HRIS vs. HRMS. vs. HCM: What Makes These HR Systems So Different

Anyone working in human resources (HR) has probably noticed just how much the entire industry has changed in recent years. Today, modern HR is much more than a way to recruit new people.

It’s a strategy ally in and of itself, helping companies to influence their culture, boost performance, and increase employee engagement.

Today’s HR professionals, in fact, get the expert support they need from an array of tech tools. Some of the most widespread are Human Resource Information Systems (HRIS), Human Resource Management Systems (HRMS), and Human Capital Management (HCM).

Each of these systems provides distinct advantages, and comprehending their disparities is crucial for selecting the appropriate tool. In this article, we’ll delve into HRIS, HRMS, and HCM, underscoring their unique attributes and their significance in contemporary HR management. 

Ready to discover more about these advanced tools, and select the best fit for your business? Let’s dive right in.

Decoding HR systems

Before we explain what HRIS, HRMS, and HCM are, it’s important to understand the concept of HR systems. These are digital platforms that help HR experts to oversee and enhance their daily operations. They are, essentially, the technological foundation of contemporary HR, aiding in process streamlining, administrative workload reduction, and efficiency improvement.

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Free to use image from Unsplash

Thanks to these systems, HR departments can easily and efficiently manage a broad spectrum of tasks, from hiring and onboarding to payroll processing, benefits administration, performance evaluation, and even adherence to regulations. 

By automating these tasks, HR systems allow HR professionals to dedicate their time to strategic endeavors that promote business expansion and employee satisfaction.

After all, task automation is nothing new. Think about, for example, a company using automated communication systems such as Aircall alternatives like Dialpad. They do so to boost team cooperation and customer engagement.

In the same way, a well-selected suite of automated HR systems can revolutionize your organization’s human resources operations. Before you jump into a blind implementation, though, you need to identify the right tools to equip your team with and propel your business ahead.

So, let’s take a closer look at the three most-used HR systems and help you work out the best fit for you.

HRIS: Human Resource Information System

Also known as HRIS, the Human Resource Information System is a software tool that combines many critical HR tasks into a unified system. Think about it as a one-stop shop for (almost) all things HR – from employee data to payroll, from benefits to leave, and beyond.

A central feature of an HRIS is its capacity to consolidate data. An HRIS hosts all employee details in a single location, facilitating easy access, updates, and analysis. This consolidation not only simplifies HR operations but also enhances data precision and uniformity.

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Free to use image sourced from Pixabay

Another plus of an HRIS is its ability to automate tasks. Similar to the auto attendant feature in a phone system that directs calls automatically, an HRIS can automate numerous routine HR duties. This automation lightens the administrative load on HR teams, allowing them to concentrate on more strategic tasks.

Who is this best suited for?

Generally speaking, an HRIS is a great choice for small to medium-sized businesses that require a comprehensive, easy-to-use system to oversee their HR operations. It’s also an excellent option for organizations aiming to enhance data management and simplify HR processes.

However, the decision to adopt an HRIS should always be rooted in your organization’s specific requirements and objectives. Always remember to consider factors such as your workforce size, how complicated your HR operations are, and, of course, your budget. 

HRMS: Human Resource Management System

Another widely used HR system is the HRMS, which stands for Human Resource Management System. This software tool extends beyond the more basic functionalities of an HRIS by also incorporating talent management and time-logging features.

Think about it as a more comprehensive version of an HRIS, designed to go beyond the mere management of admin duties and including a more strategic support to handle HR operations.

One of the most central features of an HRMS, unsurprisingly, lies in its talent management capabilities. Equipped with an HRMS, HR teams can oversee the entire employee lifecycle, from hiring and onboarding all the way to performance evaluation and succession planning. 

Essentially, an HRMS can help your company acquire, develop, and hold on to the best talent around through its end-to-end talent management strategy.

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Free to use image sourced from Pixabay

But there’s more. Another great feature of an HRMS is time and attendance monitoring. As any HR professional knows, tracking time accurately is vital to ensure top-notch HR management. So, with these extra functionalities, an HRMS becomes the ideal assistant to HR teams.

