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What Are the Different Types of HR Management Systems?

Skye Schooley
Skye Schooley
Staff writer
business.com Staff
Updated Aug 23, 2022

HR software can handle many different issues for businesses. Learn which types of HR systems are available and how they can benefit your organization.

Gone are the days of manually recording and managing human resources data. HR software solutions can help businesses digitize and streamline their HR processes. In fact, a report by Grand View Research says the growing HR software market is expected to exceed $10 billion by 2022. 

If your business hasn’t yet implemented HR software, read on to learn what HR management software is and which problems it can solve, and get an overview of the top HR management systems available.

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). While they vary slightly, HCM, HRIS and HRMS are 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.

Bottom LineBottom line: HR management software, also known simply as HR software, streamlines HR functions like payroll, employee benefits administration, training and development, performance management, and HR compliance challenges.

What are the HR management system types?

There are several different 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.

1. Recruiting, hiring and onboarding

Some HR platforms can help you find, vet and integrate new employees. These are some such HR platforms:

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

FYIFYI: The top background check services ​​protect your business by revealing critical information about a candidate’s criminal history, identity, employment and education history, credit score, and more.

2. 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

3. 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. These are some HR platforms like this:

  • Employee monitoring software
  • Performance management software
  • Employee engagement software
  • HR software

Which problems does HR management software solve?

HR management systems solve a plethora of HR issues. However, some are better than others, depending on your organization’s needs. 

Before choosing an HR solution, determine which of the following functions your HR software should accommodate:

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

Recruiting and onboarding

Finding the right employees can be crucial to your success, but finding and attracting top talent can be a struggle for many businesses, especially those that haven’t hired an HR manager trained in recruiting and onboarding. 

HR software can be a game-changer when you’re recruiting new employees, allowing 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% of businesses use HR technology to find, attract and retain talent.

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.

Some software and services allow you to conduct background screening by running pre-employment background checks on candidates to ensure they’re appropriately vetted for the job. 

Once a candidate is cleared, you can use HR software to onboard them successfully. The best HR software can digitize documents that candidates can e-sign and store for reference and compliance reasons.

Did you know?Did you know? A bad hire can cost your business 30% of the employee’s first-year earnings, according to the U.S. Department of Labor.

Workforce management

If you want your business to be as efficient as possible, you’ll need to manage your workforce strategically. HR software provides data and features to help you with efficient workforce management. 

For example, you can manage employee schedules to ensure you have the correct number of people working at a specific time. Proper staffing can ensure that your employees aren’t overworked and customers receive proper attention. Similarly, HR software can help with resource allocation.

Employee compensation

Employee compensation management is one of HR’s most important responsibilities, and various HR software options can help. For example, you can use time and attendance software to track how many hours each employee works, the locations where they’re clocking in and out, and how much time they spend on specific projects or jobs. You can also track and manage time-off requests. These features can help you comply with critical labor laws.

HR software can also help you process payroll, file payroll taxes, report new hires to the state, track and manage PTO accruals, and compensate your employees. Some HR solutions also offer employee benefits administration that integrates with your payroll so that 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.

FYIFYI: There may be mandatory sick leave laws in your state, and HR software with compensation management features can help you comply with these laws.

Employee development

Employee development has become a key driver for many job candidates when accepting 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 a popular way to upskill and educate employees. Giving your employees a clear path to their future can help increase employee engagement and satisfaction.

Performance management

In addition to offering employee development opportunities, HR software can help you manage employee performance. For example, employee monitoring software allows you to track when and where your employees are working 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 a good employee performance process. You can identify your most efficient workers and reward them accordingly. You can also see who might be reaching burnout or who needs a little extra handholding.

TipTip: If you notice that an employee is struggling to meet their goals, consider putting them on a performance improvement plan.

Legal compliance

Maintaining compliance 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 can also offer HR guidance to help you in your compliance with labor and employment laws, like COBRA compliance and OSHA compliance.

What are the best HR management systems?

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

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

CompanyDescription
WorkableBest recruitment software for small businesses
BambooHRBest applicant tracking and performance management software (read our BambooHR review to learn more)
GoodHireBest background check platform 
BerniePortalBest HR software for employee onboarding
QuickBooks TimeBest time and attendance software for mobile workforces (read our QuickBooks Time review for more information)
When I WorkBest time and attendance software for restaurants and retail (read our When I Work review for more information)
GustoBest HR software for payroll (read our review of Gusto to learn more)
InterGuardBest employee monitoring software for remote workforces (read our InterGuard review to learn more)
ActivTrakBest employee monitoring software for workforce analytics (read our ActivTrak review to learn more)
Paychex FlexBest HR software for remote teams (read our review of Paychex Flex to learn more)
SAP SuccessFactorsBest HR software for employee experience
RipplingEasiest HR software to implement (read our Rippling review to learn more)
WorkdayBest HR software for compensation management

When 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’ll need to integrate properly to ensure you’re compensating your employees correctly.

If you’re looking for a more comprehensive HR platform that can take care of some or all of your HR responsibilities, consider using one of the top HR outsourcing services or the best professional employer organizations available.

 

Image Credit:

Wavebreakmedia / Getty Images

Skye Schooley
Skye Schooley
business.com Staff
Skye Schooley is a staff writer at business.com and Business News Daily, where she has written more than 200 articles on B2B-focused topics including human resources operations, management leadership, and business technology. In addition to researching and analyzing products that help business owners launch and grow their business, Skye writes on topics aimed at building better professional culture, like protecting employee privacy, managing human capital, improving communication, and fostering workplace diversity and culture.