A human resources information system (HRIS) is a crucial software tool for HR departments that collects and stores employee data. It’s one of the most-used software solutions in HR departments because it promotes efficiency and facilitates human resources management.
We’ll explain more about what an HRIS is, how it works, what it does and how to implement an HRIS in your business.
An HRIS is an HR software solution that stores and analyzes employee data for end-to-end human resources management (HRM). This data is used in daily HR tasks, including employee recruitment, payroll processing, accounting and performance management.
An HRIS is also referred to as an HRM system; it helps HR departments manage and control the costs and time spent on administrative tasks. An HRIS differs from a human capital management (HCM) system, which focuses more on talent management. Still, these HR systems can support overlapping functions.
An HRIS is usually cloud-based, meaning the software is managed outside the organization, creating easy access for employees. These systems run on employee data generated by HR department personnel. The HRIS organizes this information into in-depth HR reports. Other data, such as time-off requests and benefits, are also automated through an HRIS, making managing these tasks easier on HR personnel.
“The most impactful tools are those which save time, drive efficiency, and maximize productivity for the employee and the organization overall,” explained Stephen Kohler, CEO and founder of Audira Labs. “In today’s context, this means cloud-based, self-service platforms that allow the employee to access, monitor and update data quickly and easily, including app-based access.”
An HRIS brings numerous benefits to your business, including the following:
HRIS systems and software packages can handle or assist with various HR tasks. When you choose an HRIS, be sure it has modules that can take care of your most pressing HR needs. Here are a few examples of typical HRIS functions:
An applicant tracking system (ATS) handles an HR department’s recruiting needs. It tracks potential candidates and measures their resumes against job descriptions and postings on job boards. It also helps recruiters smoothly move candidates through the hiring process.
HRIS systems can assist with and automate the process of running payroll. They can create payment orders as start dates and other employee changes are updated within the system. This module takes data from other HRIS system functions, including time and attendance and employee status, to determine correct payment amounts. Check out our review of Gusto to learn about an excellent HR solution with payroll functionality.
HRIS systems with efficient user interfaces can help employees manage their employee benefits. They allow employees to schedule time off for vacation or parental leave or sign up for specific benefits when they become eligible. Visit our review of ADP to learn more about a comprehensive HR solution with particularly good benefits administration capabilities.
Managers can track the progress of multiple employees through performance management software. This HRIS module provides templates for employee performance check-ins and guides to creating a performance rating system for all employees.
Some HRIS software packages can integrate with time and attendance modules to track employee time data. For employees who do shift work, this system allows management to keep track of hours worked versus the time each employee is scheduled to work. If an employee is late or misses work, the system can also send an alert to the manager.
Employee development is crucial for company growth. Many HRIS systems have training modules that track employee skills, certifications and other professional development endeavors. Monitoring and encouraging employee development and training is also a great way to attract top talent.
Reporting and analytics
Some HRIS systems include a reporting and analytics module that provides in-depth analysis of “transactions,” such as hiring a new employee, employment status changes, employee absenteeism or tardiness, and more. The system can analyze this data and provide reports on things like employee turnover rate and employee performance that help HR personnel spot patterns and form solutions.
Pertinent reports for HR personnel can include the following:
However, not all HRIS systems can create comprehensive reports. If data is pulled from multiple sources (e.g., time and attendance software vs. performance management software), it may not sync properly, making it challenging to report possible correlations accurately. If reporting functionality is a top priority for your HRIS, ensure the solutions you consider offer reporting and analytics features.
Many HRIS systems offer employee self-service modules that allow your team to take charge of their HR tasks, including tracking time, requesting time off and viewing benefits. However, ensure your HRIS system is user-friendly so employees can reap those benefits. For example, visit our Paychex review to learn about this solution’s user-friendly employee self-service features that are particularly helpful for remote and hybrid workforces that need flexibility.
Here are the most important steps to take when implementing an HRIS:
Your first and arguably most crucial step when implementing an HRIS is finding the right software. Several excellent HR solutions are on the market, each with unique pros and cons. For best results, identify your budget and the features your organization prioritizes. Next, search for a solution that matches those needs. Remember to factor in potential features you may need as your business expands.
An HRIS will play an integral role in your organization’s success, so you must ensure you implement one your employees will use. After you narrow your search to a few promising HR vendors, arrange software demos so you can see the platform in action. Some HR solutions also offer free trials to test the platform independently.
After settling on an HRIS solution that fits your needs and budget, you’ll walk through the setup process and establish your account. Software implementation will vary by vendor. Some companies offer guided setup support, while others provide prompts that walk users through the setup process. Familiarize yourself with your chosen vendor’s help resources, including online knowledge bases you can consult during the setup process.
Once you’ve set up your HRIS account, familiarize yourself with its features and migrate your company’s data into the system. Be sure you adapt to the HRIS system’s specific processes to better relay these changes to your employees. Again, some companies may offer support during data migration, while others rely on self-service features.
Ensure your employees and leadership are familiar with the new system. It’s crucial to train everyone on the specific functions they’ll need to perform their duties. Streamlining the solution’s adoption is easiest if you’ve selected a user-friendly HRIS system. Employees and management alike will benefit from the system’s analytics and reports if everyone uses these resources properly.
Your HRIS vendor will be a valuable resource while you’re discovering how best to cater to your organization’s needs. A good vendor will have customer service options for troubleshooting and training opportunities to help you get the most from your system’s features.
Many modern HRIS providers continually update their software to improve their products, creating more value for your business. To take advantage of new features, update your software regularly and on time.
HRIS implementation time depends on how many employees you have, what features you need, and how much customization and automation must be established. We found that most software takes about six to eight weeks to implement — from research to employee training. However, the actual data migration and implementation period tends to be shorter, averaging around two or three weeks.
Your total HRIS cost will depend on how many employees you have, what features you need, and what pricing structure the vendor uses. We found that most HR solutions charge on a per-employee basis, averaging between $5 and $25 per employee per month. Annual pricing is often a bit cheaper than monthly pricing. You may also incur a monthly base fee or additional fees for setup, payroll, employee benefits, and performance management.
There are two primary types of HRIS systems: cloud-based and on-premises. Cloud-based systems are hosted in the cloud and managed by the HR vendor. They are a popular option for SMBs because they’re typically less expensive and easier to manage than on-premises solutions. On-premises solutions are installed on your company’s servers and are managed by your organization. They tend to be more expensive and complex than cloud-based solutions; however, they can be a good option for larger or highly regulated organizations that need more control and security over their HR data.
The biggest implementation challenge is subjective. However, two commonly cited issues are data migration and change management. Migrating data from one system to another can be complex and time-consuming. You may be left with incomplete or inaccurate data if it’s not done correctly. On the other end, change management can be a problem if your new system is very different or more complex than your previous system. Training everyone on proper software usage can be time-consuming, and it’s especially tricky if your people are resistant to change.
The best way to mitigate these challenges is through diligence and communication. Instead of rushing through the setup process, take time to properly implement the software and communicate with your staff every step of the way.
Sean Peek contributed to this article. Source interviews were conducted for a previous version of this article.