Human Resources is a key component of any business. Without an effective HR department, employee data gets mismanaged (or not managed at all) – and when that happens, the internal framework of the entire company can fall apart. Therefore, almost all businesses invest in sophisticated and effective HR management software.
Companies prefer a digital solution, as modern organisations hold and produce a lot of data – too much certainly for HR workers to sort through manually. But with software vendors throwing around various new and recycled terms in their marketing jargon, it can become confusing to understand the differences between systems.
To help, we’ve compiled this handy article that explains the various types.
Human Resource Information System (HRIS)
According to HR expert Mike Maiorino, there are three prominent types of system, each taking into account the various data management tools and programs that HR use. The first of these is the Human Resource Information System, or HRIS.
The HRIS is designed to manage “people, policies and procedures”; typically, this encompasses the following areas:
Recruitment and Applicant Tracking
The large majority of organisations advertise their job vacancies online now, using the digital medium to target potential talent in increasingly creative ways.
HRIS allows businesses to accept and process these online applications easily, referring them to the relevant departments and managers for review; it also offers time-saving benefits, as unsuitable candidates can be filtered much more easily than if a person was physically sifting through paper applications.
Training & Development
While HRIS cannot provide actual training to employees, it can be used effectively to set goals and track progress. Many businesses use it to direct staff to external online training aids and/or portals, and to provide key information about the company and its policies to new employees.
Having a clear outline of training goals allows businesses to be confident that their people are developing, and are taking individual accountability for that development.
Open Enrollment and Benefit Administration
For a manager, individually explaining benefit options to every single member of staff can feel like hitting their head against a brick wall; on the flipside, employees can feel pressured into choosing the wrong benefit option during a rushed one-on-one meeting. The solution, therefore, is simple: to provide clear information (ideally with an FAQ section) on the HRIS, as well as an easy to use enrolment page. This allows managers to focus on answering trickier and more specialised benefits queries.
It also has the additional benefit of saving on paper and mailing costs and minimising form mistakes – a win-win all around.
Compensation Management
This is a key aspect of business management that really benefits from the HRIS system. In most businesses, members of staff are paid different salaries to reflect their experience or performance; it can be tricky to keep on top of this without making errors. HRIS mitigates this and even provides an analytics capability, linking to performance reviews and assessments to make compensation decisions much easier. It can also link to benefit administration, permissions and job codes – all things that might change when an employee’s salary increases.
Additionally, it makes it easier for businesses to be transparent with their salaries – a hot topic currently, with companies under pressure to show they are addressing social and political concerns (such as the gender pay gap, for example).
HR Reporting
Rather than trawl through individual records, HR reporting allows management or senior figures to understand various breakdowns of employee data quickly, clearly and efficiently. Workforces can be sorted by any number of criteria, such as by location, age or seniority – these details can again be useful for transparency purposes, as well as allowing a company to understand the make-up of its staff.
Management can also request accounting reports related to payroll (although they would need certain permissions for this), as well as paid leave reports, sickness reports, or any other criteria they require.
Workflow
Within the context of HRIS, workflow relates to tasks such as hiring, firing, promoting and training. HRIS improves these processes by implementing ‘approvals’ into the system; for example, if an employee is being promoted, the process cannot move forward until the relevant manager has approved it on the system. This means that the promotion system isn’t relying on just hoping that people see and respond to emails.
It should be noted that these processes and structures need to be evaluated and fine-tuned before they are turned over to a HRIS, as otherwise they will not be efficient. Once in place though, the automation of the system can save a lot of time and money.
Self Service (for Applicants, Employees and Managers)
The self-system service is primarily beneficial for employees, making it infinitely simpler to manage administrative tasks such as submitting leave requests and updating personal details. When used properly though, it can also highly benefit managers.
Those leave requests can link instantly to staff rotas, allowing management to approve or deny instantly; they can also communicate important notices to staff, ensuring they will be seen and not lost in translation. Interestingly, it also streamlines feedback capability – handy for companies who are constantly extolling the virtues of a frequent and regular feedback system. Managers can simply rate certain performance factors, rather than constructing entire reports for each employee.
