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HRIS systems are becoming commonplace in businesses around the world. With this software being the way of the future, companies need to understand what these systems are, how they work, and why they are so important for business success. Before you lock in an HRIS system for your company, read this comprehensive HRIS buyer’s guide to help you understand how HRIS systems work and inform your decision about choosing the right software for your company.
HRIS stands for Human Resource Information System, and it is a digital solution that moves HR activities and processes into an electronic system. HRIS software handles a variety of HR-related tasks, including accounting, management, and payroll processes.
The purpose of using HRIS software is to digitize information, reduce errors, maintain employee compliance, and save businesses time and money. HRIS software is meant to cover the basic functionalities of end-to-end HR administration, with system features for recruitment, performance management, training and learning, employee development, and more.
There are three main types of HRIS solutions: HRIS, HCM, and HRMS. Each type of system offers various capabilities and characteristics, making certain solutions better suited to particular organizational needs. Before you purchase this software for your company, you need to understand the different types of HRIS systems and how they function.
Human Resources Informations Systems help companies manage policies and procedures while keeping employee information organized and accessible.
Human Capital Management (HCM) systems function similarly in function to HRIS but have additional features, including talent management, salary planning, succession planning, and more.
Human Resources Management Systems (HRMS) is nearly identical to HRIS software. However, HRMS software may also include elements of HCM systems but are best used for time and labor management.
The main difference between HRIS, HRMS, and HCM is how comprehensive they are and what features they provide. HRIS software offers the fewest features while HCM systems include all HRIS features plus additional offerings. HRMS software is the most comprehensive option, providing all the features of HCM and HRIS systems with unique offerings of its own.
While there are different types of HRIS systems, there are also different classifications of HRIS. Each classification performs different functions that allow companies to complete everyday tasks; the four HRIS classifications are operational HRIS, tactical HRIS, strategic HRIS, and comprehensive HRIS.
An Operational HRIS system is ideal for people in management positions. This HRIS system includes information about your employees’ positions as well as vital documentation for governmental regulations. Operational HRIS is subdivided into three additional categories: Employee Information Systems, Position Control Systems, and Performance Management Information Systems.
Employee information systems handle employee records and personal and professional details. Some information could include name, address, sex, minority status, citizenship, education, work experience, and more.
Position control systems help HR professionals organize job positions within a company keep track of which employees are assigned to those positions. The HR team can also view unfilled positions to help with the hiring process.
A performance management information system tracks employee performance. This information is vital for determining raises, retention, promotion, or termination of an employee, but it can also be used as evidence in a grievance hearing.
Tactical human resource information helps employers make decisions regarding how to allocate company resources. Tactical HRIS has four subparts, including:
Strategic HRIS systems support labor and workforce planning to help ensure businesses are adequately staffed to meet production needs. These systems are usually broken down into two parts.
This system helps with the long-term planning of a business. Planning options include expanding into new markets, building new office spaces, producing new products, and more.
Specialized human resource information systems software is offered in two options. A comprehensive system covers a variety of HR management needs while a specialized system focuses on one or two specific HR functions.
A comprehensive HRIS system offers every function of HR management, including:
The comprehensive system keeps all information in one secure database, so it remains easily accessible at all times.
There are different types of HRIS solutions, but some examples include payroll and benefits administration, job applicant tracking, and an onboarding checklist. Read on to learn more about these HRIS offerings.
Payroll and benefits administration is one of the most common reasons a company needs an HRIS system. The payroll and benefits functions automate complex, time-consuming processes of payroll timelines and benefits enrollment and administration.
These system offerings also include reporting functionality, increased security in an online database, and better transparency since every process is traceable and viewable by HR administrators.
Finding and hiring the right talent can be a struggle, but an effective applicant tracking system makes all the difference. In terms of job applicant tracking, the system can help with:
Onboarding automation makes it easier to onboard new employees into a company and helps them feel more welcomed as a member of the team. The automated onboarding process can start before a new hire’s first day and continue through the end of their first week or first month, depending on the company.
Information covered by the automated onboarding process may include:
As a result of an effective, well-designed onboarding process, new employees are more likely to stay at a company longer. Adding automated onboarding as part of an HRIS system is important for any business, big or small.
While many businesses may feel that they are too small to implement HRIS software, such systems offer a variety of advantages and benefits for every company, regardless of size. These benefits can include:
When you are ready to implement a new HRIS system into your business, there are a few things to consider as you find the right HRIS solution for your needs, including:
With these considerations in mind, the HRIS decision process can be broken down into three stages: Planning, Selection, and Implementation.
Most HR processes are time-consuming and some may not be beneficial to your company. As you determine your company’s needs for an HRIS system, it is important to find options that increase productivity, save time, and simplify HR processes.
Almost every HRIS system offers basic functions such as time tracking, turnover, job history, and performance reviews. Outside of common functions, most HRIS software offers unique functions that are specific to their system. If your company needs the additional functions, look for HRIS software that offers those options and rule out any that do not.
