There’s no shortage of challenges facing today’s business leaders, who must contend with a post-pandemic workplace, tight labour market and predictions of a turbulent year for the economy. In this changing work world, successful organizations must offer people a positive experience at every stage. Enter a Human Resource Management System or HRMS, robust software that augments organizations in numerous ways, ultimately making it easier to manage all aspects of the modern workforce.
A guide to Human Resource Management Systems
Whether you’re looking to strengthen the candidate and employee experience to attract and retain top talent, introduce personalized learning opportunities for employees, make informed decisions about your workforce or improve efficiencies throughout your organization, an HRMS can help.
Here is our guide covering many of the positive aspects of human resource management systems.
What is a Human Resource Management System (HRMS)?
Human resource management systems or human resources management systems — known by the acronym HRMS — are software systems an organization uses to manage many human resource functions, such as benefits, payroll, recruiting, training, employee engagement and attendance. As these robust systems consolidate scattered human resource functions in a single package, they can help organizations save time, improve efficiencies, lower costs, make more informed decisions and improve the employee experience.
Note that the terms human resource management system or human resources management system are often used interchangeably with human resource information system (HRIS). Initially, HRIS described the electronic recording and management of employee records and was a system usually used only by HR leaders and senior managers.
As technology has progressed, the role of an HRMS has also evolved. They now enhance all processes throughout the employee lifecycle and are used by the entire workforce, even job seekers. Companies of all sizes and in varied industries use these systems, from start-ups and small businesses to large organizations with robust HR teams.
What are the features of a Human Resource Management System (HRMS)?
Numerous companies offer HRMS software, each with different features, prices and capabilities. In general, common features include:
- storing staff members’ records centrally
- offering self-service portals so employees can update and manage their own records
- integration with other systems, such as accounts payable software and applicant tracking systems
- providing onboarding programs to train new employees, and personalized learning opportunities for all employees, such as training courses and mentorship
- tracking time, vacation usage and attendance records
- managing payroll processes and benefits administration, including self-service functions so employees can complete numerous functions without HR assistance
- various reporting and analytics capabilities to inform an organization’s planning and decision making
- offering workforce management functions, such as employee performance reviews
What does the future of HR technology look like?
Today’s HRMS software generates and stores huge amounts of data. Increasingly, technologies like artificial intelligence and machine learning are processing this data, offering organizations deep insights and customized solutions to prepare for the future of work. From predicting talent needs and succession planning to helping employers understand what's causing employees to quit, there are numerous ways new technologies can add value to existing HR processes.
To that end, the global human resource technology market is projected to grow from nearly USD $24 billion in 2022 to $40 billion by 2029, according to Fortune Business Insights, with companies likely to prioritize investments in AI and machine learning to streamline business processes and reduce costs.
Another technology trend is a greater focus on user-friendliness, as often the entire workforce uses the HRMS. Today’s systems may include chatbots that can resolve common problems quickly, mobile apps and personalized dashboards — all examples of how workplace technology can enhance human connection.
What are the benefits of using a Human Resource Management System (HRMS)?
An HRMS automates many HR functions that would otherwise be done manually, which saves time, increases efficiencies and ultimately lowers an organization’s overhead costs. The benefits of an HRMS, though, go further, boosting key areas of a business such as:
Decision making: these systems are designed to consolidate an organization’s plentiful workforce information in a centralized spot and offer real-time analysis of that data. Such insights help leaders better understand their workforce, identify trends and make informed and strategic decisions about everything from worker retention to workplace equity.
Compliance: by consolidating and storing employee information in a centralized spot that’s simple to access and update, organizations can stay compliant with Canadian labour laws and regulations. Given the rise in international hiring, systems can also cover relevant regulations for employees based overseas.
Recruiting and onboarding: when it comes to recruiting, streamlining all the processes that go with hiring under one system can help reduce costs and improve efficiencies. The onboarding process can also run smoother, as orientation courses, policy documents and other training modules are easily organized and accessed. Such user-friendly, automated hiring practices can ultimately help you attract and retain talent.
Skills development: numerous opportunities for skills development can be created and organized within an HRMS, such as training curriculums, personalized learning plans and mentorships. Considering the severe skills shortage in several key Canadian sectors, employers able to offer upskilling, reskilling and other learning opportunities are better positioned to close the skills gap and manage labour challenges.
What should I consider when choosing a Human Resource Management System (HRMS)?
With so many different HRMS options to choose from, you’ll want to narrow down your search by taking a closer look at your organization’s current and future needs and matching those with a platform’s features. Some systems offer complete solutions, while other software can be accessed in a modular way, so you only use the features you need.
In general, the size and structure of your organization is a key consideration, as what matters to a small business with a small HR team will be different than that of a large multinational company.
The security features offered are another important requirement, considering all the sensitive employee information the HRMS will house. Security also encompasses the different rights of people in different roles to access the HRMS, as well as two-factor authentication, data encryption and policies around password strength and reset periods.
Consider, too, if a cloud-based solution and its added flexibility is right for your organization, or if such data storage by third-party servers may not work for you. It can also be helpful to understand exactly which HR metrics the software measures.
Cost is another major consideration. Free HR software does exist, but may only work with a limited number of employees or allow access to a limited number of features. The way the software is charged also varies — some programs can be purchased outright, some are provided on a licensed basis with a limited number of users allowed simultaneous use and some charge on a modular basis, based on what functions of the system are used.
While that’s a lot to consider, know that the benefits of an HRMS are also plentiful. From helping you manage the modern workforce to improving the candidate and employee experience, this powerful software has the potential to boost your business in numerous important ways.