Companies researching human resources technology may encounter a wide variety of acronyms, with HRIS, HCM, and HRMS being among the most common. Many business leaders struggle to understand the difference between these terms and how each area can influence the way they do business. There's even a lack of consensus within the industry itself. These terms are sometimes used interchangeably and inconsistently by the very companies who sell human resources related technologies. Here's a closer look at the differences between the terms HRIS, HCM, and HRMS and what business leaders need to think about when evaluating systems for their human resource needs.
Human Capital Management (HCM)
Human capital management refers to the overall approach that a company takes to managing its most important asset: its people. HCM is a people-centered approach to making the most of a company's human resources, and refers to both the strategic and technological elements needed to address a wide range of HR-related activities. HCM offers businesses the ability to report and analyze human resource data to make better strategic organizational decisions. HCM solutions often encompass activities such as recruiting, compensation and benefits, talent management, time and attendance, and other employee-related processes. Overall, proper HCM plans can help companies strategically manage their workforce productivity.
The underlying technology in each relevant area of the business collects data and gives management access to accurate and timely reporting to support effective decision making. Thus, integration plays an important role in HCM systems, as integrated data provides deeper insights and can enhance the ability to make holistic decisions that impact overall human capital management strategies. Proper integration requires technology that reflects the wide range of functions companies need to optimize their human resources.
HRIS and HRMS
HRIS is an acronym for human resources information systems, while HRMS stands for human resource management systems. At the highest level, these terms are used interchangeably to represent the technological systems used in HR functions. Some examples might include organizational and employee data management, payroll administration, and benefits administration.
Often, systems that fall into this category are limited-function systems that provide one or two core services. Companies may link them together by creating workarounds to help them communicate or by using provider partnerships to expand their service offerings. HRIS and HRMS are terms that are best used to describe technological solutions, but don't specifically tie into broader strategic planning or management philosophies.
For companies that want to leverage their human capital assets for maximum impact, an HCM strategy is essential. Choosing an integrated HCM system over a single function HRIS software platform can give companies access to high quality information, while potentially reducing workloads and the risk of propagating inaccurate data.