What Is an HRIS? How IT and HR Are Evolving Together

In the new world of work, data is everything. Whether your focus is human capital management, performance management, or employee experience, employee data has become a decisive factor in determining the success of organizational outcomes. That’s why finding the right human resources information system, or HRIS, is increasingly critical for businesses.

According to this Human Resource Executive survey of 500 human resources (HR) professionals, respondents think that the most important workforce/HR technology they use is their HRIS (44%). That places it above even core HR technology, such as payroll, time, and attendance (42%). But what is an HRIS, and why are HR solutions so top of mind for businesses?

What Is a Human Resources Information System?

A human resources information system primarily functions as a central database for many of the administrative responsibilities of HR. That includes absence management, benefits administration, and compensation management. An HRIS integrates various HR functions into a single system design to easily collect data and share it between departments.

In some instances, you may see an HRIS referred to as an “HRIS system.” Much like saying ATM machine (ATM = automated teller machine), saying HRIS system is redundant. However, it does help clarify the intended meaning of the acronym, especially when referring to HRIS systems in the plural.

What Are Examples of an HRIS?

Deciding what HRIS is right for your organization can be a complicated process. In fact, the “Software Path 2022 HRIS Report” found that, on average, companies spend 15 weeks choosing an HRIS. Even with good workplace communication, it can be hard to make significant software decisions precisely and efficiently.

It’s important to know the business needs your HRIS is intended to meet. Furthermore, you need to ensure that your HR and IT teams are working in conjunction to make that decision. Here are a few examples of the functions an HRIS can fill.

• Operational HRIS systems: An operational HRIS gathers foundational human resources data, such as employee demographics, appraisal metrics, and job position details. It helps reduce the time for routine HR tasks while empowering managers to more confidently hire, appraise, and promote team members.

• Strategic HRIS systems: A strategic HRIS primarily provides oversight on labor resources to support workforce planning and strategy. This includes data such as available workforce, skills, and the option to compare and contrast this employee information with long-term company goals, enabling businesses to expand or transform confidently. 

• Tactical HRIS systems: A tactical HRIS system informs decision-makers how to most effectively allocate resources and budget. By comparing competitor data, existing compensation plans, and local legal requirements, people leaders can more readily make macro-level decisions.

Comprehensive HRIS systems: Where each HRIS system above has a specific focus, a comprehensive HRIS streamlines those functions into a single system design. An all-in-one HRIS platform is preferred by enterprise companies, where the financial cost is justified by the time saved.

What Is the Difference Between HRIS, HCM, and HRMS?

According to Productiv’s eBook “The State of SaaS Sprawl,” the average company now uses 254 SaaS applications, with that number leaping to 364 for large enterprises. Understanding the distinctions between different HR solutions can save your company precious time and money. Additionally, it can help ensure that the functionalities of your existing solutions don’t overlap.

Since the terms HRIS, human resources management system (HRMS), and human capital management system (HCM) all refer to human resources software, they’re often used interchangeably. HCM can also refer to the HR tech category more broadly. However, each HR system varies in its capabilities:

• HR information system (HRIS): An HRIS is a solution that collects and stores employee data. It compiles information on employee demographics, job status, contact information, compensation, and other areas.

• HR management system (HRMS): An HRMS expands on the data management tools of an HRIS to include a wider range of software and utility. The term originated in the early 21st century to describe HR software suites covering payroll, applicant tracking, benefits, and talent management.

• Human capital management (HCM): HCM systems encompass the functionality of HRIS and HRMS systems while supporting a wider breadth of HR functions, including employee experience and analytics. HCM largely refers to HR suites designed with cloud computing at the core, ensuring they remain adaptive. 

Despite the distinctions outlined above, the terms HRIS, HRMS, and HCM software are still used inconsistently, which can make evaluating HR solutions difficult. At Workday, we use the term HCM to describe our core HR suite that encompasses human resources management (HRM), employee experience, workforce management, and so on.

