing in education or career development for their employees, and HCM could be a solution that can help track these things, while still managing basic HR functionalities.
More benefits of using HCM:
- Allow business managers to model workforce needs based on changes in business strategy.
- Help to identify and nurture in-house talent.
- Show compensation spends in multiple ways, e.g., according to regions, pay grade, or department wise. This can help you re-define your compensation strategy.
- Match the learning & development needs of employees with all the available opportunities in the organization
- Get real-time reports to manage your labor cost better.
Let's sum it up.
- HRIS offers the most basic functionalities to automate the core HR administrative processes
- HRMS allows automating onboarding and performance management along with the core HR administrative processes offered by the HRIS.
- HCM brings in more strategic focus with the enterprise-level capabilities to drive HR decisions with business impact.
How do I pick the right HR solution?
Which is the right HR solution? Is it the one that's ranked No.1 in the leading HR magazine? Nope.
Every organization is unique. The right HR solution is the one that meets the specific needs of your organization.
When you go shopping for HR solutions for your business, you'll realize that most vendors randomly label their products as HRIS, HRMS, and HCM. As the HR software industry evolved, these terms also emerged organically.
Start by asking yourself:
- Do you have more than 50 employees?
- Do you have multiple standalone HR systems for recruitment, attendance, and payroll?
- Do you have a better employee experience as a critical strategic priority?
If you answered yes to one or more of these three questions, it's time that you adopt the right HR solution to streamline your HR department.
The difference lies not in how the vendors label their product but in what features their product offers.
Follow these five steps to pick the right HR solution for you:
1 - Make a team.
Put together a project team that includes all the critical stakeholders like HR, line managers, IT, and payroll. Don't forget to include the legal department to ensure the HR software solution complies with the local and regional laws.
2 - Understand the needs of your organization.
- Outline the workflow for HR processes
- Talk to the employees, managers, and HR teams regarding the issues they are facing
- Take into account the long-term business and HR plans
3 - Prioritize your software requirements.
By knowing what you need, you'll be in a better position to control the selection process rather than let software vendors dictate your needs.
- Start with the problems you want to solve
- Analyze the shortcomings of your current system
- Prioritize as "must-have" and "nice to have" features
4 - Conduct extensive market research.
Conduct research to identify reputable HR software vendors. Shortlist at least five HR software solution vendors who offer products with features and functionalities that meet your needs and budget. Suggested criteria to shortlist are:
- HR specialty they serve
- Business size they serve
- Key features and functionalities offered
- Must be within your budget
5 - Schedule demos and get references.
Connect with selected solutions with the shortlisted HR software vendors to request live demos. This will allow you to preview the software.
Ensure the representatives from all the stakeholder groups attend the live demos. Make a decision based on inputs from all stakeholders.
If you like a particular HR software solution, one last step that you must always remember is to seek references from the vendor. It's still good to verify the claims made by any HR software vendor.
Do I need an HR solution for my small business?
We know that change management, leadership development, and employee engagement are the worries of HR leaders in large businesses.
However, the small businesses face the novice HR challenges of lack of a dedicated HR department, huge operating costs, and record-keeping for meeting regulatory compliance.
Most small businesses have 1-2 HR folks who wear too many hats. From being a recruiter to handling exit formalities, these HR folks cannot establish, execute and follow robust processes for hiring, onboarding, and performance reviews. Most of the time, timelines are shorter, the process is rushed, things are overlooked, and poor decisions are made.
The right HR software for small businesses is one that alleviates their pain points by automating administrative tasks, record-keeping, and compliance and by giving HR coordinators tools to find and retain the best talent.
When it comes to small businesses, there is a crucial need for automating and centralizing workflows to improve efficiency in core administrative tasks like payroll, hiring, managing employee performance, and record-keeping for compliance.
Push Operations offers an easy-to-use and flexible HR solution that can transform the HR function in a small business. By automating key elements like punch-in rules, statutory holiday calculations, employee hourly rates, and overtime calculations, KayaPush Payroll software offers one-click payroll processing. It helps companies save 40 hours a week.
Hopefully, when you finish reading this post, you'll have answers to all these questions about HRIS, HRMS, and HCM software solutions, and feel confident in selecting the right software solution for your business!
