The Difference Between HRIS, HCM, and HRMS
6 min. Read
Last Updated: 06/14/2023
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For companies exploring HR technology, acronyms like HRIS, HCM, and HRMS can prove confusing at first. What are the differences between these terms? How does each one impact the way companies do business? Sometimes these terms are used interchangeably, which only adds to the confusion. Also, there are times when there is an overlap of critical HR functions across the three system types.
Here's a closer look at the key differences between these HR terms and how business leaders can evaluate these systems to determine what's best for their human resources needs.
Human Capital Management (HCM)
Human capital management refers to the overall approach a company takes to managing its most important asset: 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.
Examples of key HCM topical areas include:
- Administrative functions, such as management of institutional and employee data, as well as benefits and payroll administration.
- Recruitment and performance management functions, encompassing onboarding, career planning, and learning and development.
- Service delivery, such as access to company policies and procedures, managing documentation, and organization-wide knowledge base.
- Managing the workforce, including time and attendance, budgeting, forecasting and scheduling, and self-service options.
HCM technology solutions can offer 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.
Integration plays an important role in HCM systems, as integrated data can provide deeper insights and enhance an employer's ability to make holistic decisions affecting overall human capital management strategies. Proper integration requires technology that reflects the wide range of functions companies need to optimize their human resources.
Human Resource Information Systems (HRIS)
Human resource information system software enables companies (and their HR teams) to track, manage, and automate basic HR capabilities. In most cases, the system works off a comprehensive employee database. HRIS software may also encompass HR analytics and reporting.
Common software applications cover the following HR functions:
- Entering and tracking HR data
- Managing an employee database
- Tracking applicants
- Benefits administration
- Payroll processes
- Work scheduling
- Self-service for employees
HRIS software may also facilitate tracking employee work hours, supervision of absences relating to sickness, vacation, or other reasons, as well as benefits administration and new employee recruitment.
As a software solution for these and other related HR functions, human resource information system software can help HR teams maximize success in employee hiring, retention, and performance.
Human Resource Management Systems (HRMS)
HRMS software can facilitate the seamless integration of core HR capabilities into a single suite, where HR teams can conduct tasks, perform data analysis, and put together essential reports.
With HRMS, employees can complete self-service tasks linked to their personal information, thus allowing HR professionals more time for other duties. Data security is often a key feature of an HRMS, which may employ authentication steps to limit access to only those defined as "authorized users."
Additionally, many HRMS platforms can be customized to meet specific organizational and user needs, thereby streamlining workflows and other processes. Processes favorably impacted by HRMS platforms may include:
- Payroll management
- New employee recruitment and onboarding
- Maintaining employee attendance records
- Performance reviews
- Benefits administration
- Learning and development
- Employee scheduling and self-service
An HRMS can be a central location to store critical business data and provide employees with access to information specific to their compensation, performance, benefits, or paid time off. It can also provide organizations with the analytics and insights they need to make critical HR and other data-driven business decisions.
HRIS vs. HRMS
Both HRIS and HRMS software are capable of automating common human resource functions, but HRMS typically offers expanded, customized capabilities. While an HRIS houses data and demographic information, An HRMS often integrates additional productivity measurements such as performance reviews. An HRMS also may feature added security measures that enable different levels of user access. For reporting purposes, an HRMS offers expanded analytics compared to an HRIS.
HCM vs. HRMS
HCM systems provide the most extensive functionalities to assist with HR strategies, while HRMS systems focus on streamlining and automating HR responsibilities. An HCM system generally offers built-in analytics related to a wide range of HR processes that can support strategic decision-making. Comparatively, an HRMS is most often used to add efficiency to HR processes.
HCM vs. HRIS
As the most comprehensive of the three systems, HCM systems offer a wider, more strategic focus compared to an HRIS. HCM systems will include additional functions such as performance management, learning management, recruiting, and onboarding. HCM systems also allow for data integration from a variety of sources that support the development of strategic goals using advanced quantitative and qualitative analytics.
HRIS vs. HCM vs. HRMS
Within the human resource management industry, the terms HRIS and HRMS are often used interchangeably to represent the technological systems used in HR functions. Some overlapping 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. The two terms are best used to describe technological solutions, but don't usually 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.
As more data is transferred and stored digitally, businesses need tools to ensure that personal, sensitive employee information remains secure at all times. Key elements of effective security include:
- Segmentation: Specific information should be available only to specified individuals based on job requirements.
- Two-factor authentication: The system should employ advanced two-factor authentication technology for an additional layer of data security.
- Password and reset policies: It's imperative that user passwords (revolving around recommended complexity and strength) be altered and reset regularly. This helps maintain a defense against unauthorized users attempting to acquire sensitive employee or business information.
With security in mind, an HR system can empower HR teams to transition cumbersome, paper-based processes into the cloud — significantly reducing the potential threat of unauthorized users gaining access to files.
Choosing the Right Technology for Your Business
Whatever form of business you lead, you may reap significant benefits from HCM, HRMS, and HRIS software. The key is determining which platform best suits your company's specific human resource needs.
To be assured you're purchasing the most effective human resource management system for your business, it's necessary to conduct research, which requires time and resources. The point of this research is to help you understand what software vendors are offering as they present potential solutions.
Just remember that, like other business-related software, all HRMS options are not alike. Keep these tips in mind when making your selection:
- Determine if a system's fundamental functions offer solutions that maintain compliance in an organization as it changes and evolves.
- Compare and contrast software solution vendors to evaluate their track records in this field.
- Narrow your choices to which software technologies address your company's specific needs and provide the most effective employee user experience.
Today, more than ever, businesses coping with changes in the workplace and other factors need a way to stay compliant with employment laws and regulations, recruit new employees, and properly care for the needs of the employees they have. Explore Paychex Flex®, our all-in-one HR software and service solution, to help you achieve your human resources goals.