Human Resources Management Systems (HRMS)

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27th April, 2022

HRMS: A guide to Human Resource Management Systems

An essential element of any business, Human Resources Management can be made easier, more efficient and deliver more insights into productivity with the right system in place.

People are a big part of any business and managing them requires vision, leadership skills and some great processes for them to work with.

Human Resources Management (HRM) has developed as the accepted approach to managing people within an organisation over the past 50 or more years, but the technology business’s use to deliver it has undergone significant advances more recently.

Enter the world of Human Resource Management Systems (HRMS).


What are Human Resource Management Systems?


HRMS refers to software an organisation deploys to handle key human resources workflows, such as managing employee data, payroll, time and attendance, training and development and more.

In the past, many of these processes were managed via paper-based filing methods and later moved into onsite HRMS applications on computers and servers. Today, HRMS is available in the cloud, so that organisations can manage HR remotely and securely via the internet.


HRMS vs HRIS vs HCM: What’s the difference?


While these three terms are often used to mean the same thing, there are some differences according to how HR-related technology has developed over time.

Human Resources Information Systems (HRIS) is a term used to describe earlier HR-related solutions that began bringing together key data sources and connecting them into one people management platform. An HRIS traditionally maintains employee data and the company’s HR policies and procedures.

Human Resources Management Systems (HRMS) are the next step in HR systems journey, and represent a holistic HR management solution that brings together all key functions and workflows that come under the HR banner, including payroll, recruitment, training and development. The term first arrived in the early 2000s to describe on-premise systems, however modern HRMS can today be found in the cloud.

Human Capital Management (HCM) is the modern term used to describe a collection of HR-related applications that aim to uplift the employee experience, thereby improving engagement and retention outcomes. Designed in the cloud, HCM solutions often include AI-powered digital assistance and other tools to assist HR in driving not just efficiency, but tangible business value.


Why HRMS is important


HRMS is important for businesses and other organisations that wish to be able to effectively store key HR-related data and access that information on the go.

Think about the cost associated with hiring, training and developing any single employee. Beyond the salary overheads, there may also be equipment and education costs, bonuses and more.

Maintaining accurate financial records relating to each employee is fundamental to understanding your workforce productivity, and that starts with a solid HRMS.


Key functions of an HRMS


Modern HRMS tend to offer features across seven areas of HR.

Understanding these seven areas, as well as the specific needs of your organisation, will help you more easily choose the right HRMS for your situation.

Recruitment or candidate management

These features focus on the elements of HR related to attracting and hiring new employees, such as job ads and applications, resume management and interview scheduling, through to onboarding.

READ: Talent acquisition and building a modern workforce

HR management

This is your ‘single source of truth’ when it comes to employee records of skills, attributes and key documentation. This data then enables advanced people management capabilities that enhance workforce planning, reporting and analysis so that your organisation can truly reach its potential.

Payroll

Getting people paid correctly and on time is a critical part of a positive employee experience, and helps organisations keep accurate accounts, too. With a good payroll module, these processes can be largely automated.

Leave planning

Hand-in-hand with payroll, leave planning allows an organisation to streamline the way it delivers non-monetary benefits to employees in the form of leave entitlements. With a cloud-based HRMS, leave planning offers employees self-service options while managers can easily handle approvals, reporting and forecasting.

Employee development

Schedule staff reviews and maintain accurate performance records for your employees, essentially reducing the burden on your HR team so that they can dedicate more time to delivering employee training and development programs, or lifting the overall employee experience.

Health and safety

A critical piece of the puzzle, health and safety is not only important for maintaining a productive workforce, it also comes with a stack of compliance for HR to manage. But, with a modern HRMS system, you can track and manage any incidents that occur while maintaining compliance with government regulations without having to reinvent the wheel.

Employee self-service

As mentioned under leave planning, self-service functions of an HRMS allow employees to easily update their details, apply for leave or notify the organisation of a health and safety incident via an online portal, allowing them to stay productive while your HR staff get the information they need without having to chase it.


Features of an HRMS


The specific features of any given HRMS can vary between solutions providers, while some businesses may seek to bring multiple different solutions into the one ‘stack’.

The following features set represents a general list of things you might expect to see as you drill down in your assessment of HRMS functions.

All-in-one employee data storage

By creating a single repository of all employee-related data, organisations can access more effective and accurate reporting, which means less time spent in cleaning data sets and crunching numbers.

HR reporting

A powerful reporting set will take that employee data and deliver a suite of useful reports and analytics tools, designed for HR professionals and business managers. This may also include the ability to develop HR-specific KPIs that can be used for the organisation to use in order to manage HR performance and productivity.

Time and attendance

These features enable employers to track attendance or absenteeism across the entire workforce, with employees given the ability to apply for sick leave or ask to swap shifts. These features integrate with payroll and scheduling.

Workforce scheduling and planning

Particularly for projects-based workflows, workforce scheduling and planning features allow an organisation to forecast, plan for and allocate employees to projects more effectively. These features may also include budgeting and other project management elements such as scenario planning.

