HRIS Software: Insights on What to Consider for My Business?

A human resources information system (HRIS) is a cloud-based software system that helps to automate and streamline human resource functions, and may be more efficient and enhancing productivity.

Small and medium sized businesses (SMBs) can really benefit from HRIS software, especially those that lack a large HR department. Automation helps to free up time to for business owners to focus on the big picture. The HRIS supports the business and its employees with HR needs.

While an HRIS helps businesses streamline their HR functions, they do not go as far as HR outsourcing solutions like PEOs and ASOs. PEOs (Professional Employer Organizations) provide HR outsourcing services to companies to help with most of their HR functions. The PEO is the co-employer and is the generally the employer of record for payroll tax purposes.

An ASO, or Administrative Services Organization, provides outsourcing services to companies for a limited number of HR functions or a wide swath of them. The client remains the employer or record for payroll tax purposes unlike in a PEO relationship. PEOs and ASOs offers access to powerful cloud-based software — in essence an HRIS.

This article will present an overview of the key components of HRIS software, explain how HRIS can enhance employee experience, and discuss what factors to consider when choosing an HRIS.

What HRIS Software Can Do

HRIS software solutions are fueled by comprehensive data on your entire workforce and your company's human resources procedures, policies, and goals.

Using this database, an HRIS can help with core HR processes, including hiring, onboarding, payroll management, benefits administration, compliance, training and development.

HR software, in general, helps to automate these functions as much as possible and execute them efficiently. But a good HRIS will offer features that enhance those basic functions and go beyond them.

Employee data management

An HRIS system should securely store worker information in an employee database. The system can also provide employees with a self-service portal so they can update their data (for example, when they move), which will save time for HR personnel.

Time tracking and attendance management

An HRIS streamlines time and attendance recordkeeping and management. The software makes it easy to track time for on-site, remote, and hybrid employees, perhaps even accommodating mobile phone access. It also simplifies the process of handling time-off requests.

Payroll management

An HRIS will integrate time tracking as it automates the processes of calculating pay and delivering it to employees. The system should handle all types of employee’s pay information, including hourly wages, overtime, salary, bonuses, and paid time off. The system can also be accessed to use for compensation benchmarking and reporting.

Employee recruitment, onboarding, and development

Recruitment involves many steps, and they must be performed consistently and quickly. Research shows that the best candidates are off the market in 10 days. For each applicant, documents may need to be sent, received, signed, and filed. Interview appointments and follow-ups may need to be scheduled. Feedback from interviewers to be gathered to use for evaluation. It’s easy for crucial pieces of information to be missed. HRIS applicant tracking systems help ensure that all the information is organized, stored, and easily accessible when you need it.

HRIS software also can provide a customized employee onboarding experience that is efficient and organized. It can help create individual development plans for current employees, makes their performance expectations clear, and helps them advance in their careers.

Benefits administration and health insurance

By using an HRIS system, employees can get information on and enroll in health insurance and other benefit plans on their own. The plans are then administered through the system.

Performance and talent management

An HRIS system can streamline performance reviews and other types of employee feedback, provide managers with data about their teams’ performance, and create learning paths for employees.

The Benefits of HRIS

HRIS software can provide significant benefits, particularly for companies struggling to manage HR tasks in house and grappling with rising HR operational costs.

A good HRIS program ensures you are up to date with state and federal regulations, avoiding compliance issues. It also assists in managing independent contractors and freelance workers as well as employee recruitment.

Improved efficiency, automated workflows

An HRIS can automate menial tasks that would otherwise have to be performed manually, saving HR teams significant time and energy for more complex, value-generating work.

For example, by automating a process like onboarding or data entry, the HR staff can focus their energy on concepts like mentorship programing or creating a continuing education program for employees. And automated approvals keep projects moving forward, reducing wait times and making employee management a breeze.

An HRIS may also facilitate integrations between HR service, as well as with other business software systems, making working across departments and teams easier than ever. It also means that scaling in the future, no matter the scope, will be easier and more efficient.

Centralized data enables easy, quick access

An HRIS enables companies to streamline HR data, processing it in one place. Rather than investing in individual tools stitched together via an application programming interface (API), an HRIS keeps everything centralized for quick access to relevant data. A mobile app helps to ensure user-friendly access as well.

This may also translate to cost-savings with bundling of necessary tools through your HR software company.

Access to most up-to-date software, technology and information

A basic HRIS system can deliver essential reports and analysis on employee and organizational data, rather than relying on manual data collection and analysis. This could look like pulling payroll data to report on compensation across the company or employee data that provides demographic information, even time and attendance.

Improve the employee experience

Besides lifting the burden of time-consuming administrative work from SMB managers or HR teams, an HRIS can help enhance employee experience by improving employee satisfaction and employee retention rates.

