If you take a look at the Human Resources department as it has evolved over the years, you will probably be unsurprised to find that the role of an HR executive has lately come to resemble nothing so much as a project fit for Sherlock Holmes. Between factors like globalization and variable flextime schedules, freelance workers and temp agents, a typical organization's workforce is in an almost perpetual state of mutability – and tracking down and recording accurate employee information can wind up being downright detective work.
The job of HR management however, is hardly just to super-sleuth about. There are far more important undertakings to which they should be applying their valuable skills, and time squandered on basic administrative tasks is time which could have otherwise been spent on innovating company strategy and implementing progressive new plans. Herein lies the merit of Human Resource Information System, or HRIS (also known as HR software, HRMS or HCM), technology. An HRIS is a software application designed specifically for the aggregation and synthesis of employee information. These systems can provide functions varying from payroll and benefits breakdown to the relevant juxtaposition of available positions with qualified applications already existing within the system.
With employee data neatly woven into an orderly web of HRIS databases, HR executives become free to pursue more critical and creative thinking projects. Meanwhile, the automation of the data significantly reduces the likelihood of entry errors and discrepancies between records. And lastly, the formation of one vast, unified reservoir of employee information allows for more complex and integrated analysis by company executives, facilitating better decision-making and greater business efficiency.
All in all, an HRIS cannot fail to improve the performance of business operations, dovetailing different HR processes and revolutionizing the ways in which a company manages its employees. The aim of this article is to detail just what you should look for in an HR system, how to go about buying one, what you can expect to pay for it, and, most importantly, how to optimize your HRIS to the greatest advantage of your business.
It's no challenge to see how the use of an HRIS can be a major benefit to your company. What may be more difficult, however, is identifying the correct system to both meet your business' needs and fall within your business' budget. There are a lot of options out there, designed to suit the demands of all varieties of companies – but though the presence of these options ultimately means that you will get what's best for your business, it can make the initial selection process more complicated. To help narrow down the right solution for your company, let's start by taking a look at the most popular options for HRIS delivery.
The 'traditional' method of a completely in-house HRIS lately has been shunted to the side in favor of Software as a Service, or SaaS. Though in-house systems are certainly still in use, an increasing number of businesses have been opting for SaaS programs which are externally hosted and supported by the vendor. An in-house HRIS requires the full on-premise installation of a system, and it is constantly reliant on the capabilities of the company's own Information Technology department. The SaaS model of delivery, meanwhile, allows users to simply access the HRIS service through the Internet, with the vendor providing remote access to the application, system maintenance, and upgrades.
Software as a Service has evolved into an attractive option chiefly because it can be a major cost-saver. Through the use of a SaaS, you eliminate the necessity of many extra hardware purchases, fancy customization, complicated integration and implementation processes, and even those way-too-highly-paid IT specialists. Yet perhaps even more appealingly, using a SaaS allows you to take the burden of risk associated with managing a business-wide application and place it squarely on the shoulders of the third-party provider. This eradicates the danger of finger-pointing and hostility in the case of any IT mishaps or system malfunctions, and in the meantime, the people who are now responsible for maintaining HRIS performance are those best qualified to do so.
The SaaS delivery model has become so popular that many long-standing vendors are now offering only on-demand solutions. But keep in mind that SaaS isn't right for every business. Many large companies, in particular, will find that a number of SaaS programs are simply too inflexible to accommodate the in-depth customization that they require. The cost savings, too, in terms of system infrastructure and IT proficiency, while very valuable to smaller businesses, are significantly less substantial for a large company. In fact, companies with upwards of one thousand employees will find that the cost of utilizing a SaaS-model HRIS can actually wind up being greater than that of simply investing in an on-premise delivery option.
Another option, of course, is to outsource HR in its entirety. A large percentage of rapidly-growing small- and medium-sized businesses have been turning to this alternative in recent years, and statistics reflect that they have, on average, garnered cost savings of around 10 percent. Additionally, of surveyed executives working for companies which presently outsource at least one major HR function, roughly three-fourths plan to recontract with their current outsourcing providers, and many intend to move ahead and outsource at least one additional HR function.