Who is this best suited for?

As you might have guessed by looking at its extended functionalities, an HRMS is the perfect fit for larger companies with more complex HR requirements (and, typically, heftier budgets).

However, smaller and medium-sized businesses may also opt for this solution in some cases. For example, if a company wants to ensure spotless call quality in a contact center and aims to achieve this by monitoring the performance of its contact center team as well as tracking time and attendance, they might find that an HRMS suits their needs better than a simpler HRIS.

HCM: Human Capital Management

The fact that this tool includes the word “capital” should give you a hint as to what it is all about. Yes, HCM – the acronym for Human Capital Management – is possibly the most comprehensive HR system of all, and the only one that enables you to truly bring out the value of each of your employees.

You may want to think about it as the most “premium” version of HR software, as it includes all the functionalities of both HRIS and HRMS, as well as adding some extra strategic tools such as analytics and workforce planning. 

Its main feature? Of course, a strong emphasis on strategy. With an HCM system, organizations can better plan and manage their workforce, aligning those activities with their wider strategic goals.

An HCM offers insights into employee performance and potential, aiding you in making informed decisions about recruitment, development, and succession planning. This is where specialized tools like diversity recruiting software become valuable, ensuring your talent acquisition strategies are inclusive and effective.

Other than talent management, HCM systems also include interesting employee engagement features. By leveraging advanced tools for communication, collaboration, and recognition, HR teams can contribute in cultivating a positive and productive work environment. Effective employee communication is crucial for fostering teamwork, aligning with company goals, and ensuring a cohesive organizational culture.

Who is this best suited for?

Given its wider scope – and higher price tag – an HCM system is often the first choice of large organizations who typically require a comprehensive and strategic approach to HR management. In some cases, though, it can also be an excellent choice for businesses that wish to focus on attracting and engaging the workforce.

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Free to use image sourced from Unsplash

HR systems demystified: the top five factors to consider before implementation

In our previous sections, we already briefly mentioned what type of company usually benefits from each HR system. There are, though, other and more specific factors that you should bear in mind before jumping head-first into the implementation of a tool that you think looks great on paper.

Let’s check what the top five factors are, so you can use them as more precise guidelines to steer you in the right direction. 

1. Organization size

The first aspect you want to consider is how big your company is. This is because, normally, smaller companies have simpler HR processes and fewer requirements compared to their larger counterparts.

2. HR operations complexity 

Speaking of HR processes, another vital consideration to make is about their complexity. Yes, you may be running a small call center software provider, but if you employ people on an ongoing basis and need to track elements such as time and attendance, then a slightly more advanced tool might be best for you.

3. Strategic goals

Next, think about your strategic HR objectives. If your focus is on administrative efficiency, an HRIS or HRMS might be the best fit. But if you’re looking to drive strategic HR initiatives, an HCM might be the better choice.

4. Budget

As you might expect, some of the more complex and advanced HR systems also come at a higher cost. Even if you think you would hugely benefit from an HCM, for example, but your budget doesn’t allow it (yet), then it’s best to start small and then build up from there.

5. Other requirements

Every company is like its own universe. You may have very specific requirements that push you towards one HR system rather than another one that, on paper, might look like the perfect fit. Always remember to take into consideration factors like relevance, ease of use, and growth potential, as well as anything else that might be unique to your organization, such as whether you need your HR teams to send a fax from a computer or perform other specific tasks.

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Free to use image sourced from Pixabay

Empower your HR team with the right HR system

Enjoying a happy, talented, and productive workforce goes hand in hand with equipping your HR teams with the right tools to aid them in their daily tasks. In our guide, we discussed three of the most common HR systems – HRIS, HRMS, and HCM.

Before you select one, though, it’s vital that you do your research. Just as a company operating in Qatar might choose to investigate the best Qatar Domains by OnlyDomains for their website, you, too, should invest time into assessing different HR system options for your business.

And with our tips, you are now ready to empower your HR team with the best system for their needs.

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