Additionally, job applicants can register all their details and relevant information in one place, editable as required; this also allows the company to keep the applicant updated on the status of their application, providing benefits for both parties.
Human Capital Management (HCM)
The second of Maiorino’s categorizations is HCM, or Human Capital Management. Maiorino suggests that HCM contains all the capabilities of HRIS, but with “the added benefits of talent management services and more global capability”.
Here are some key solutions in HCM:
Onboarding
When new employees join a company, they are bombarded with forms to fill out, briefs to attend and training to conduct. With the HCM capability, companies can instead conduct the onboarding process digitally, by sending training and integration materials that the new hire can look through in their own time, asking any questions they may have via email. This saves time and effort for both them and the company.
Performance & Goal Management
Employee performance review is a driving force of many businesses these days, and HCM creates a format that allows for all round in-depth review from peers, colleagues and managers with ease. This paints a much clearer picture of an employee’s performance, allowing management to make better decisions regarding rewards.
A higher frequency of reviews is also preferable to one or two annual sit-downs, and the negative connotations that come with this. Development points can be highlighted a lot quicker; as a result, management can identify any training needs and address issues rather than letting them drag on until the next appraisal date.
It also improves the logistics involved, allowing staff to easily compile and store their review history – a highly useful tool for professional development.
Position Control / Budgeting
Personnel management is another important aspect of HCM, especially in larger organisations where staff headcounts are much higher. Knowing where positions need to be created in the company – and managing and allocating the funding to enable this – is something that is again made easier with HCM software.
If a manager feels they need another body on their team, they can utilise data reviews in other parts of the system, merge it with the information available here and present a strong case to budgeting managers to approve their request.
Succession Planning
HCM (and HRIS) systems are perfect for identifying which talent to utilise when previous incumbents of roles leave or retire; decision makers can analyze performance reviews as well as other available data to identify suitable successors.
The system benefits employees too. Rather than dictating set career paths to staff, companies recognise that workers want control over their destinies; they can now submit their own goals and aspirations clearly and formally to management. If a role becomes available, and a suitable candidate has expressed an interest in working in that department, then it becomes an easier decision and a win-win for everybody.
Global HR
HR management is one thing when it’s a small to medium company in one location. But when it’s a global giant, with offices and sites in a large number of international locations (complete with the cross-border regulatory issues that this may cause), it becomes a totally different animal.
This is where cloud solutions come in, allowing businesses to consolidate all their HR capabilities into one system, regardless of jurisdictions. The best vendors take into account every industry regulation and labour agreement in each territory, so that staff don’t have to – this allows internal standardisation and compliance right across the board.
Human Resource Management System (HRMS)
The third piece of Maiorino’s HR puzzle is the Human Resource Management System, or HRMS. He assesses that this encapsulates a wide range of resources that have already been mentioned, but that the two main identifying factors of a HRMS are these:
Payroll
Payroll is in many ways the most important part of the business – at least for employees! But it can also cause headaches (or even legal problems) for business owners too, especially if they file taxes incorrectly or pay the wrong amount to the wrong government organisation. Therefore, a robust and effective payroll software system is invaluable to many businesses.
In most cases, management simply input an employee’s salary and working hours, and the software does the rest. Tax laws are automatically updated and the system will remind the owner when certain forms need to be submitted, providing huge peace of mind – especially for small businesses.
Time & Labour Management
Most companies are interested in keeping track of what employees are doing with their time – and not just to ensure they are working hard. Understanding where resources are being concentrated can allow management to make decisions about whether something is receiving too much or too little attention, as well as calculating fees to clients based on how many hours a particular project took.
HRMS systems simplify this process, allowing workers to log their hours easily (or through a supervisor, depending on the company’s own policy); this provides invaluable quantifiable data to companies who can assess employee behaviour and performance, and the effect it has on the company’s overall performance.
And that’s it! It should be noted that these categorisations are not exhaustive, and are relatively open to interpretation; they do though give an essential overview of the various systems that human resources operate, and the benefits they can provide to any business – large or small.
Do you use any of these systems in your business? Let us know in the comments below…