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What is HRIS? And why is it so important for your business?

If you’re wondering what HRIS is and why it’s important for organizations, you’ve come to the right place. Let’s get started on everything you need to know about an HRIS.

Keith MacKenzie
Keith MacKenzie

Passionate about human resources, employment, and business management, and an expert at sharing that expertise.

What is HRIS?

HRIS – or Human Resources Information System – is a software system primarily used by human resources professionals to store and manage employee data such as payroll, benefits, performance reviews, and training records.

HRIS systems are designed to automate HR processes and streamline the management of employee information.

What does HRIS stand for?

HRIS stands for Human Resources Information System.

Why is HRIS important?

If you’re working in human resources, you know all too well the numerous processes and responsibilities that you need to stay on top of on a regular basis. It can be a mountain of work in your day-to-day work, especially when you’re working with distributed teams, larger employee bases, high turnover, and other variables that make for more complex processes.

This is where an HRIS come in incredibly useful in supporting and optimizing your overall workload in HR.
An HRIS can make your work:

1. More organized

You’re able to organize your work better than you could in the past, and your company can be better organized in the way it manages the information in its employee base.

2. More streamlined

Not only are you more organized, you can also optimize your work so you’re not repeating menial tasks and even duplicating efforts day in and day out – an HRIS automates your work, making it a more streamlined experience.

3. More transparency

When you have multiple players in a system and many full-time employees in your HR team and in your company, it’s hard to keep things organized and keep everyone uniformly informed. With a good HRIS, you can reduce any potential confusion by having a single source of information for everything that passes through HR.

Why should HR managers care about HRIS?

HR managers should care about HRIS because it can help them to streamline and automate many of the day-to-day tasks that take up a lot of time and resources to manage.

HRIS systems can also help reduce administrative costs by eliminating manual processes, increasing efficiency and accuracy, and improving data accuracy.

It can also help to provide more comprehensive and accurate data insights that enable HR managers to make more informed decisions and support overall business strategy that involve employees. Likewise, users of the software can better measure and analyze employee engagement, productivity, and other key metrics.

Additionally, HRIS systems provide an organized, efficient and centralized tool to manage employee records, benefits, and payroll, as well as to track performance and attendance.

The different types of HRIS software

There are three primary types of HRIS software that can easily overlap. The basic categorization can be as follows:

1. Human Resources Information Systems (HRIS)

HRIS software focuses on the tactical and logistical – at its very basic level, it stores information related to human resources departments such as employee details, salaries and benefits, organizational charts and policies & procedures. It centralizes all of this in one location, whether in the cloud or on premise.

2. Human Resources Management Systems (HRMS)

HRMS software grows on an HRIS by adding management and automation elements including onboarding schedules, performance review processes, and time tracking.

3. Human Capital Management (HCM)

HCM is more of a complete suite of the above, with additional tools focused on macro-level processes and people strategy including employee engagement, career development, and overall productivity.

Where can HRIS be managed from?

There are two primary areas where you can manage an HRIS. They are:

1. Cloud-based

Everything operates online in a portal that’s accessible by any user from anywhere. This is ideal for businesses that do much of their work online and asynchronously across locations.

2. On-premise based

Everything is stored on site in local computers. This is best for single-location businesses that do much of their work in a physical environment without a strong requirement for online access, such as restaurants, services, garages and gas stations, and so on. Data privacy can also be a consideration – some businesses may want to store their information in a location that’s not accessible online.

How does HRIS help recruitment?

HRIS helps recruitment in several ways. First, it can streamline the recruitment process by automating many of the tasks associated with recruiting, such as tracking job postings, collecting and organizing resumes, scheduling interviews, and more.

Second, an HRIS can provide valuable insights into the recruitment process, such as which job postings are performing best and which candidates are more likely to be successful in a certain role.

Finally, an HRIS can help ensure that a company’s recruitment efforts are compliant with applicable laws and regulations, such as those related to data privacy and equal employment opportunity.

Who can use an HRIS?

An HRIS can be used by human resources professionals, team managers, and other staff to manage the HR functions within a company.

It can also be used by employees themselves as a self-service model to access the information they need at any given time, including time-off usage, company policies and procedures, key performance indicators, performance ratings, compensation and bonus structures, and other relevant information.

Which businesses need an HRIS?

In short, any business that employs people. Although you can feasibly manage the information of a small number of employees through manual paperwork and files, that HR workload can grow exponentially. You’re taking up additional bandwidth every time you add to payroll or backfill a vacated role, open up new offices in different locations, or even introduce new incentives to motivate your existing workers.

