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HRIS vs. HRMS vs. HCM: What’s the difference?

An HRIS (Human Resources Information System) is one of the most important tools used by HR professionals. This article will give you an overview of what an HRIS is and how it can more effectively manage your company's human resources compared to a Human Resources Management System (HRMS) and Human Capital Management (HCM) software.

First, understanding the difference between HRIS vs. HRMS vs. HCM requires you to know what each one is, how it works, and what the main features are for your business. Let’s start with HRIS:

What is an HRIS?

An HRIS is a software or online solution used for data entry, tracking, and managing all HR operations in an organization. This system provides easy access to an actionable database that helps keep all HR systems running smoothly – whether hosted on the company’s server, in the cloud, or by an outside vendor.

How does an HRIS work?

Most HRIS solutions provide a central database where employee information can be stored and managed. This allows HR teams to input personnel data into the system and access it from anywhere.

What are the main features of an HRIS?

These are the core functions of an HRIS:

  • Centralized storage of information about personnel, policies, and procedures in an organization
  • Recruitment and talent relationship management
  • Automated onboarding of employees
  • Performance management
  • Employee self-service (ESS) to view and manage personal information
  • Time and absence management
  • Training management
  • Workforce analysis

What are the main benefits of an HRIS?

With all information and analytics in one place, an HRIS can help companies find and analyze data more efficiently. This means better-informed decisions about hiring, firing, salaries, promotions, and other human resources matters. In most cases, an HRIS leads to greater efficiency and productivity for employees and managers.

What is HRMS?

An HRMS usually consists of hardware and software resources that provide much of an HR department’s business logic and help it manage everything HR related.

How does an HRMS work?

Organizations rely on HRMS to automate tasks, organize employee information, and generate data-driven reports. This system eliminates the need for paper documents, making it more efficient and effective.

What are the main features of HRMS?

Some HRMS systems are designed for large companies with many employees, while others are more flexible and can be customized for smaller enterprises. The following are considered general and “best practices”.

  • General HR functions such as employee benefits administration
  • Time and attendance functions such as absence management and compliance
  • Analytics functions including real-time reporting, prediction capabilities, and financial analysis
  • Onboarding functions such as paperless forms and reports and probation management
  • Compliance features ensuring automatic hiring compliance and legislative compliance
  • Learning and development features, such as course management, ensuring compliance, and updating training materials
  • Payroll solutions, featuring bulk processing and reprocessing, online payroll, and overtime records

What are the main benefits of an HRMS?

The most notable benefit is the increased security of employee data. In addition, automating HR tasks reduces the likelihood of human error, further protecting the accuracy of employee data. Finally, having fewer HR systems in place makes life easier for both employees and HR professionals.

Human resources management is a major pillar in overall HR. As such, an HRM system is a tool to help you succeed as an HR professional.

What is HCM?

Human Capital Management (HCM) software is a digital HR solution that enables organizations to automate and manage employee-related processes in a centralized system. The goal is to empower organizations to focus on strategic initiatives rather than manual administrative work.

How does an HCM work?

HCM software is a collection of integrated HR tools that use mobile and cloud technology to process data. The data is pulled from the various data centers to run reports and create a seamless user experience for HR professionals.

What are the main features of HCM?

Cloud-based or on-premises, HCM software can give you the data insights to inform compensation packages and work schedules. Predictive analytics and forecasting are used for planning, for business growth, and increased profitability. HCM software automates manual tasks and processes that are time-consuming elements of talent strategies.

It can also include mobile self-service options, multimedia-based training, and chatbot-assisted applicant screenings. Multi-layered protection keeps your data secure, while global and local monitoring capabilities ensure compliance with changing regulations.

What are the main benefits of an HCM?

An HCM system can help businesses improve their decision making by integrating data into a single employee record, supporting mobility, and increasing workforce efficiencies. This can result in reduced costs and improved productivity for the business as a whole.

Main advantages of using an HR system

There are many HR software benefits for your business. These include, but are not limited to:

1. Increase in productivity

HR technology can streamline processes, eliminate repetitive and unproductive tasks, and increase efficiency throughout the organization, leading to increased productivity.

2. Enhanced employee experience

Employees who can find answers to their questions tend to be more satisfied with their jobs. You can create a positive work environment by ensuring employees have access to relevant information.

3. Security

An HR system can help protect employee data from unauthorized access and hackers through encryptions. It can also make payroll processing more secure.

4. Minimize errors

Artificial intelligence software can help reduce errors in processes like payroll management. This can reduce the likelihood of human errors, such as misplaced numbers or decimal points.

How are an HRIS, HRMS, and HCM different?

So, what’s the difference between an HRIS, HRMS, and HCM? Let’s go through them one by one.

HRIS vs. HRMS

An HRMS is a complete system used by organizations to manage employee information. In contrast, an HRIS is simply a database system or collection of databases that track employee data. An HRMS is usually more detailed than an HRIS.

HRIS vs. HCM

HCM refers to a broader concept that encompasses not only HRIS but also other systems and processes related to managing and optimizing the human capital within an organization. HCM systems often include HRIS functionality, but they may also include other tools and features that go beyond just managing employee data.

HCM vs. HRMS

There is often confusion around the terms HCM and HRMS, because many systems perform similar functions. However, there can be important differences between HCM and HRMS programs in terms of specific features and functionality. When considering which system to implement for your company, it is therefore crucial to compare different options in detail.

Which HR software should I choose for my business?

Now that you know the differences between an HRIS, HRMS, and HCM sopftware, you’re probably thinking about how to choose one for your organization. There are many considerations and variables to think about here.

First, define your HR needs. You should consider the extent to which the current HR system is falling short, the most common pitfalls and challenges the department faces, and the biggest barriers to a positive employee experience. It’s also important to determine which HR processes are the most time-consuming and whether new software could streamline them.

In addition, you should research your company’s policies and regulatory requirements around data security, vendor diversity, vendor contracts, etc., and assess how tech-savvy your team is.

Second, identify what matters most when choosing an HR system. Consider whether the system is suitable for your industry and company size. There are many different options, so you must make a list of the features that are absolutely necessary for your business.

To get an idea of what would be most beneficial for your business, talk to stakeholders about where they see gaps in the business and what they would like to see improved.

There is a lot more, of course, but don’t let that intimidate you or scare you off this important decision.

For a deeper dive, check out our complete guide to HR software selection.

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