Whether your purpose is to dodge the inconveniences of regulatory compliance or even just to free up some internal resources, it is clear that there are definitely some advantages to be had in outsourcing your HR services. Still, if you're thinking about making the switch, be aware that trusting a third-party provider to manage your HR essentials can come with its own set of risks. If you aren't careful, outsourcing can easily result in compromised quality levels, so choose wisely when you engage in contracts with unknown or foreign companies. You also may face difficulties with your employees if there are not adequate provisions for employee data privacy. Your workforce deserves security when it comes to their personal information, and failure to ensure this will result in resentment, worry, and overall poor morale. Perhaps most importantly, before you sign your name to any agreements, be sure to kink out the details regarding issues such as continued access to employee information once your relationship with an outsourcing provider is concluded.
Once you've established which HRIS model of delivery works best for your business, you need to figure out just what kind of system you want to invest in. The easiest way to divide HRIS vendors is to split them into two categories: suite and niche. Vendors of suite systems offer brawny, many-faceted software applications comprised of multiple HR functions, each of which can be utilized as either an independent module or as part of a more universal package. Vendors of niche solutions, meanwhile, cater to one specific area of HR management, like time and attendance, payroll, or staffing.
Both niche and suite solutions have their advantages – it just depends which strategy best suits the needs of your company. A large HRIS suite solution may, for example, provide wonderful access to HR activities and data such as recruitment, training, payroll, benefits and compensation, time and work management, and performance analysis. However, as part of a suite, this HRIS may only be a fraction of what you are getting; chances are good the package comes with several other business modules such as financial services and project management, which, if yours is a smaller company, you may not need.
If you're only in need of a solution for one individual HR function, rather than the full package deal, then a niche program is what you're looking for. Niche software targets a single concern, such as compensation and benefits planning, or employee clock-in and hours management, or talent analysis. These niche HR programs are especially useful for small businesses, who have fewer employees and consequently fewer overwhelming processes to manage.
As you can see, both niche and suite HRIS solutions have their pros and cons. For small-scale businesses, a full complement of HR applications is simply too costly to be supported, and besides, half of the functions offered by the suite will probably go unused. For larger businesses, meanwhile, an HRIS suite can offer a cost-efficient means of investing in many HR services which are already seamlessly integrated because they are provided by the same vendor. Just imagine trying to tie together a dozen software applications produced by different providers – it would be an integration nightmare. For the small businesses which only need to take care of one or two key processes, however, a niche solution allows them to invest in the best possible programs without having to buy up lots of additional software.
The Human Resource Information System is by no means a new phenomenon – on the contrary, HRIS technology has been around for years. Only recently, however, have people begun to realize the serious benefits such systems have to offer. Nearly every business can stand to gain something in the realm of efficiency and operational cohesion, and HR information software is designed to provide exactly those improvements.
It helps, too, that HR software vendors have been coming out with increasingly bigger and better offerings. Evolving technology is allowing HRIS to perform tasks that no one could have even dreamed of back when the systems were first introduced. Consider talent management: an HRIS helps companies to streamline the hiring process, formulating better recruitment strategies and decreasing time-to-hire, which results in an improvement in the quality of the workers hired and, consequently, an improvement in the quality of the business as a whole. An HRIS benefits management module, meanwhile, is a legitimate revolution for those still stuck doing the work manually. With HRIS, executives can track a variety of different benefits plans, electronically set certain eligibility requirements, and instantaneously calculate costs and details. The list goes on – compliance management protects confidential employee information, recruitment tracks applicants and analyzes available positions, payroll crunches those numbers so you don't have to. Put simply, HRIS exists to make your job easier – it takes care of the routine administrative tasks so that you can focus on more important issues.
It goes without saying that no two HR software solutions are exactly alike. Nevertheless, there is a standard set of base features that every HR system is essentially expected to provide. The four most common are the following:
The Payroll module collects employee time and attendance information from the databases, calculates taxes and other deductions, and automatically generates paychecks according to executive dictate.
The Time and Labor Management module pools and analyzes information on employee work/time so that executives can accurately manage labor resources. This typically leads to reduced labor costs and improved understanding of labor functions.
The Benefits Administration module enables executives to conveniently observe and manage employee participation in the various benefits programs offered by the company. Certain modules even feature a self-service capacity which allows employees to access their benefits round-the-clock, review their program options, and easily enroll in those plans for which they qualify.