To find an HRIS system that offers everything your business needs, try making a spreadsheet. List your most important features in one column and the HRIS vendors across the top in their own columns. Add a checkmark for each feature a vendor offers and, once you find the vendor that most closely matches your company’s needs, you’ll know which software to get.
Another factor to consider is how many employees your company has. Every company, even small to midsize businesses, benefit from having an HRIS system in place. However, your workforce size may help determine which features you actually need, and some types of HRIS systems may be better for smaller business operations.
The next step is to calculate the budget for the project. How much can your company afford overall for the project? Will it be a monthly budget or a lump sum? You’ll also need to create a timeline for the HRIS to be implemented, tested, and rolled out successfully across the entire organization. When will the implementation need to be completed? If your company requires an RFP for the project, now is the time to create it.
While most systems are generic enough to work for any business, there are different types of HRIS systems that are particularly effective for certain industries, including retail, manufacturing, hospitals, banks, government agencies, and more. Since there are so many different systems and options, the cost of HRIS software varies.
Most HRIS systems offer one of three types of payment structures: per employee, subscription plans, and perpetual licensing.
In a pay-per-employee plan, companies pay for HRIS software based on how many employees access the system and which services are chosen. This means that if a company picks a general HRIS system, they will pay less per employee compared to a more specialized system with additional features.
If the HRIS vendor is hosting the software on their own server, a business will pay a monthly or annual subscription fee to access the outside server. Most subscription services still operate on a per-employee payment structure, but others cover employee ranges to make pricing easier.
Perpetual licensing means the company hosts the HRIS software on their own server, meaning they usually pay for the system upfront. Typically, larger organizations prefer this option since they often have more complex HR needs.
Most HRIS systems include important features and services in their original pricing. However, some vendors offer additional features that come with a separate cost. These separate costs may include:
When it comes to budgeting for an HRIS system, it all comes down to your company needs, the features you select, additional costs, and the price of the software you choose. However, systems costs can range anywhere from $5,000 per year to upwards of $100,000+ per year, depending on company size.
It is a good idea to budget for more than you think you need and decide if you want to pay monthly or in one lump sum until you find the right software and get their specific pricing. But, keep in mind that HRIS systems ultimately save your company time and money in the long run, making the initial costs worthwhile.
Getting approval from the C-suite can be a challenge, so it’s important to prepare ahead of time. In addition to outlining the budget and timeline for the executives, you should also calculate how much money and time will be saved once the software is implemented and in use. Pay attention to feedback and be aware that you’re selling them an idea.
You’ll need to determine which members of your organization will be a part of the HRIS project team. This team will likely need to include someone from IT and payroll, as well as an executive sponsor. Will outside help be needed? Also, think about who will lead the team and how much time each person must contribute to the project.
Whether you’re adopting HRIS technology for the first time or switching to a new HRIS, you can prepare for implementation by ensuring that all data is digitized. Most HRIS software requires data to be uploaded in the form of Excel spreadsheets, so in order to save time in the implementation process, consider converting your data beforehand.
During this step, it is also an opportune time to determine what employee data must be retained to remain compliant with laws and regulations. Decide what data needs to be entered
into the new HRIS and what can remain in spreadsheets.
Consider the major players in the HRIS/HCM space and create an initial shortlist of potential vendors. Create a comparison spreadsheet with scoring to determine which vendors may best fit your company’s needs. Then, you can contact the vendors on the shortlist and request initial demos that outline the costs, the software’s features, and each vendor’s customer support model.
The vendors’ demos may not reveal the actual realities of using the system or any negative situations that can arise. Get in touch with peers within your HR network. Some of these HR professionals may have used the same software you’re considering. Their feedback can provide valuable insight into how they use it and/or make you aware of any problems they have encountered.
Online reviews of each vendor’s software can also provide useful information about how the software works in practice. In addition, any issues users found with either the HRIS or the vendor’s customer support will be exposed. Local SHRM chapters and social media are good places to find reviews. Here, you may also learn how to frame questions for the vendor during the next stage of demos.
Ask vendors for a list of companies that considered their software but ultimately didn’t purchase. The vendor’s software may simply have not been a good fit for the company — but these contacts may also reveal problems with either the software or the vendor.
Request a second demo from any vendors still on the shortlist. Make a list of questions that you would like to be addressed during the demo and send those questions to the vendor ahead of time. You can also request an interactive demo so that you can go through your use case. Use this information to make the final selection and then negotiate your contract with the selected vendor.
Remember, there is no one-size-fits-all when it comes to choosing a HRIS vendor. Just because a product has a lot of bells and whistles, or it’s a well-known brand, doesn’t mean it’s necessarily right for your organization.
Now that the HRIS or HCM has been selected, the next step is to prepare for implementation. Update your timeline to reflect any new information from the vendor. Don’t rush this phase; modules can be implemented in phases to ease the transition. If there are any new requirements for the system, make sure they’re in place before implementation begins. Workflow mapping can also help plan for the implementation.
It’s also important during this stage to communicate openly with employees about the implementation and training plan. Doing so encourages hype and excitement about the project.
