Payroll, leave management, new hire paperwork, benefits enrollments and deductions…all these tasks can become a headache to manage as your business grows and brings on more employees. It becomes even more cumbersome if you are trying to manage these processes in multiple systems or manually with spreadsheets and workarounds.
But there’s a better way. There are a variety of HRIS platforms out there that can streamline and simplify essential HR processes ensuring you and your team remain organized and compliant while having access to information that can aid decision-making related to your people.
In this article I’ll explain what an HRIS is, how it can benefit your business, and tips for how to choose the right one.
What is an HRIS?
An HRIS (short for human resource information system) is a software application used to store employee information and support various human resource functions, such as benefits, payroll, recruiting, training, and more. As with many tech solutions in the marketplace, an HRIS can help your business become more efficient and productive by automating and streamlining routine tasks. By leveraging the support it provides, you can optimize your people operations and planning.
Every business that has employees can benefit from the automation of administrative tasks and streamlined workflows that an HRIS can provide. If you are a small business with 50+ employees – or will be scaling to that size within the next 12 months – it is a great idea to move to an HRIS that allows you to manage the entire employee lifecycle in one application.
The Key Benefits of an HRIS
There are a variety of benefits that come from using an HRIS. Here are five big ones you can expect when utilizing HRIS software in your business.
1. Increased efficiency and productivity
Automating HR tasks: An HRIS greatly increases efficiency for you and your staff by automating various HR tasks. I’m old enough to remember the days of manually onboarding new employees and transferring their handwritten new hire paperwork into our payroll system. I would get anxiety checking and double-checking that those details were entered correctly. Nowadays, options abound to support an automated workflow for new hires with the electronic signing of the offer letter, submitting required new hire paperwork electronically, and enrolling in benefits plans in just minutes.
Streamlining workflow: The setup period is critical when implementing a new HRIS. This is where you are able to build out the workflows that will streamline processes for you, employees and managers. With the integration of AI, I predict you will see many more HRIS providers using simple prompts to help you set up powerful workflows tthat meet your specific employee population and business needs. Weeks of back-and-forth with your customer success rep during the build-out/implementation phase will be replaced with being able to launch a powerful system in the matter of hours, if not minutes.
Scales as you grow: Many comprehensive HRIS are able to serve businesses of various sizes. As you scale your business, your needs will evolve. Most HRIS have this in mind and are designed to meet your changing needs. In my experience, the best options are those that have additional features, modules or functionality that can be added as you grow.
2. Enhanced decision-making with data-driven insights
HR analytics and reporting: Integrated into most HRIS software is the ability to analyze data and trends over time and access reports that support the execution of routine tasks, along with higher-level decision-making. Many systems include dashboards on the admin’s home screen, capturing a snapshot of relevant data that helps you focus on important tasks and key insights to drive your business forward.
Forecasting and strategic planning: The ability to access reports that support long-term resource planning and financial management can be helpful to management teams and HR staff. HRIS software allows you to customize reports that provide your business with the information needed to make informed decisions based upon your HR-related data and trends over time.
3. Improved accuracy and compliance
Reduce human error: Humans are prone to making mistakes. That’s why many HRIS platforms embed checkpoints and safeguards to reduce human error. In some cases, it may be a pop-up message that alerts you to the impact of the change that you are about to make. Other features help identify duplicate information in multiple sections of the software or ensure that changes made in one section are reflected in all the right places.
Regulatory compliance and auditing: It can be difficult to stay up to date on reporting deadlines, regulatory changes and ensuring all employee records are up to date. An HRIS helps you manage this and more through notifications and reminders about deadlines and new changes at the federal, state and local levels where you have employees.
4. Employee self-service capabilities
Empower employees: Who wants to ask permission from a team member every time you want to change something in your employee record? No one. Payroll platforms like Gusto and Deel offer a number of self-service tools for employees to enter and update their information as needed, being able to access important information related to areas like benefits, 401(k) contributions, and payroll deductions that aid planning for their family and future. This is a huge benefit of implementing HRIS for your employees.
Improve engagement and satisfaction: Who appreciates being able to log into a performance management system and see kudos from your manager or team? Just about everyone. Some HRIS include this as part of a comprehensive suite of features, and some focus solely on performance management and employee engagement and satisfaction. Trakstar is an example of an HRIS that allows employees to take ownership of their careers through goal-setting, regular check-ins with managers and self-appraisals. Additionally, the learning platform empowers individuals to continue growing in their career by taking part in training that enhances their skills, translating to increased engagement and satisfaction in their roles.