Benefits, leave and rewards

Calculating salaries, and variable payments for bonuses and commissions, is a core part of any HRMS and you’ll want to select the solution that can deliver for your employees’ expectations in this area. Additionally, benefits schemes such as medical and insurance may also be managed in your HRMS, so if you have any existing relationships with benefits providers, these should also be considered when choosing an HRMS.

Learning management

You may also find a set of learning management features available as part of a comprehensive HRMS, which allows HR teams to deliver training and development sessions to employees remotely. With career development becoming an increasingly sought after element of employee experience, learning management features may soon become a must-have for any HRMS.


Benefits of HRMS


You may have already picked up on the fact that the major benefit of any HRMS is having all your employee records managed for you and your HR team, in the one place.

A central repository of employee data helps you maintain compliance when it comes to payroll and entitlements, but it also makes it much easier to glean insights from your employee data to inform decision making (more on that in a sec).

Here are the top benefits a good HRMS can deliver to your organisation.

Powerful performance insights

When it comes to analysis, forecasts and planning, you can’t expect to be able to make great decisions without first having accurate data. And when it comes to employee-related data, that’s precisely what your HRMS should provide.

Coupled with a powerful reporting and analytics module, HR will be better able to discern key gaps in workforce skills for recruiting, as well as how to budget for it.

This also allows HR teams to identify potential problems before they come to a head. For example, if a certain type of employee demonstrates higher churn than others (both entering and exiting the business at a higher rate), then additional attention should be placed on enhancing the employee experience for that type of talent.

Lower administration overheads

Compared with paper-based filing systems, digital HRMS deliver a much more efficient way to store and manage employee data and that means less heavy lifting in the back-end.

This continues to be true of the move from on-premise systems to cloud-based HRMS, which benefit from advanced security and anywhere, anytime access, without the overheads associated with onsite data storage and maintenance.

Enhanced security

By bringing employee data into one place, an HRMS must deliver a-grade security in order to offer businesses and their workers peace of mind. They also need to maintain a high level of security in order to remain compliant.

The good news is security is a core focus of most HRMS providers, with data encryption, role-based access and system segmentation coming standard with many solutions on the market.

Better employee engagement

The purpose of delivering an enhanced employee experience should be to improve employee engagement rates, and this generally means higher retention and more satisfaction.

If an HRMS is implemented successfully and is used to deliver a seamless experience for employees from their first interaction with your organisation, then engagement will naturally rise. In turn, this creates a positive feedback loop whereby not only will you need to hire less frequently (as employees stay with you longer), but you’ll reduce your costs to acquire new talent as your reputation as an employer of choice starts to grow.


How to choose an HRMS


There are hundreds of different providers offering HRMS or HRMS-related applications that may or may not be suitable for your organisation.

In order to whittle down that list, it makes sense to begin by grouping providers in a few different categories or types, before focusing on those providers that match the required type for your needs.

Here are a few things to consider when sorting through HRMS providers.

Location

Where is the solution provider of the HRMS you’re considering based? Choosing a more local provider may offer you better access to service and support as required, and they are more likely to understand your specific needs when it comes to compliance and local regulation.

Best-of-breed vs integrated platform solutions

Some HRMS providers may focus on a few key ‘best-of-breed’ applications that you can choose from or ‘stack’ together to create a comprehensive HRMS. On the other hand, some providers may provide a selection of these features in a fully integrated platform.

You may find it initially more cost effective to select best-of-breed solutions for the specific needs of your organisation, but this can turn into a very costly approach should your needs begin to evolve in the near future.

ERP functionality

Enterprise Resource Planning (ERP) providers are likely to offer HRMS features within a broader ERP platform, integrating workforce planning with payroll, accounting and more.

Not only does considering an ERP-integrated offering help reduce the costs associated with trying to manage a tech stack featuring multiple solutions from different providers, it also creates a consistent user experience under the security of a single system.

Outsourced HR providers

Some organisations will take on the entirety of your HRMS needs, including paying payroll, taxes, managing benefits and even managing the flow of HR-related data back into other business departments, such as accounting.

While this sounds like a very tidy solution, it naturally comes at a higher cost and may give your company less control over its data.


When to upgrade your HRMS


Generally speaking, each organisation will have its own set of performance metrics for the processes and systems it uses in order to deliver value through each business unit.

If you’re yet to perform a comprehensive audit of your HR team and its performance over time, this would be a great place to start. You’ll then want to ask a few basic questions before taking the acquisition process any further.

  • Does my current system meet my current needs?
  • Will it continue meeting my needs in the coming months and years?
  • Does it attract significant costs in order to maintain or update it on a regular basis?
  • Does it integrate seamlessly with other core business systems?
  • Does it enable a consistently accurate view of employee data that’s actually useful when it comes to planning initiatives?

If the answer to any of these questions is ‘no’, then it may be time for you to begin considering an upgrade of your HRMS.

MYOB delivers a range of HR solutions as part of its product range of bigger businesses. Find out more today.