What is a human resource information system?
A human resource information system (HRIS) is a software solution used to collect, process, store and manage employee data and forms, payroll and benefits, timekeeping and other relevant information in a central location. Using an HRIS can cut down on the amount of time spent on manual administrative tasks, allowing HR teams to focus on more impactful initiatives, like developing and executing the right recruiting strategies to hire the most qualified talent for your open roles.
While features of HRIS solutions vary, basic features include the ability to manage:
- Employee data
- Scheduling and timekeeping
- Recruitment and retention
- Employee training and performance
Pros and cons of HRIS
Some of the main benefits of using an HRIS are:
- Less paperwork: Gathering and storing data in an HRIS means there’s less of a need to fill out paper forms and documents as this information is stored digitally versus in a physical format.
- Better organization: Using an HRIS means important data is collected and stored in one central place, and can be easily searched for. HR employees no longer have to manually search through filing cabinets and documents. Rather, the data they’re looking for is generally available in a matter of seconds with a simple search.
- Easier compliance: Organizations must often adapt to various compliance requirements set out by regulatory agencies. Most HRIS are regularly updated by their creators to be fully compliant with the laws and regulations within the area or country your company operates in.
- Improved HR efficiency: With operations that used to be time-consuming now being done in a matter of seconds, HR representatives using an HRIS solution are able to focus on ways to improve the business — rather than spending too much time on repetitive tasks. For example, they can now dedicate their work hours to finding ways of improving company culture, boosting productivity or increasing employee retention rate.
Some disadvantages of implementing an HRIS are:
- Data security: The data stored in an HRIS is generally safe and secure. Even so, a data breach can still occur, which would put confidential company and employee information in the wrong hands.
- Over reliance on statistics: HRIS typically tracks all employee-related information, and can generate meaningful short-, medium- and long-term statistics. However, these numbers are not always the best way of evaluating an employee, as certain aspects of their work can be observed only through direct interaction.
- Cost of installation and training: Such software systems can be costly and challenging to install and run. Expenses for installation, training HR representatives on how to use it and further consulting on various issues can be a significant financial burden for a small or medium-sized company. Despite the potential long-term benefits, an HRIS can be challenging to sustain as a short-term investment.
The cost of HRIS
For many companies, price is an important factor when implementing a new tool or software solution. After all, it’s a good idea to make sure the benefits of using a new solution — in this case, an HRIS — outweighs the costs that come along with it.
The cost of a human resource information system generally depends on the nature of your company and the number of employees. For example, monthly fees can vary from just a few dollars per month to several thousand per year for large companies. The main expenses of an HRIS are:
- Cost of the actual HR software: This fee is usually per month and per employee, so the monthly fees are directly proportional to the number of employees.
- Setup fees: Some HRIS require an initial setup fee. While some software comes with free setup and installation, other systems can cost up to thousands of dollars every year for setup and maintenance.
- Consulting fees: Similar to setup fees, consulting fees are sometimes free. Or, they might be charged on an hourly basis. Companies may need consulting when trying to implement various features.
- Support fees: Software support fees allow users to benefit from regular customer support, as well as updates and releases from the developer.
Is an HRIS right for your company?
A simple way to determine if you’re ready to invest in an HRIS is by taking into account how many workers your company employs. Some HRIS solutions recommend using a human resource management information system when a company reaches 25 employees. At this point, it becomes more difficult for businesses to both manage all HR aspects with accuracy and maintain meaningful employee-employer relationships.
When choosing the right HRIS, you’ll also want to consider the current and future needs of your company. This is because as your company grows, the system that might work best now may become inefficient or ineffective later down the road. For example, how many employees do you plan on hiring within the next year? Five years?
A few other questions you might want to ask are:
- What are your current challenges that an HRIS could solve?
- Are you missing out on hiring great candidates?
- What kind of data-driven decisions do you want to make, and can an HRIS give you the data and insights you need?
Something else you’ll want to think about: Before committing to an HRIS, find out the level of training and ongoing support the software developer offers. Choosing a human resource information system is a long-term decision, so you may want to make sure that the contract between your organization and the software maker includes clear specifications on post-purchase training and follow up. This will help your HR staff know how to efficiently use the system — both now and in the future.
Human resource management information systems FAQs
What should I look for in an HRIS?
The most commonly used criteria when selecting an HRIS are:
- Requirements of the organization
- Price when compared to competitor products
- Functionality and how in-depth the reporting is
- Ease of use to create statistics based on recorded metrics
- Reputation of the software vendor
- Financial cost and time spent with operating the software throughout its life cycle
- Level of data security it can provide
- Post-sale support provided
How do I use the HRIS once I select it?
After selecting the HRIS you think is right for your company, it’s recommended that you take full advantage of its features by loading all of your company’s HR data into the system and making sure both employees and executives immediately start using it. The employees responsible for implementing the system should continually communicate with the software vendor to ensure it’s implemented in the most efficient way for your particular needs.