5. Cost savings
Reducing administrative costs: With the automation that comes from implementing an HRIS, many manual and time-consuming administrative tasks can be handled by the technology, freeing HR staff to focus on more strategic initiatives. The need for paper-based systems, manual data entry, and repetitive administrative work is reduced which cuts down the amount of hours that were once devoted to those tasks. Additionally, a multi-functional HRIS can eliminate the need to use seperate tools, which may decrease the cost of maintaining various platforms and subscriptions.
Return on investment (ROI) of HRIS: In addition to the reallocation of time and resources (HR staff having more time to focus on strategic initiatives versus routine administrative tasks), there are other ways that a business can realize ROI by implementing HRIS. The access to analytic tools and reports helps leaders make better informed decisions about their people and future business needs. This data-driven approach can result in operational efficiencies and resource allocation that can lead to cost savings. Finally, the compliance and auditing features can help your business understand, plan for and respond to issues or new developments in a timely manner, reducing the exposure to risk, potential penalties and legal issues in a more proactive manner.
Choosing the right HRIS for your business
As you research vendors, keep in mind your business needs (now and in the future), your budget, and level of ongoing service you’ll need as you implement and integrate your HRIS solution into your business.
Here are a few factors to consider when selecting an HRIS for your business.
- Business needs and scalability: Understanding what you require from an HRIS is important. Are you an early-stage business with a handful of employees? You may be most interested in payroll and PEO services. For larger and/or more mature businesses you may need a more complete solution. Either way, consider what your current needs are, along with how the system will be able to support future growth.
- Features and functionality: I’ve used HRIS software in the past that had too much for our business. This became more of a distraction and cause of overwhelm. Therefore, it is important to understand what features are going to maximize you/your staff’s efficiency and productivity and support your data needs for ongoing planning and decision-making.
- Ease of use: A system is of very little value if it is difficult to use as an employee or manager and manage as an administrator/owner of the system. You’ll want to consider how user-friendly the system is, the user interface and customization features for admins. Request a demo account so you and a subset of employees can test it out and determine if it will meet your needs. Also, get an understanding of the user experience on various devices (desktop vs tablet vs mobile device). Mobile responsiveness or the accompanying app will be important to the user experience and ease of use for your employee base.
- Potential ROI: Sometimes HRIS pricing can cause sticker shock. It is important to not only consider the cost of the product, but also what it will allow you and your team to do and have access to as a result. The efficiencies, savings on time and productivity and the tools to support better decision-making moving forward can all result in returns on your investment over time.
- Integrations: You may be using a great ATS right now that you don’t want to lose when you upgrade your payroll system. That is when integrations become a differentiating factor. Also, integration into complimentary apps and platforms that your team is already using daily, like G-Suite, Outlook, Slack, Hubspot, etc can be a big win.
- Support and training: Ask questions about the vendor’s approach to client success. It is important to have dedicated support as you prepare to launch and roll-out your HRIS, along with ongoing support and training for employees, managers and system administrators.
Successful adoption by your employees and the integration of the new system into your existing business tech stack hinges on a great implementation and launch process. Here are a few tips to help this process go smoothly:
- Clearly define the needs of your users. That includes employees, managers and power users. Use this as criteria when researching HRIS companies.
- Commit to a realistic implementation timeline. Consider projects or initiatives that may compete with a comprehensive roll-out of your new HRIS. Decide if every feature of your chosen system needs to be implemented all at once or in phases. For example, you may decide to launch your payroll, leave management, and benefits administration modules first, and then roll-out the ATS or performance management components in subsequent phases.
- Communicate at key points during the process to ensure everyone is well informed. A good client success team on the vendor side will help you determine the different stakeholders to communicate with and the information that should be shared at key points throughout the process.
- Enlist support from employees and managers. A great way to do so is by having a small number of people test the software in a demo environment first. This will help you understand the user experience, determine where additional support is needed, and also build buy-in and support prior to roll-out.
- Conduct user training and offer tools, resources, and support to new users. Training is essential for successful implementation. It’s important to have direct access to your vendor’s client success team who will support you with resources and additional training as needed.
To start researching possible vendors for your business, check out the top HRIS providers we recommend in 2024.
The Bottom Line
There are a number of benefits of HRIS systems that can help your business. By using an HRIS in your business you will likely see productivity and efficiency increase, decision-making becoming more objective and better informed by data-driven insights, improved accuracy and compliance, empowered and engaged employees, and cost savings. With the options that exist within HRIS software, you can easily find a solution that will help streamline and automate tasks and leverage tools to aid the growth of your business.
As you consider your next step in enhancing your HR tech resources, check out our HR Software for Small Businesses Guide. This will provide more human resource information systems examples and tips for HRIS implementation.