The 6 Components of HR Information Systems 

The Sapient Insights Group 2022-2023 HR Systems Survey White Paper found a 12% increase in positive business outcomes when a company had an HR systems strategy versus when it did not. An essential part of that systems strategy is understanding each solution your HR and IT teams use. Here are the six components all HRIS platforms should have.

1. Database Management

The main function of HRIS software is acting as a central database for employee data. Your chosen HRIS should make it easy for your team to input, manage, and share human resources information. Likewise, a robust HRIS should enable HR professionals to quickly surface analytics to make business critical decisions. 

But it’s a mistake to view your HRIS solution as a vault that’s only accessed by HR and IT specialists. It should be as easy for an employee to access their own data as it is for your HR professionals. By enabling employee access to your HRIS, not only do you increase agency, you also increase trust and reduce burnout risk. 

2. Scheduling and Labor Optimization

Any labor optimization initiative should first consider the most valuable resource a company has: employee time. You can’t increase productivity without first understanding what projects your employees are working on and when. Simple clock-in-and-out software that connects to your HRIS promotes accurate time sheets and efficient scheduling.

An HRIS also makes it easy for managers to monitor employee attendance across different functions. Since workforce management tools are directly connected to other HR functions such as payroll, manager actions automatically transfer to other databases. For example, leave requests are immediately reflected in employee pay.

3. Payroll and Workforce Management

Payroll and workforce management have historically been some of the most time-consuming aspects of an HR department’s workload. However, an HRIS dramatically reduces the time required to manage employee compensation, automating HR processes and automatically reflecting changes brought on by adjustments to salaries or tax codes.

Intelligent payroll software can also provide analytics and insights that would otherwise be missed. Companies can identify the impact of changes to compensation, factoring in employee satisfaction and the wider market. Predicting the outcomes of financial decisions is essential in today’s ever-changing economic landscape.

4. Talent Acquisition and Retention

One of the biggest challenges facing businesses is managing talent. A recent Workday report found that 27% of employees were at risk of leaving their jobs. As we face another period of uncertainty, it’s important that businesses have the right tools for talent acquisition and retention. 

An HRIS makes hiring easier by enabling businesses to keep track of the right people for the right roles. It also helps promote a stronger onboarding experience, ensuring consistency across the board in terms of training while adapting to individual employee needs. 

5. Employee Interface

When we talk about the future of HR, we often talk about manager and employee self-service. The benefit of an HRIS is that it streamlines HR requests into one platform. Employees can use one solution to view job role information, perform basic time and expense tracking, and update personal information. That makes an HRIS an essential part of modern HR service delivery. 

When considering which HR tool is best for your company, it’s worth evaluating how user-friendly the interface is. Employees increasingly expect workplace technology to have the same level of sophistication as their personal smart devices. Providing a user-friendly interface for your HR information solution can be a quick way to increase employee engagement. 

6. Benefits Management

One of the most dramatic changes to employee experience over the past decade has been employee expectations, especially around benefits. Where once employees only negotiated based on salary and paid time off, now far more options are included. Benefits can range in scale from snacks to volunteering days to private healthcare.

With an HRIS, you gain full visibility over each of those benefits, including which employees have opted in. The HRIS itself can also act as a value add for employees. An employee should be able to view their compensation package with the same ease that they request time off.

What Is the Future of HRIS Systems?

When we look to the future of HRIS, we have to do so within a framework of collaboration. Businesses that silo software decisions to IT or HR will find it difficult to gain buy-in across the C-suite. Worse, they’ll lack a coherent long-term strategy for their HR systems and solutions. 

As businesses look to HR leaders to inform workforce decisions, HR roles are evolving to become more strategic. Despite that, the Sapient Insights Group 2022-2023 HR Systems Survey White Paper saw a 33% drop in survey respondents with over 10 years of experience in the HR technology field. Avoiding further turnover, especially from experienced employees, is critical. 

For businesses to succeed, they need to invest in their people. Your HRIS has to be able to provide real-time data and analysis to inform business decisions. But without the right strategists in place, those analytics are worthless. Only by empowering your people can you ensure that you’re unlocking the true value of your HR solutions.