What is HRIS?
A human resource information system (HRIS) is software that provides a centralized repository of employee master data that the human resource management (HRM) group needs for completing core human resource (core HR) processes. An HRIS can help HR and organizations become more efficient through the use of technology.
An HRIS stores, processes and manages employee data, such as names, addresses, national IDs or Social Security numbers, visa or work permit information, and information about dependents. It typically also provides HR functions such as recruiting, applicant tracking, time and attendance management, performance appraisals and benefits administration. It may also offer employee self-service functions, and perhaps even accounting functions.
In some ways, an HRIS can be considered a smart database of employee information. The interaction of the data, the processes that can be performed and the reporting capabilities make the data stored in the system more accessible and usable.
HRIS software can breathe new life into a company's HR processes and procedures. While the benefits may vary depending on the system a company opts for or the modules they choose, the following are the key benefits of HRIS software:
- Expedites tasks. An HRIS enables the HR department to spend less time on clerical tasks, helps ensure the accuracy of employee data and can make it easier for employees to manage their information.
- Reduces paperwork. Having a centralized repository for employee data removes the need for storing paper files, which can be easily damaged, as well as the need to search through large paper-based employee files to find information.
- Simplifies predictive analysis and visualizations. Depending on the type of HRIS software, it may generate various reports, provide Ad hoc reporting capabilities and offer HR analytics on important metrics such as headcount and turnover. Modern HRIS software also offers visualization capabilities for employee data, such as automatically rendered organizational charts or nine-box grids.
- Empowers employees. Employees can directly access and make changes to their personal information without the need to contact HR.
- Improves productivity. When an HRIS offers employee or manager self-service, the process for making employee master data or organizational changes becomes more efficient and uses less time than paper-based requests. Approval workflows enable changes to be approved or rejected, with the necessary individuals automatically notified. An HRIS might also offer mobile capabilities that extend self-service and provide additional flexibility for remote workers.
- Maintains compliance. HR tasks are highly regulated and there's little to no margin for error. Many HRIS programs have monitoring capabilities and are designed with specific compliance regulations in mind. This encourages organizations to stay compliant and avoid legal issues, penalties and financial losses.
- Offers security and privacy. An HRIS also helps secure employee data and keep information private. When using paper forms or spreadsheets, information can easily be accessed by people who may not have the authority to access it. An HRIS can secure information so that it can only be accessed by authorized individuals. Data security and privacy are important factors when handling sensitive personal information, especially in countries such as Germany and France, where works councils have a strong role in protecting employee data. With the exception of a lock and key, protecting paper records can be extremely difficult.
Types of HRIS software
A variety of HRIS software is available and aimed at different types of customers, ranging from small and medium-sized businesses (SMBs) all the way up to large enterprises. Usually, the difference is in the range and depth of features for each process area.
While most HRIS software covers a large portion of the processes described above, many HRISes aimed at midmarket enterprises have less depth of functionality in each feature than those aimed at large enterprises.
In this way, the HRIS market is similar to the automobile market. All automobiles will get a driver from A to B, but major differences exist in the quality and amenities offered.
As an HR tool, an HRIS usually features modules to handle the following tasks:
- master data management (MDM);
- organizational management, such as positions and departments;
- employee and manager self-services;
- absence and leave management;
- benefits administration;
- performance appraisals;
- recruiting and applicant tracking;
- compensation management;
- training tracking as opposed to a learning management system (LMS) and organizational development; and
- reporting and basic analytics.
An HRIS provides a comprehensive set of functionalities to serve most HR needs. Without this, unsecured or paper-based documents or spreadsheets are required to store data. Manual data entry can cause errors, and manual cross-checking of documents and spreadsheets can be time-consuming and sometimes confusing, especially with a lack of standardization on how data is captured and stored.
Even when a specific system is purchased to cover a process -- such as benefits administration -- it may mean manually entering employee data changes to keep the system up to date. If multiple systems are used, data re-entry may be required for each system, or users may need to export data from one system, change it and then import it into another system.
In some instances, payroll can be part of an HRIS. However, many vendors either don't have payroll as part of their HRIS offering or -- as with Oracle, Workday and SAP SuccessFactors -- they sell payroll as a separate system that integrates with their HRIS.
The importance of HRIS
An HRIS can play a critical role in enabling compliance -- for example, to store regulatory data for a country, such as U.S. equal employment opportunity information or U.K. Working Time opt-out -- and can offer a way to gain insight into the workforce. Both are important and, in some industries, are interwoven.
In addition, downstream integration of systems that require employee data, such as payroll or LMS, and the efficiency created by having integrated applications mean an HRIS can serve a critical role, since data entry in multiple systems can lead to costly errors or reduced employee engagement.
For example, suppose a company that manually enters HR data mistakenly overpays employees or gives out too much vacation time. That company will find employee experience and engagement negatively affected if the error is reversed, a situation that could be avoided with an HRIS.
The difference between an HRIS and an HRMS
Exact definitions for HRIS and human resource management system (HRMS) vary, but many experts take the view that an HRMS offers greater functionality by adding talent management and human capital management (HCM) options to human resource information systems.
The talent management functions often include the following:
- employee onboarding processes
- succession planning
- career development planning
- learning management
The HCM functions often include the following:
- labor tracking, typically as a system that tracks all necessary work and distributes that work to workers, often in hourly roles, such as in manufacturing plants;
- time entry and evaluation; and
- workforce management.
HRIS analysts are highly trained HR professionals with skills in both IT and HR, who are responsible for managing the HRIS and presenting relevant and beneficial data on employee productivity, attendance, training and pay. HRIS analysts also ensure IT departments adhere to HR regulations as well as provide necessary resources to employees and arrange for appropriate equipment updates. Large organizations may employ several HRIS analysts to focus on specific HR tasks, such as employee benefits, compensation or training.
