Which HR System Is Best for Your Business?

which hr system is best for your business

Human Resource teams know this image too well: A busy day, filled with HR professionals, countless employee inquiries, and a load of paperwork.

Now, this shouldn’t be the reality for agile teams. 

To maintain efficiency and productivity, organizations have turned to HR systems.

In this article, we’re diving into HR management systems, namely HRIS, HRMS, HCM, and the role they play in modern businesses.

But First: What Are HR Systems and Why Are They Needed?

HR functions have transcended basic administrative roles. Today’s HR teams are key to building employee engagement, sourcing and nurturing talent and driving overall organizational growth. 

HR systems are platforms designed to help HR teams address these challenges head-on.

They range from intuitive software that centralizes data to sophisticated systems that automate processes throughout the employee lifecycle (recruitment, payroll, benefits management, performance). 

With a good HR system in place, you can: 

  • boost efficiency,
  • ensure workplace compliance,
  • bridge the gap between management and HR teams,
  • track employee performance,
  • and improve the overall employee experience, reducing attrition rates in the process. 

If you’re looking to onboard a human resource system but don’t know which one works best for you, we’ve got you covered. Keep reading to find out the best HR software for your organization.

HRIS, HRMS, HCM: Key Differences and Benefits

What Is an HRIS?

A human resource information system (HRIS) is a type of software designed to carry out core HR functions like employee records management, recruitment, payroll, and attendance. It offers a centralized database that allows users to input, store, and manage employee information. 

While HR and payroll teams will find an HRIS useful, it’s considered the most “basic” option out of the three. As your company grows, you’ll need features that go beyond basic reporting and data tracking.

What Is an HRMS?

Simply put, an HRMS or Human Resource Management System is a more comprehensive solution compared to an HRIS. It does more than storage and management, boasting features that let users create workflows that boost overall business productivity and retention. 

Let’s say your HR team wants to attract and retain top talent. While an HRIS stores applicant information and job postings, an HRMS does this and allows you to create a recruitment workflow from interview to onboarding.  

An HRMS benefits team managers as well. Whether it’s workforce or performance management, managers can get a centralized system for all their administrative needs.

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What Is an HCM?

HCM (Human Capital Management) solutions encompass traditional HR functions.

But what sets it apart from an HRMS and HRIS is its emphasis on strategic planning and decision-making. An HCM helps HR teams align their initiatives with long-term business goals.

Imagine a growing enterprise that’s seeking to become a leader in its industry. To achieve this, the company wants to start by nurturing future leaders within the organization. 

An HCM platform has modules for talent management, performance management, succession planning, and learning and development. Not only does this help identify potential leaders, but plans for succession scenarios as well.

HRIS vs. HRMS vs. HCM: What System Is Best for My Business?

Deciding the best hr system

A simple way to determine if you’re ready to invest in an HRIS, HRMS, or HCM is to take a good look at your organization and where it’s heading.

Your organization’s size and complexity

A small business or startup can easily benefit from an HRIS. The system helps HR teams streamline administrative tasks and ensure payrolls are done on time.

However, you might need to consider upgrading your traditional HRIS to an HRMS when you surpass 20 employees. At this point, it becomes increasingly difficult for a business to maintain accuracy in employee management.

A growing workforce could also pose a challenge in managing employee requests. To address this, an HRMS has self-service features including profile management, leave management, and access to payslips to reduce the administrative burden on HR.

Compliance and regulatory requirements

If you work in an industry with strict labor laws and regulations, an HRMS can help ensure compliance by automating processes and providing real-time updates.

An advanced HRMS lets you set predefined rules for overtime pay, leave accruals, and other regulatory conditions.

Consider your goals

What do you want to achieve by onboarding an HR system? If you’re seeking operational efficiency and automation, then an HRMS would be a great option.

If you want operational efficiency but want to prioritize employee growth and development in your pipeline, upgrade to an HCM solution.

An HCM is essential for HR teams that are undertaking succession planning. When you want to identify leadership roles, an HCM solution assists you in evaluating employee readiness and lets you segregate talent pools.

An HCM also provides tools for crafting personalized learning pathways and helps you track an employee’s training progress.

Organizational changes

Undergoing a change in management, a merger, or an acquisition? HCM systems can support your team as it experiences a major restructuring.

You get insights into your workforce, including your organization’s existing skills, roles, performance, and compensation data. You can then use this data to allocate resources effectively and determine which departments need restructuring.

An HCM system also lets you forecast the impact of layoffs and role changes, reducing unnecessary costs.

In summary, all HR systems benefit various stakeholders by improving efficiency and decision-making. Whatever HR tech you go for boils down to your organization’s challenges and how each solution can address them. Other factors that come into play are your budget, the level of customizability needed, and the system’s ease of use.

Find the Right HR System for Your Organization

Each HR system we covered delivers its unique strengths to the table. Choosing one for your organization depends on your specific workforce needs, size, and goals. 

For smaller businesses and startups, an HRMS and HRIS can offer invaluable support in managing personnel records, benefits, and payroll. If you’re looking to gain data-driven insights and improve workflows, consider an HRMS. 

Alternatively, organizations that are undergoing transformational change (i.e., mergers and acquisitions), can benefit from an HCM. 

HCM systems help HR teams align their initiatives with broader organizational goals. 

Of course, it’s hard to predict if these solutions will stay the same in the next year or so. Technology is rapidly evolving, with new features and integration possibilities introduced every day. As you continue to develop your workforce, be sure to keep an eye on emerging HR trends and technologies.

Ready to streamline your HR processes? Take the first step toward a more organized workplace with KAMI Workforce, our intuitive and customizable HR solution.