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How to Choose Between HRIS, HRMS, and HCM Solutions
Just like there is an app for everything, in the business world there is a technology platform for everything. Your organization’s goals and strategy determine which technology will give you a competitive advantage. When it comes to HR technology, you’ve probably heard terms thrown around like HRIS, HRMS, and HCM. If you don’t know the difference, these terms can spell confusion and indecision.
While these terms are used rather loosely and interchangeably in the HR software world, we’ve come to a consensus on what we believe each of these solutions best encompasses. We’ve provided a breakdown of these solutions so you’ll have a better understanding of the differences between HRIS, HRMS, and HCM solutions.
There are lots of opinions out there on what features comprise HRIS, HRMS, and HCM platforms. These opinions, along with the letters making up these acronyms, can create a very confusing alphabet soup. So let’s break down each of these terms:
What is an HRIS?
A Human Resource Information System (HRIS) allows you to manage the information of your personnel, policies, and procedures online. An HRIS typically provides functionality such as:
Payroll and Tax Compliance: Process payroll using correctly calculated wages and salaries, and manage deductions for taxes and benefits.
Attendance: Track employee hours worked, accrual balances, PTO, and manage schedules.
Recruiting: Manage the hiring process by posting job openings, receiving online applications, and tracking candidates.
Benefits Administration: Manage benefits information, track compliance, and allow employees to enroll online.
Personnel Tracking: Manage an online employee directory that includes contact information, position details, and personal information.
Reporting: Pull metrics and analytics for company trends and actionable insight.
What is an HRMS?
A Human Resource Management System (HRMS) is an HR solution that scales the functionality of HRIS a bit further. This system typically includes all the components of HRIS, but with talent management added to the mix. This piece of the HR puzzle can provide applications such as performance reviews and succession planning to further incorporate employee lifecycle management from hire to retire.
By using HRMS systems, companies can promote engagement from the recruiting process, just like with an HRIS. But with an HRMS solution, companies can maintain that engagement by assigning personalized employee goals and conducting regular performance tracking in a simplified, online system.
Why are performance reviews so important?
As your company grows and continually goes through the hiring process, investing time and money in those employees who have a clear path outlined for them in the company will reap higher rewards. Turnover will be reduced, and employees will be more engaged with their work and company.
What is an HCM?
Similar to HRIS and HRMS, a human capital management (HCM) system is composed of core HR functions that can provide comprehensive solutions to companies. An HCM system has the capability to store and manage all information that HRIS and HRMS software can. However, HCM software also incorporates “capital” management in the form of new hire onboarding, performance tracking, succession planning, and the associated analytics. An HCM system covers a wide range of core HR functions like HRIS and HRMS software but has increased capabilities to manage strategic HR functions and report the analytics associated with the data.
Here are some key capabilities of an HCM solution that some companies might find useful:
Administrative Functions: Employee data, benefits administration, payroll administration, and self-service portals for employees.
Company Data: Access to company documents and data and an organizational knowledge base.
Talent Management: Recruiting, onboarding, training, applicant tracking, online job board posting, performance tracking, and management.
Labor and Workforce Management: Time and attendance, scheduling, self-service options, budgeting.
Heard of Workforce Management?
Don’t be confused. Workforce Management is also a phrase used in HR conversations but differs from the solutions we’ve described. It revolves around labor utilization and focuses on managing compliance risks and optimizing worker shift schedules. An HCM takes it to the next level to encompass the full range of HR management.
|Payroll||HRIS Capabilities||HRMS Capabilities|
|Tax Compliance||Performance Management||Scheduling|
|Benefits Administration||Succession Planning||Applicant Tracking|
|Time & Attendance||Training|
|Employee Self-Service Options|
Which System Should You Choose?
We hope the information we’ve provided makes it easier to differentiate these HR technology terms. The next step is to evaluate your company’s needs and determine which type of solution is the right fit. No matter the size of your business, all of these tools are useful in managing businesses. It is up to you to determine the set of goals you wish to accomplish with your system and which will be most beneficial to you.
Using systems that are designed to unify many different HR tasks in one place increases efficiency, improves usability, reduces operational costs, and bolsters security exponentially. As your business grows and you have more needs, having an intuitive HR system that can grow with you is a must.
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