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What is an HRMS?

How would an HRMS apply to your business's specific human resources functions? Here's a breakdown of what an HRMS is designed to do and the role it can play in your business.
What is an HRMS?

What is an HRMS, and how does it apply to your business's specific human resources functions? Though the breadth of HR technology now available to businesses of all sizes has streamlined many traditionally burdensome processes, it has also made it difficult to determine exactly how one HR system compares to another, or to decide which is the right fit for your organization's needs.

Here's a look at what an HRMS is designed to do, how it compares to other types of HR systems, and what role an HRMS can play in your business.

HRMS background

An HRMS, or human resources management system, is designed to manage common HR functions related to human capital management including but not limited to employee compensation, benefits, and performance. There can be confusion when considering other HR systems such as an HRIS (human resource information system).

An HRMS may include the same capabilities of an HRIS, such as compensation reporting and employee training. An HRMS allows you to use technology to implement your HCM strategy, including performance review management and salary planning.

Aside from housing many critical HR functions, an HRMS empowers HR teams to transition otherwise cumbersome paper-based processes into the cloud. As more information is transferred and stored digitally, a business should have the tools to keep personal and sensitive employee data secure. At the same time, an HRMS offers a central location to store critical business information, and provides employees with access to information specific to their compensation, performance, benefits or paid time off.

Here are some aspects of HR that an HRMS is also designed to help manage.

Recruiting and hiring: An HRMS can help HR professionals manage the many moving parts associated with the recruiting and hiring process. Many systems are also designed with global capabilities that serve the talent management needs of international organizations, including the ability to manage information and reports in a variety of languages, currencies, and employment laws as they relate to specific regions.

Payroll and benefits: Organizations vary in when and how they complete payroll and HR functions across departments, but an HRMS can help ensure that all parties impacted by payroll (including the employee) have access to accurate information. With an HRMS, employees can manage their own compensation information, including digital access to paycheck stubs, tax records, and workplace benefits information.

Paid time off: If an employee's benefits package includes the accrual of a specific number of days off that are earned based on the number of hours an employee works each week, an HRMS can help HR and the employee track and manage this information. An HRMS empowers employees to independently access their benefits status, including the amount of paid time off they've earned or have already used at a specific point in time.

Performance: Because an HRMS also includes cloud capabilities, this system can simplify a variety of processes associated with performance management. For example, employees can access the system to review established performance goals. The cloud-based system can also streamline processes that involve multiple stakeholders, such as the collection of 360-degree reviews completed by any number of employees.

Policies and procedures: Many businesses have some type of employee handbook or set of rules and expectations that staff are required to follow and adhere to. But those in highly regulated industries may face additional complexities when it comes to making certain that staff are aware of current legal and compliance standards. An HRMS empowers businesses to deliver digital training modules to employees that they can complete online, and captures employee signatures acknowledging that they have read and agree to various policies and regulations.

Planning and analytics: An organization's future success depends on its ability to plan a future recruitment and retention strategy based on industry trends. While salary isn't the only driver of employee satisfaction, an HRMS can provide key insights about compensation and benefits relative to current trends in an industry. An HRMS’ customized reporting and benchmarking analytics capabilities also make it possible for HR departments to measure activity relative to goals and industry benchmarks.

An HRMS can help streamline hiring, onboarding, employee benefits management processes, and other HR functions. It can also provide organizations with the analytics and insights they need to make HCM and other data-driven business decisions.

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* This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.

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