In general, HRIS analysts ensure efficient organization and presentation of information concerning all features of HR functions within a company. Some specific benefits HRIS analysts provide include the following:
- customer service for both the employee and management users of the HRIS;
- advice based on analysis of HRIS processes and outcomes from someone who specializes in the program and its performance;
- data entry for the large amounts of employee information that's gathered;
- assurance that employee information and data is kept confidential and secure; and
- increased accuracy due to the analyst's editing and confirming of data before it's reported.
Currently, HRIS analysts aren't required to be certified. However, to be competitive in the job market and increase salary potential, it's suggested that applicants provide proof of their excellence in the field and commitment to HR by obtaining certifications such as the Professional in Human Resources (PHR) or Senior Professional in HR (SPHR) -- both from the HR Certification Institute (HRCI) -- and the Human Resources Information Professionals (HRIP) certification from the International Association of Human Resource Information Management (IHRIM).
The salary range of an HRIS analyst varies based on seniority and location. Employment website Glassdoor estimates the total pay for an HRIS analyst to be anywhere between $71,754 to $89,048 per year in the U.S. According to salary.com, a senior analyst based in New York will earn between $97,695 and $127,670, while a similar senior analyst role in Oregon, Ill. will earn anywhere between $79,537 and $103,940 respectively.
Key considerations when choosing an HRIS
Investing in an HRIS is a massive undertaking for any organization. Before the selection process, organizations should involve the appropriate stakeholders and conduct a thorough assessment of current and future needs. While HRIS selection isn't a linear process, the following are some general steps that should be considered before adopting an HRIS:
- Initial assessment. This step identifies an organization's biggest pain points and challenges with current HR processes. The organization should determine who will be part of the HRIS selection process and if it will be conducted internally. Smaller businesses with limited staff and resources might consider hiring the services of consultants.
- Collect internal data. Conduct an internal audit of the features and functionalities that are a must for the company's HRIS software. This can be accomplished by speaking to employees, managers and stakeholders and by observing the day-to-day operations. Employee input is essential, as it helps make the adoption of the new HRIS easier. For example, a company with a large group of telecommuters or employees who travel regularly, may give feedback to replace the time clock-based system with an online time keeping system, which in turn will also reduce visits to HR. Having a time clock-based system makes more sense in a manufacturing environment, as employees perform all work onsite.
- Create a checklist. After the internal evaluation, a company should make a checklist of all its needs and requirements. This checklist should be updated regularly as the company goes through various research phases. It should also be checked against all the HRIS products the company evaluates along with a side-by-side comparison of needs.
- Assess the budgetary limitations. Determining the project's budget is important once the list of requirements has been determined. This can be achieved by performing a budgeting exercise, which should investigate budgeting and technological and time constraints that the company might potentially face. HRIS vendors can also assist in narrowing down costs and budgets for the company. Cost assessments can be broken down into software, hardware, implementation and support. For example, if the company goes with a cloud-based HRIS, then hardware costs aren't a factor, whereas the software will typically be priced as a monthly subscription.
- Select a vendor. Create a vendor checklist and evaluate HRIS vendors against the organization's needs and requirements to create a short list of potential vendors. Once all the insights from the initial and internal assessments are gathered, companies can prepare a request for proposal. Once a vendor is selected, the company can either decide whether to go with a basic package and add more modules and functionalities as the business scales or start with a comprehensive package.
Future of HRIS technology
HR technology is constantly evolving. While automated HRISes aren't new, the features and functionalities of the systems are expected to become more efficient and useful to cater to the growing trend of remote work and globalization. When employees work in different locations, departments and specializations, having the best HRIS in place is essential.
The following are evolving trends with HRIS technology:
Artificial intelligence (AI) and machine learning (ML). As automated technologies advance, the future of HRIS will likely see the integration of AI and ML to make intuitive decisions. These intelligent systems will be able to detect what employees want to accomplish, such as making a change in benefits selection or requesting time off. This will also enable AI and ML-based HRISes to offer proactive solutions, making it easier for employees to accomplish their goals such as using AI-powered cloud technologies for pay calculation and time tracking. AI's facial recognition feature also eradicates the need for passwords, ID badges or waiting in line to sign in to work.
Performance management. HRISes are introducing comprehensive performance management features that can completely change how employee performance is tracked, rated and communicated. Many organizations have been slow to adapt to the changing HR trends. But as HRIS technology becomes more advanced, it will enable these organizations to adopt new performance management programs to give them more options for performance reviews.
Compliance and regulations. By moving away from complicated payroll and seeking access to automated compliance, companies can avoid losing money from compliance violations and penalties. Future HRISes will provide automated compliance to enable companies to keep up with complex and evolving compliance laws. For instance, this may include the introduction of a comprehensive payroll engine that supports labor compliance regardless of the circumstances.
Software as a Service (SaaS). On-premises HR systems or SaaS options are being widely adopted, making it easier for organizations to access HR information from anywhere. This trend is likely to expand in the next few years and will play an important role in how workplaces and employees function collectively.
Advanced integrations of HR systems. Payroll and HRMS both play important but separate roles. For most organizations, payroll typically maintains corresponding pay and time data, whereas HRMS stores all employee data. Modern HRISes provide the capability of advanced integrations, which prevents the disruption of a business's current ecosystems by integrating these contrasting systems into one platform. This way businesses can connect pay and time with employee data and use these factors to manage performance, engagement and productivity. Cloud-based HRISes also play an important role in sending data to both local and global systems within payroll and HR.
When it comes to the HR software buying process, learning the key differences between the terms HRIS, HRMS and HCM are crucial. Here are some ways to tell them apart.