For businesses that are just starting out, finding the right HR software solution that fits their business needs can get tricky. In this article, we help you navigate through various human resource systems and help you find the one that’s best for your small and midsized enterprises (SMEs).
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Deciding whether to invest in specialised human resource (HR) software is essential because as businesses expand and develop, so do their HR requirements. With UK tech industry looking to hire more people in the coming months as per a report by UK Tech News, it may be helpful for businesses to prepare themselves accordingly and take the help of technology to automate and streamline HR processes. In order to best manage the talent, ensure employee satisfaction and boost productivity, it may be essential to find an HR software solution that integrates seamlessly with your business operations. In this article, we will look at the three different types of HR systems (HRIS vs HCM vs HRMS) and which one best fits your business needs. Before we do that, let us first briefly understand what a human resource system is.
What is an HR system?
An HR system is a technology that enables the storage, processing, and reporting of HR-related information. These systems simplify the administration of human resources, aid HR teams in providing greater assistance to the workforce, enhance the decision-making of HR professionals, facilitate legal compliance as well, automate tasks, and enhance data security. HR software is possibly used by businesses of all sizes to boost employee productivity and satisfaction levels.
What are the 3 different human resources systems?
HR activities in today’s times are more intricate and sophisticated than ever before. As such, the capabilities of the software have also improved. While some solutions are all-inclusive, covering the majority or all of the HR management responsibilities, other options may be specialised and may only help with a small number of HR requirements. Below, we list the three most common types of HR solutions (HRIS vs HCM vs HRMS) along with the features offered.
Human Resource Information System (HRIS)
HRIS enables organisations to employ technology to improve their HR procedures and increase the effectiveness of their organisation as a whole. The management of policies, procedures and people is facilitated by HRIS software. Additionally, HRIS software aids businesses in the organisation and accessibility of employee data by enabling HR specialists to store and arrange massive amounts of data relevant to employees and track applications as well. HRIS solutions can help companies with the following capabilities:
- Applicant Tracking
- Compensation Management
- Reports
- Core Human Resources
- Absence management
- Training and Development
- Workflow management
Human Capital Management (HCM)
HCM or human capital management software contains all the features of an HRIS system in addition to capabilities like talent management, talent acquisition, and talent organization. The HCM is intended to assist HR in monitoring employee growth and performance. Using HCM software, an employee can set their professional goals, track their progress from time to time and modify their goals when need be. These systems are also capable of helping employees collaborate and share information across teams. Some of the features of an HCM system on top of the capabilities offered by an HRIS are:
- Employee performance
- Onboarding
- Salary Planning
- Analytics
- Global support
- Administrative Functions
- Workforce planning
Human Resource Management System (HRMS)
HRMS systems typically incorporate all of the capabilities of HRIS and HCM systems apart from additional features like core HR tracking, payroll and benefits. While some HRMS solutions concentrate primarily on managing personnel data, others also include planning and assessment capabilities as well. All HR-related data is managed through integrated, modular systems by HRMS which may be arranged and adapted to meet organisational demands because of their modular nature. Human resource management systems can be bought as a completely integrated package or as separate modules that can be combined with one or more best-in-class HR software solutions. In addition to the features offered by HRIS and HCM, the following features are offered by an HRMS:
- Payroll management
- Time management
- Labour management
How do I know which HR system is right for my business?
As we saw above, every human resource system (HRIS vs HCM vs HRMS) is unique in its own way. It's possible that your HR team may not know what to look for if they've never used an HR management system before or if they are trying to upgrade to more advanced tools.
Finding a human resource management system for small businesses with more straightforward HR needs, HRIS can be a suitable option since it encompasses all the basic features of HR software solutions. However, a user-friendly HRMS that streamlines HR procedures and provides valuable data might be advantageous for a business that is expanding quickly and seeks to improve HR management.
In case your business is at the point where it has already been using an HR system and is looking to expand the capabilities of the current system, HCM would give you all the existing features, plus additional features to manage the workforce, track their performance and perform other administrative tasks.
For businesses looking to maximise the output of their current HR operations, HRMS may be a suitable fit as it possibly offers a full range of features offered by HR management systems.
The features and functionality of the three systems may overlap and although the terms are sometimes interchanged, HRMS is occasionally thought of as the more comprehensive form of HRIS since the two generally have more features in common.
What’s the key takeaway?
A thorough overhaul of your present HR management systems could be a good move if your processes are still performed manually utilising a mix of manual and computerised approaches. When you convert to a system that connects all essential HR functions and makes them accessible from a single place, you'll also cut down on labour hours. In such a circumstance, it could be wise to spend some time and money moving to a more effective system, but only after a careful and in-depth analysis of the available options.