The HR Management module compiles all of a business' workforce data, allowing executives to keep track of employee details such as contact information, training status, skill development, and benefits and compensation programs.
As you've undoubtedly realized by now, an HRIS can work wonders when it comes to lightening the administrative load for a business' HR department. But HRIS was not created solely for the benefit of the management. An HRIS system also opens the door to a whole new level of employee self-service, allowing workers to remotely access useful tools and essential data through the use of the system's interconnected databases.
Take a look, for instance, at an ambitious employee eager to work his way up in the company. With an HRIS, the worker can easily log into the system to review internal position openings, submit an application, and check the status of any pending applications at his leisure. And consider an employee who's recently moved – rather than add to the clutter on HR's desk, the worker can update his own contact information himself by merely logging into the HR system and making the necessary changes. And of course, there's always the availability of online benefits enrollment, which allows employees to simply log in and browse the plan options for themselves, rather than schedule a meeting with a benefits expert who's got plenty of other things on his plate.
Obviously, one of the primary concerns when it comes to investing in an HRIS is cost. The truth of the matter is that the “average cost” of an HR system can be difficult to narrow down; these applications can range from many thousands to even millions of dollars. Then factor in the costs of hardware, installation, integration, customization, and technical support, and the price of your comprehensive software solution will probably total several times the cost of the HRIS package on its own.
There are certain choices that can dramatically impact the price tag on your HRIS, however. When it comes to vendor selection, for instance, bear in mind that opting for a large suite-model package is going to be far pricier than a small niche application. Another point to consider, though, is whether or not your business will need to integrate the new HRIS with a lengthy string of existing systems. In certain cases, though a niche program may initially be less expensive than a full suite, the challenge of integration can drive costs so high that in the long run it may be more cost-efficient to go ahead and invest in the suite package, where the simple act of adding a new module to an active full-service application is a breeze.
Last, but certainly not least, it is vital that you remember the cost of training your employees to use the new system. Getting workers to learn the ropes of a new system can be expensive, but failing to push their adoption of the software can be downright disastrous. Many employees in the HR department will be initially uncomfortable with the introduction of an HRIS – they will feel that the computer is taking over the jobs they used to do and they will be afraid that they're expendable. It is essential that they be trained to understand the proper use of the system so that they can realize their new potential for innovative business strategy rather than mundane managerial tasks. And that is another key thing to keep in mind – when calculating the HRIS package's projected return on investment, don't forget the intangible efficiency benefits that can't always be assigned a simple dollar value.
Before you venture out into the HRIS market, be sure that you know the answers to the following questions with respect to your business personally:
1. How many workers are employed by your company?
2. Will your company be in growth mode during the coming few years?
3. How soon is your company intending to introduce an HRIS?
4. How much has your company budgeted for an HRIS?
5. Does your company possess the IT resources necessary to support an on-premise HR system?
6. What existing legacy systems does your company already have in place?
7. What level of security does your company require for private data and to what extent would your company be comfortable relinquishing the control of such data to a third-party provider?
8. To what degree would your company expect to be able to customize an HRIS?
As you can see, these questions are all straightforward enough, and knowing the answers to them will greatly help to expedite the process of finding an HR system that is appropriate for your business.
Today more than ever, the HR department is truly bogged down with things to keep track of, ranging in nature from recruitment of prime employees to adherence with rigorous regulations. And when you consider the fact that manual paper-based processes can detain as much as 80 percent of an executive's time on administrative grunt work, it is no wonder that so little initiative remains to implement business strategy and further important issues like training and talent management.
With an HRIS, the Human Resource department can effortlessly manage employees and employee data within the vast computer system, allowing them to reallocate their energies toward more important overarching goals. The use of an HRIS will reduce data-entry errors, increase the efficiency of business processes, and streamline the activities within the HR department, all creating new opportunities for better analysis of the workforce and thus, improving decision-making among company executives.
Optimizing an HR Management Software system means identifying and investing in the right system to meet your business' unique needs. Whether those needs demand a solution that is on-premise, SaaS, outsourced, niche, or suite, all exist to make your company more effective and more efficient, and all of them, when utilized properly, promise to deliver revolutionary results. So turn the microscope on your business, and examine your cultural, technological, and economical parameters. Once you know what you're looking for, finding the perfect HRIS for your company will be a regular walk in the park.
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