Next, ensure that all data you plan to enter into the system is in a format the new system can accept, typically spreadsheets. Set up the integration between this new HRIS and any systems it will connect to. You can run parallel payrolls to ensure important processes can continue to run while the new system is set up. Before the go-live date, the new platform should be extensively tested, ideally with the assistance of the vendor’s support team.
After the new system has been installed, integrated, and populated with the necessary data, it’s time to train employees on how to use it. Decide who will lead the training and when it will occur. The vendor may be able to provide training. If the system includes an employee self-service portal, some training may need to be provided for all employees, besides just the HR team and Management. Change can be difficult, so it’s important to have a plan for addressing resistance to the new system.
The implementation doesn’t end with the go-live date. Once the new system is live and in-use, it’s essential to keep an eye on things. For example, how accurate is the data? There may be ongoing cleanup that is necessary to improve accuracy.
Review the adoption rate to ensure that all employees feel comfortable using the new system. Ask yourself what was learned during the project. Were all of the objectives met in implementation? The implementation may not have been perfect and tweaks may be needed to ensure that the new HRIS is performing to its full potential and meeting your needs and expectations.
HRIS software features can be broken down into different categories, which is helpful when determining what is most important for your company’s needs. If an HRIS system doesn’t offer a feature you need, it may be an add-on to their basic package, so double-check before you rule them out. Additionally, if you find some types of HRIS software that offer more than you need, keep them in the running until you can find a system that fits your company best.
Along with all the HRIS features listed above, there are additional features to consider when choosing the right HRIS software for your company.
HRIS systems contain a variety of private personal and professional information about employees and the company as a whole, including:
With all of this personal and company-specific information included in one database, the HRIS system you choose must have in-depth security features in place to protect your company’s data.
If an HRIS system is hard to use and difficult to operate, it won’t be functional for your company. These systems are often used by every member of a company, meaning they need to be easy to use and intuitive for every employee.
As you look at different types of HRIS systems, look at how they integrate and connect with other software. Can you easily add your own company information to the system? Can you connect it to other software that your team uses daily? Take these questions into consideration to ensure that the software you choose can easily integrate into your company’s current processes.
Cloud-based software means that the entire HRIS system is contained online in a network of servers that provide different functions, such as running applications, providing online services, and storing data.
Benefits of cloud-based software include:
With on-premise software, the HRIS system is contained completely on-site and run by your company’s own servers. HRIS software can be difficult to run on-premise due to extra maintenance costs, outdated hardware, and the inability to compete with cloud-based software.
Most companies have made the switch to cloud-based HRIS systems and such systems are expected to be the standard option in coming years.
At Matchr, we believe in matching you with the best HRIS software available. In our experience, the following HRIS systems are the best options for any business due to offered features, price, and system compatibility.
HRIS systems are continually evolving to integrate new technologies and adapt to the changing needs of different companies. As this software changes, there are future trends to watch for and consider when deciding which HRIS system is best for your company.
Artificial intelligence (AI) and machine learning are quickly becoming the HR solutions of the future. AI can automate mundane, routine tasks and, as the system learns your needs and preferences, the machine learns how to best help your company become more efficient.
The cloud, which is now being referred to as Software as a Service (SaaS), is becoming the preferred method of delivering software through the internet. Companies are choosing to use SaaS options since they are more convenient and flexible compared to on-premise options.
As you move forward in deciding which HRIS system is right for your business, there is additional information you may want to consider.
In most cases, HRIS implementation takes longer than more companies realize. This is because there are many steps involved in properly setting up the system. On average, most systems take about six to eight weeks to be fully implemented and can be broken down into five phases.
Once properly implemented, HRIS software is easy to use and helps companies become more efficient. However, there are still some challenges that businesses can face during the implementation process, including:
When you implement an HRIS system into your company’s processes, it may be helpful to schedule training sessions for you and your employees. HRIS systems are designed to be intuitive and easy to use, but participating in a training class helps your team get familiar with the software sooner.
Most HRIS vendors offer online training courses as part of their implementation process. Employees can learn and train at their own pace and learn system operations in a step-by-step process. Online training can be tedious and could be difficult for employees who have no experience with HR software, but it is more cost-effective than other training methods.
The HRIS system you choose may include in-person classroom training at corporate or regional training centers. Seeing the software used in real-time and explained by system experts can make it easier for employees to grasp software components. However, this style of training is usually a one-size-fits-all approach, which means that some employees may get left behind during the learning curve.
On-site training is more expensive than other training options, but it may be the most effective method. HRIS software experts come to your business and provide hands-on training for you and your employees. This type of training usually happens in smaller groups, making it easier for employees to ask questions and get familiar with the HRIS system.
Choosing an HRIS system for your business can be overwhelming. With so many systems and features available, it can be difficult to pinpoint exactly what your company needs and select the option that is best for you. Matchr takes the hassle out of finding HRIS software by selecting hand-picked HR recommendations based on your company’s unique needs. When you need an HRIS system, we are the company to trust to match you with the right one.
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