What Are the Different Types of HR Management Systems?

What is HR management software?

You may have heard the terms “human resource management system” (HRMS), “human resources information system” (HRIS) and “human capital management” (HCM). Although they vary slightly, HCM, HRIS and HRMS refer to the same general concept: managing human resources via software. 

Instead of keeping manual HR information records, HR software lets you digitally store and manage core HR functions, such as staffing and onboarding, payroll and benefits administration, workforce management, employee training and development, performance management, and legal risk and compliance.

What are the HR management system types?

There are several types of HR software. While some HR systems serve one primary function, others are comprehensive and include a combination of services. Here are some of the most common HR management system types and the primary services they include.

Recruiting, hiring and onboarding

Some HR platforms can help you find, vet and integrate new employees. These HR platforms include the following:

• Recruitment software
• Applicant tracking software
• Background-check software and services
• Onboarding and offboarding software

Employee compensation

HR software can help you track how many hours your employees work and compensate them accordingly. Here are some examples of these HR platforms:

• Employee scheduling software
• Time and attendance software
• Benefits administration software
• Payroll software and services
• Compensation management software

Workforce management

Different types of HR software can help you manage your overall workforce. You can record important HR documents, track employee performance and improve employee engagement. Here are some examples of these kinds of HR platforms:

• Employee monitoring software
• Performance management software
• Employee engagement software
• Learning management software

Which problems does HR management software solve?

HR management systems solve a plethora of HR problems. However, certain types of software are better at addressing particular needs. Before you choose an HR solution, determine which of the following functions your HR software should accommodate:

• Recruitment and onboarding
• Workforce management
• Employee compensation
• Employee development
• Performance management
• Legal compliance

Recruitment and onboarding

Finding the right employees can be crucial to your business’s success. However, attracting and hiring top talent can be challenging, especially if your business hasn’t hired an HR manager who’s trained in recruitment and onboarding. 

Here’s how HR software can help in this area: 

• Recruitment: HR software can be a game changer for recruiting new employees because it allows you to cast a wider (or more targeted) net to find qualified candidates. More businesses are using HR software in recruitment: A survey by PwC found that 58 percent of businesses use HR technology to find, attract and retain talent.
• Applicant tracking: HR software lets you track applicants throughout the hiring process to ensure they move swiftly through the funnel before they get swooped up by the competition.
• Background checks: Some software and services allow you to screen candidates with preemployment background checks.
• Onboarding: Once a candidate is cleared, you can use HR software to onboard them. The best HR software can even digitize documents that candidates can e-sign and store for reference and compliance reasons.

Workforce management

If you want your business to be as efficient as possible, you must manage your workforce strategically. HR software provides data and features to help you manage your workforce efficiently and allocate resources effectively.

For example, you can manage employee schedules to ensure you have the correct number of people working at a specific time. Proper staffing means your employees aren’t overworked and customers receive appropriate attention. 

Employee compensation

Employee compensation management is one of the most important HR responsibilities. HR software can help handle these aspects of employee compensation:

• Time and attendance tracking: You can use time and attendance software to track how many hours each employee works, the locations where they clock in and out, and how much time they spend on specific projects or jobs. You can also track and manage paid-time-off (PTO) requests. These features can help you comply with labor laws.
• Fair and competitive compensation: In recent years, pay transparency has become a top priority for many employers, and HR software can help. Some HR and compensation management solutions can track employee compensation and compare it against job benchmarks and industry standards. This functionality eliminates the guesswork of maintaining fair and competitive employee compensation throughout your company.
• Payroll, benefits and taxes: HR software can help you process payroll, file payroll taxes, report new hires to the state, track and manage PTO accruals, and pay your employees. Some HR solutions also offer employee benefits administration that integrates with your payroll to ensure each employee is compensated appropriately. An all-in-one HR solution, or multiple solutions that integrate, is a great way to ensure your employees receive their total compensation on time.

Employee development

Employee development has become a crucial driver for many job candidates’ decisions to accept a new position. A defined employee development process helps you attract and retain top talent while improving your bottom line. With a team of highly skilled employees in place, your organization produces better work all around. 

HR software can help you provide professional development opportunities to your workers, often through e-learning platforms. Although some companies offer in-person training, online courses and workshops have become popular ways to upskill and educate employees. Giving your employees a clear path to their future can help increase employee engagement and satisfaction.

Performance management

HR software can help you manage employees’ performance. For example, employee monitoring software allows you to track when and where your employees work and how productive they are when they’re on the clock. 

The best software compiles a vast amount of employee data that can be used to create an excellent employee performance process. You can identify your most efficient workers and reward them accordingly. You can also see who might be approaching burnout or who needs a little extra hand-holding.

Legal compliance

Complying with every federal, state and industry law and regulation can be challenging, especially for small businesses. However, HR software can help you maintain legal compliance by streamlining several HR processes. For example, it can store mandatory HR documents, maintain accurate time-tracking metrics in line with pay laws, and manage payroll in compliance with tax laws.

Employees can often use HR software to access necessary training, including sexual harassment prevention training. Some HR software providers offer HR guidance to help you comply with labor and employment laws, such as ensuring COBRA and OSHA compliance.

What are the best HR management systems?

There are many HR management software solutions, and each has specific features, benefits and limitations. Some systems are more general, while others can be customized for particular businesses or industries.

We researched and analyzed various HR systems to identify the top solutions. Here are some of our favorite options.

When you’re choosing HR software, pay attention to how it integrates with your other platforms. For example, if you use one platform for time tracking and another for payroll, they must integrate properly to ensure you are compensating your employees correctly.

If you’re looking for a more comprehensive HR platform that can handle some or all of your HR responsibilities, consider using one of the best HR outsourcing services or the best PEOs available.