Also, a small business may not have the resources to employ a dedicated HR team or even a single human resources professional. So, HR-related matters fall on the shoulders of business managers and owners. An HRIS can greatly reduce the burden on those shoulders.

So, back to the original point – any business that employs people needs an HRIS. There’s an HRIS to accommodate the needs of the smallest businesses all the way up to larger-scale multinational enterprises, and one for every budget.

How many employees can an HRIS handle?

As said above, there is an HRIS for every size of business. There’s no minimum or maximum limit to the number of workers that an HRIS can handle. Software is naturally built to scale, and even if it’s not, businesses can ‘graduate’ to a next-level HRIS as it grows.

Is an HRIS suitable for small businesses?

Yes, an HRIS is suitable for small businesses. The benefits of an HRIS system include improved efficiency, easier reporting, improved compliance, and better data management.

With an HRIS, small businesses can access their employee data in one place, track employee performance, and access analytics to understand their workforce better.

What are the features of HRIS software?

An HRIS software has numerous features, each designed to cover different aspects of human resources management. They include:

1. Recruitment and onboarding

Many HRISes come with a ready-made, fully integrated applicant tracking system or recruitment software that optimizes the hiring process. An HRIS is also equipped with onboarding tools such as online review of policies and procedures with e-signing capabilities and the collection of an employee’s personal information.

2. Payroll management

Managing payroll is one of the most important jobs of human resources – ensuring that every employee gets their compensation as scheduled. An HRIS can manage this from initial entry of compensation details through to automated delivery of payment on a regular basis. Other elements of payroll management include visibility from a finance perspective and tracking of changes in payroll due to raises and internal mobility of employees.

3. Paperless records

When records are stored in the digital realm of an HRIS, this lessens or even eliminates the need for physical documents – which in turn removes the burden of filing and organizing these documents. When everything is stored electronically, not only can an HRIS locate the needed documents at a moment’s notice, it also reduces waste for organizations that are more environmentally conscious.

4. Applicant tracking

As above, the recruitment process includes the tracking of applicants and their information, including their resumes, contact details, interviews, evaluation results, and other details. An HRIS equipped with an ATS can do all this for you.

5. People analytics

People analytics is a crucial ingredient in the HR management playbook and, as such, is a major feature of many HRISes. It helps you spot opportunities and gaps in your employee base to support different people strategies including DEI, retention, internal growth, etc.

6. Time and attendance

When you’re paying by the hour or using contracted workers, or monitoring hours for overtime pay, tracking time and attendance is essential. HRISes will ensure that you stay on top of this important part of human resource management.

7. Benefits management

Managing benefits is one of the major tasks in an HR professional’s day-to-day work – be it in the onboarding process, open enrollment, benefits selection, or something else. An HRIS with this feature enables you to manage your company’s benefits in one place.

8. Mobile app

Not everyone has the time or space to do their work on a laptop, let alone at a desk or in a dedicated workspace. Many HRISes come with mobile capabilities that enable HR professionals to do their work while on the go.

9. Integrations

Your HRIS likely isn’t the only software in your company tech stack, so you want to ensure it seamlessly integrates with your other tools. A well-designed HRIS should fit within your existing tech stack.

10. Employee self-service

HR professionals and managers regularly field requests for information and updates from employees, whether it’s in terms of time off or sick days, a change in benefits, work hours and shifts, or other pertinent data. An HRIS can give employees their own access portal to get the information they need right away.

11. Reporting capabilities

We mentioned analytics above – the ability to create reports to advise and support overall business strategy is a great feature of HRIS software. These reports can show insights in any area of interest, be it retention, DEI, or any other information that can support a strategic business decision.

What are the benefits of HRIS software?

The benefits of an HRIS are almost too numerous to mention, whether tangible or intangible. Highlights include the following:

1. Data-driven decisions

An HRIS enables you to consistently track various elements of employee management, including PTO, benefit usage, employee tenure, promotions, attendance, productivity, and other key metrics. The resulting insights come in incredibly handy when making decisions at a strategic level for your organization.

2. Enhance employee experiences

An HRIS provides a single platform for management and employees to access all the information they need in one place – including policies and procedures, organizational charts, compensation and benefits, employee history, performance evaluations, time off, sick days, and so on. This level of transparency and ability to get quick approval (i.e. in the case of time-off requests) can make a smoother experience for employees.

