There’s no one-size-fits-all approach to running a business. Missions, goals, and needs vary – and so does the type of software that can power your workforce.
When it comes to human resources (HR), there are three types of systems you can leverage to create a positive employment experience and workplace culture for your people. Human resource information systems (HRIS), human capital management (HCM), and human resource management systems (HRMS) have some similarities – and at times, the acronyms are used interchangeably – but each has a distinct purpose.
- HRIS (Human Resource Information System): stores employee data and records and supports the execution of core HR functions such as employee in-processing, payroll, and time and attendance
- HCM (Human Capital Management): generally all the core functions of an HRIS plus capabilities to support strategic people planning that aids in retaining and engaging your employees
- HRMS (Human Resource Management System): often used interchangeably with HRIS, the focus is on managing employee data in order to support planning and management of your workforce needs
|HRIS vs HCM vs HRMS: A Quick Comparison|
|Management of employee data|
|Administration of core HR functions||
(Plus strategic human capital management capabilities)
(Plus strategic human capital management capabilities)
|Data and Analytics||
(More limited than HCM and HRMS)
(Typically robust to support strategic decision-making)
(Provides the most comprehensive solution for strategic decision-making)
While HRIS focuses on HR data management, HCM takes a strategic approach to managing human capital. HRMS is a more comprehensive system that combines both data management and strategic HR capabilities. Each system’s specific functionalities and features can vary among software vendors, so it’s essential to consider individual system capabilities when choosing one for your business.
Let’s dive into more details about each type.
HRIS: Human Resource Information Systems
HRIS refers to a software system or a set of interconnected software applications used to manage and automate various HR processes and data. An HRIS typically includes features for managing employee information, such as personal details, employment history, performance records, time and attendance, payroll, benefits administration, and more. It focuses primarily on the information and data management aspects of HR.
HRIS software is usually where most businesses start when they need a streamlined way of executing core HR functions. Depending on the system, you may also find reporting and analytics capabilities that can help you move beyond the day-to-day administrative tasks to begin thinking more strategically about your people needs.
Overall, an HRIS helps you execute core HR processes and manage information and data related to your employee base.
- Storing all employee data in one place
- Increasing efficiency by automating and streamlining core HR functions without adding more HR staff
- Scalability to handle increasing amounts of data and more complex processes as your organization grows
HCM: Human Capital Management
HCM is a broader concept emcompassing HRIS but expands the scope to include a strategic approach to managing human capital within your organization. As the name suggests, HCM helps reorient your perspective of your employees as assets (human capital) versus a cost-center or “resource.”
HCM encompasses the entire employee lifecycle, from recruitment and onboarding to performance management, learning and development, talent management, workforce planning, and succession planning. It involves managing HR data and supporting leaders in aligning HR strategies with their business objectives, focusing on employee engagement, and optimizing workforce productivity.
The benefits of HCM include:
- All the core features of an HRIS
- Tools that allow for a more strategic and future-focused approach to your people needs
- Robust analytics and data to inform decision-making
HRMS: Human Resource Management System
The exact definition of HRMS varies depending on the context. In general, an HRMS is a comprehensive system that combines HRIS and HCM functionalities. It integrates various HR processes, data management, and strategic human capital management capabilities into a single system.
An HRMS may include modules for HR administration, employee self-service, payroll processing, benefits administration, talent management, workforce analytics, and more.
The benefits of HRMS include:
- Managing employee data to gain insights that inform decision making
- The ability to think more strategically about your workforce’s needs and plan for the future
- A comprehensive approach to support your HR and human capital needs
Some vendors use HRIS, HCM, and HRMS interchangeably, so it gets confusing when you’re researching options. Look for software that automates essential HR functions and gives you easy-to-implement tools to analyze trends and empower your team.
Deciding what’s best for your organization
Any business can benefit from implementing any one of these types of systems into their organization. You will see immediate and long-term benefits in better-managing employee data, serving your employee base’s needs, and automating everyday HR tasks to free up staff member time for more strategic tasks.
When determining which system to get for your business, ask yourself the following questions.
It is crucial to identify your business’s needs and projected growth when considering what type of system to buy. Decide if the basic HR functions an HRIS provides are enough or if you require a more comprehensive solution for advanced tasks like performance management. Consider the system’s scalability and if it will continue to meet your needs as your business expands.
If you have non-HR staff executing HR-related tasks and managing your HR software, an HRIS may be your best option. Generally, when you move to more strategic people planning activities where HCM and HRMS are beneficial, you will need to hire someone with the expertise to manage the system and related processes.
It may be a giant leap for some businesses to move from no system to a more robust system, like an HCM or HRMS. So, you must audit your current processes and systems against business goals and objectives to determine the best for you. If you already have a system, decide if it meets your current needs and if it can grow with you. If not, replace or upgrade to a system type with the necessary capabilities. In some cases, adding and integrating with other systems may make sense to provide a complete solution.
The Bottom Line
Whether you choose HRIS, HCM, or HRMS, it is essential to have HR software that can help you can help you store, manage, and make informed decisions related to your employees.
HRIS, HCM, and HRMS have unique purposes and can be powerful tools to support you in retaining and growing your workforce. When deciding which to go with, take inventory of your needs and how an HR system can help you be more efficient and intentional about taking care of your people now and in the future.
Visit our HR software guide to compare pricing, plans, and key features and find the perfect solution for your business needs.