The different types of HR software: a quick overview

HR software creates paperless, efficient processes for the fundamental element of every company – Human Resources (HR). This software solution encapsulates a range of functions. From onboarding programs to payroll to learning management systems, the list is endless.

The parameters within these categories are constantly expanding. Complete a time off request in minutes. Emergency meeting? Create a boardroom-ready strategy report by the time everyone’s taken their seats. And with just a few clicks, you can issue company-wide alerts and notifications.

HR software has revolutionized the way human resources operate. It’s saving companies time, money, and piles of paperwork. With its ever-growing popularity though, the market has become inundated with software solutions led by numerous developers. HRIS, HCM, HRMS… these acronyms have left many scratching their heads.

We will break them down for you so you can find the ideal HR software for your company’s needs.

Deciphering the different types of HR software

HR software is widely available in a variety of solutions. However, three main systems dominate the digital realm of human resources. These systems are not interchangeable, although there is an overlap in some areas.

Here are the three major types of HR software:

1. Human Resource Information System (HRIS)

This system is probably the most popular of the three, with its main focus on employee data organization. The collection and storage of this data aid in performing functions such as:

Onboarding: HRIS simplifies the induction process as the new employee need only input their information once – records in the relevant departments will be automatically updated. This is just one way it improves the onboarding process.

Recruitment: An Applicant Tracking System (ATS) records an employee’s resume and credentials and also performs job matching from the existing candidate pool.

Time and Attendance: Employee hours are automatically recorded for timesheets when employees clock in and clock out.

Compliance: HRIS issues notifications when there’s a threat of non-compliance, for instance, when breaks need to be taken or overtime has been exceeded. It also checks compliance with the relevant legislation.

Payroll: With hours automatically recorded, payments are made on time and accurately. Employees can also easily view their paychecks.

Employee self-service: This neat feature allows employees to change certain personal details without having to contact HR. They can also request time off via this service with approval and updates taking place within minutes.

Performance management: Executives and managers have easy access to performance records and reviews.

Learning management: The system notes the skills and qualifications of each employee. It also allows employees to view available courses and learning opportunities as part of a company’s L&D strategy.

Analytics: Reports are quickly created once parameters are defined. Templates are also available for typical HR metrics.

The efficiency of the system saves a lot of time on the admin end of HR. It also provides opportunities for personnel to strategize thanks to its accurate record-keeping and efficient reporting process.

The self-service portal also helps to keep employees engaged through regular interaction. HRIS is the ideal starter software for any business that needs to streamline its HR processes.

2. Human Capital Management (HCM)

HCM is an extension of HRIS in that it covers all the same features but becomes more complex in its solutions. HCM spotlights the employee’s journey through the company, from talent acquisition to management to optimization.

Here’s what these aspects involve:

Acquisition: This is the process of recruiting and onboarding a candidate. Candidate experiences during this initial period can easily go wrong when there’s a lack of organization. With 33% of new employees quitting within the first 90 days, it’s easy to see how important a structured and comprehensive onboarding program is. HCM inspires confidence in new employees by allowing them to focus on integrating into the workplace instead of mountains of paperwork.

Management:  Throughout an employee’s career, HCM will keep track of the high and low points through time and attendance, as well as performance assessments and reviews. This category also looks at company culture and how it can be developed while managing the day-to-day events of an employee’s work life.

Optimization: This aspect revolves around getting the best out of your employees. Factors such as employee engagement, learning and development, remuneration, competency, and succession planning are taken into account when curating a fulfilling career journey for the employee.

As you can see, HCM takes a deep dive into the career paths of employees to ensure job happiness and high retention rates. The system can also be customized to each organization’s needs, highlighting certain people management practices and processes.

3. Human Resource Management System (HRMS)

And now, we come to the most sophisticated of the three – the Human Resource Management System (HRMS). This powerhouse HR software includes the features of HRIS and HCM while putting extra emphasis on the administrative aspects of employee relations.

The management of time and labor has a new level of complexity including an automated payroll system that calculates wages. HRMS is geared towards improving efficiency by creating productivity reports and analyses.

Choosing the right HR software

There are certain components that your chosen HR software should cover: recruitment and onboarding; employee management; compensation and benefits; employee development; performance management; and compliance.

Consider whether you prefer cloud-based or on-premises software, your budget, and scalability options. The level of security, the system’s flexibility, and how user-friendly it is should also be taken into account when making a decision.

A good starting point to finding the best HRIS software for your needs is to find one that covers all your basic requirements simply and efficiently.

Whether you have a small home business, a medium-sized enterprise, or a large corporation, there’s a perfect HR software solution for you. It’s just a matter of considering your needs as well as the expense and intricacy of the system you require. Whatever your choice, HR software is a must in any modern-day organization.

Need more? Check out our comprehensive HRIS purchase guide: HR software selection: Your guide to purchasing an HRIS