An HRIS can enhance employee engagement by:

• Helping them understand their roles within the company
• Facilitating communication with their managers and peers
• Providing a transparent system for managing their performance
• Helping them develop their careers with individualized learning paths.

An HRIS also can improve the employee experience by giving self-service access to the system. This access provides an easy and efficient way for employees to request time off and scheduling changes, select or change benefit plans, and access HR-related information, such as employee handbooks.

The Five Types of HRIS Systems

There are generally five main types of HRIS systems. Three types — operational, tactical, and strategic HRIS systems — are categorized according to the types of HR functions they perform.

The remaining two types — comprehensive and limited-function — are based on the scope of their features. Which type will work best for your company depends on the nature of your business, the size of your company, your budget, and which tasks you want to automate.

Operational

An operational HRIS system handles core HR capabilities and data management tasks, including the certain day-to-day HR operations of the HR department. This type of system can help process payroll and manage and track employee data, using automation to help save time and improve accuracy.

Operational systems are often a good choice for small and medium-sized businesses that have limited budgets and want to focus on the most essential HR functions.

Tactical

Tactical HRIS systems include key HR processes and go a step beyond. They provide HR data that managers and owners can use to make decisions and increase efficiency. They typically focus on recruitment, development, and training. The information that tactical systems provide helps managers make the best use of employees’ talents.

Tactical systems typically include:

• Applicant tracking systems.
• Performance management systems.
• Systems to analyze how your employees are using their benefits.

Tactical systems are well-suited for companies that have concerns about getting the most out of their workforce.

Strategic

Strategic HRIS systems also include core HR processes and add advanced features. They provide analytics that help companies set goals and conduct big-picture planning. The typical use for a strategic HRIS is workforce planning.

Strategic systems are a good choice for companies that want to apply the benefits of technology to high-level decision-making.

Comprehensive

Comprehensive systemssupport almost all important HR processes, including operational, tactical, and strategic needs.

Comprehensive systems are a good choice for larger businesses that need many HR functions and have the budget to pay for them.

Limited-function

Limited-function HRIS systems focus on one or a few core functions, such as payroll and benefits administration.

Limited-function plans are often the best HR technology platform for smaller businesses that have tighter budgets and lean HR teams.

What HRIS Solution Fits My Company?

How can you find an HRIS system for your company? Which will suit your company’s needs? Consider these points when choosing HRIS software:

Understanding Your HR needs

Before you can choose HRIS software, you should know what you want it to do. Consider which HR tasks, in particular, take up the most time and/or would benefit the most from being automated. Look for bottlenecks in your HR workflow and how you want to improve HR management or workplace efficiency. See if there are any snags in the way you handle employee data during collection, storage and retrieval. Consider whether you need help with recruitment, onboarding, or development.

Once you have a wish list of HRIS features, set your priorities. Which of the functions are essential and which would be nice to have if your budget will allow it?

Talk with all the people in your company who will be directly affected by the change to an HRIS system. This may include all HR personnel, management, and your technology people. Ask them what they would like to see from the system and if they have any concerns and preferences.

Evaluating HRIS features

Once you have a clear idea of what you are looking for, you can start to evaluate HRIS systems. Talk with different vendors to find out whether they provide the features on your wish list.

Considering the user experience

No matter what combination of features you’re looking for, you want your employees to have a positive user experience. Everyone in your company should find the software relatively easy and pleasant to use. Employee access is an important feature of an HRIS, and if the interface is complicated or confusing, employees are not going to want to use it.

The best way to get a feel for the user experience of each HRIS system you’re considering is to take it for a test drive. The vendors will offer demos, and you should participate in those.

Assessing customer support

Customer support is another important aspect of the user experience. You’ll want to know that help is readily available if you have any problems setting up or maintaining the system. There should also be a helpline for employees to use if they have questions about any aspect of the self-service employee system.

Find out if the users of the system will need to be trained or if they can pick up how to use it on their own. If training is necessary, ask if the HRIS vendor will provide it.

Free trial

Despite all your preparations, research, and vendor discussions, you won’t know for sure if an HRIS is the right fit for your company until you actually try it out. The HRIS provider may offer a free trial. A free trial goes beyond a demo and gives you a chance to use the HR software. This can help you assess if the HRIS meets your company’s needs.

Finding HRIS Software

HRIS software can bring tremendous benefits to small and medium-sized companies. Technology tools can help save your business time and overhead, improve accuracy, lock in compliance, and streamline recruitment, onboarding, and employee development.

However, all HRIS systems are not equally beneficial. To choose the best software solution for your company, you should assess your HR needs, compare different systems by talking to vendors, and then evaluate each system’s features, customer service, and user experience.

This communication is for informational purposes only, is not legal, tax or accounting advice, and is not an offer to sell, buy or procure insurance.

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