3. Increased productivity

An HRIS manages PTOs and even work processes so that you can ensure your work is streamlined. For example, if you have a staff of 10, you can’t afford to have seven of them checking out for PTO in a single week.

An HRIS can help you monitor this so that you can stagger the time off and ensure that productivity remains consistently high.

4. Increased automation

When you’re working with resource-strapped HR teams and limited bandwidth, the automation features of an HRIS can make the day-to-day work more consistent and attainable on a regular basis.

5. Fewer errors

When information and processes are regularly logged and tracked in a single resource – in this case, an HRIS – the propensity for sometimes costly human errors is vastly reduced.

6. Speedier processes

An HRIS speeds up the process in many areas of human resources, including signing paperwork for a new hire, getting approvals for time-off requests, creating and delivering reports for compliance purposes, and tracking different elements of an employee’s lifecycle – including promotions, salary changes, attrition and retention, and more.

7. Freed-up HR resources

The reduction of time-consuming errors, increased automation, and accessibility of information in a single place all free up valuable hours in an HR professional’s day-to-day work – allowing HR to focus more of their time on the things that deserve closer attention.

8. Increased compliance

When an employee’s data is collected within an HRIS, and with policies and procedures kept in a single place all with e-signature capabilities, this makes compliance much easier for an organization. That’s especially when you require a paper trail or regular reporting to meet EEOC or GDPR standards.

9. Accommodate business growth

When businesses grow rapidly – especially startups and SaaS companies – they need systems in place that can accommodate the rise in scale, including in HR. The number of processes increases when a company’s FTE count grows, and an HRIS can manage this free of breakdowns, in ways that manual systems cannot.

How to choose the best HRIS for your business

Now that you understand what an HRIS is, what features are included, and what the benefits are, you can then start shopping for an HRIS.

Looking for an HRIS for your organization isn’t a decision to be taken lightly, but doesn’t have to be an intimidating experience even for the less-experienced business leaders looking to shore up their HR processes.

The following guide can help you know what to consider and how to make the right decision in choosing the best HRIS for your business.

Know what you need to do to implement an HRIS successfully

First, make sure you know what you need to do to properly introduce an HRIS into your company.

1. Define your goals and objectives as a company: Determine why you need an HRIS in the first place, what you want to achieve with it, and how you expect it will help your organization.

2. Research and select an appropriate HRIS: Research different systems and select the one that best meets your organization’s needs.

3. Plan and organize the implementation: Develop a detailed plan of the activities and timeline for implementing the system.

4. Train and support users: Provide adequate training for the system users and ensure that they are comfortable using it.

5. Monitor system performance: Monitor the system’s performance to ensure that it is meeting the organization’s goals and objectives.

6. Update system components: Ensure that the system is up to date with the latest features and components.

7. Evaluate the system: Review the system’s performance and make changes as needed.

Know when you should invest in an HRIS system

The best time to invest in an HRIS system is when your current HR processes are not meeting the needs of your business. Consider investing in an HRIS system if you’re experiencing any of the following problems:

  • Inefficient processes for tracking and managing employee information
  • Staying compliant with labor laws and regulations
  • High costs associated with manual processes
  • Inability to produce timely and accurate reports
  • Difficulty managing and tracking employee benefits
  • Unable to recruit and retain top talent
  • Not creating and managing effective employee development programs
  • Struggles in maintaining a positive work culture and engaging employees

Know what elements your HRIS should include

It helps to know the features that a standard HRIS can be expected to have right out of the box:

1. Employee Database: Information such as personal information, previous employment history, pay rates, and other pertinent data should be stored in a secure, easily accessible format.

2. Payroll System: An HRIS should include a payroll system that allows for easy calculation of wages, taxes, and other deductions.

3. Time and Attendance Tracking: An HRIS should track employee time and attendance, including both regular and overtime hours.

4. Benefits Administration: An HRIS should include a system for managing employee benefits, such as health insurance, retirement plans, and other employee perks.

5. Performance Management: Tools for tracking and evaluating employee performance should be included in an HRIS.

6. Analytics and Reporting: An HRIS should include reports and analytics to help inform decisions about staffing, compensation, and other HR-related matters.

The future of HRIS software

The future of HRIS software is very bright. As businesses continue to recognize the value of HRIS software, the demand for such software is expected to grow exponentially.

Companies are likely to invest in more advanced and sophisticated HRIS systems that will be able to provide greater insights about their employees, better management of employee data, and improved reporting capabilities.

Moreover, the development of AI-driven features and predictive analytics capabilities will also play a major role in the advancement of HRIS software.

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