What Is a Human Resources Information System (HRIS)?

What is an HRIS?

An HRIS is an HR software solution that stores and analyzes employee data for end-to-end HRM. This data is used daily for HR tasks, including employee recruitment, payroll processing, accounting and performance management. 

“In essence, [an HRIS] provides some structure to the administrative burden so it can reduce the workload,” explained Richard des Moulins, founder and CEO of ROCKCREST, an HRIS consulting and staffing firm. “It’s putting all the data in one spot so that you can simplify all the different tasks that you’ve got to do.”

HRIS vs. HRMS vs. HCMS

HR software is often categorized as HRIS, HRMS or HCMS. Although these terms are often used interchangeably, they have distinct meanings. According to des Moulins, an HRIS focuses on managing employee data, an HRMS adds workforce operations solutions and an HCMS provides the most comprehensive workforce management features.

Here’s a quick overview: 

• HRIS: An HRIS primarily focuses on storing and managing employee data. It will typically handle core HR functions like payroll, benefits administration and compliance tracking.
• HRMS or HRM system: This type of HR system can handle everything an HRIS offers but also provides additional HR functions, such as talent management, employee self-service and performance tracking.
• Human capital management system (HCMS) or HCM system: An HCM system is a more advanced system that incorporates workforce planning, employee engagement and talent development features.

Kenny Latimer, director of product marketing at BambooHR, noted that these terms aren’t always used consistently across the industry. Solutions can vary and the names can sometimes be used interchangeably. However, in general:

• An HRIS provides the foundation for managing and organizing employee data.
• An HRMS builds on an HRIS by adding workforce management features.
• An HCMS includes HRMS functions but extends into strategic workforce planning and employee engagement.

“Generally, with an HRIS, you’re starting with some of the core features and solutions that allow for you to track and organize and manage that employee data,” Latimer explained. “Then HCMs start to get into complicated workforce management type solutions that allow for you to do much more beyond that once you’ve built a foundation of managing that employee data.”

Company size can also influence which system a business chooses. Smaller businesses often use an HRIS while larger companies with more complex workforce needs may opt for an HRMS or HCMS. However, this isn’t a strict rule.

“An HCM is more like an all-in-one system,” des Moulins noted. “So, it could be that it’s for a larger system, but it could be that it’s for a small company of 50 people and you want a system that does everything for you.”

How does an HRIS work?

An HRIS is usually cloud-based, meaning the software is managed outside the organization, allowing employees to access it easily. These systems run on employee data generated by HR personnel and organize this information into in-depth HR reports. Other data, such as time-off requests and benefits, is also automated through an HRIS, making these tasks easier for HR personnel to manage.

“The most impactful tools are those which save time, drive efficiency and maximize productivity for the employee and the organization overall,” explained Stephen Kohler, CEO and founder of Audira Labs. “In today’s context, this means cloud-based, self-service platforms that allow the employee to access, monitor and update data quickly and easily, including app-based access.”

What are the benefits of an HRIS?

An HRIS brings numerous benefits to your business, including the following.

Streamlined recordkeeping and easy data access

An HRIS’s search functions make finding data effortless. Since an HRIS is essentially a recordkeeping system, it tracks all data changes, allowing HR departments to access the most up-to-date employee information for personnel management.

Less administrative work, more focus on growth

David Lewis, national managing director of HR consulting at Gallagher, emphasized that an HRIS helps business owners run their companies more efficiently by alleviating administrative burdens.

“For a small business, everything always should be … focused on one thing and one thing only — and that’s the core product or service that you’re delivering and ensuring that you’re able to do what you need to in order to be a profitable, successful entity,” Lewis said. “Stuff related to employment should not be a hindrance to that.”

Stronger compliance and reduced legal risks 

Securely stored HRIS data can help with HR compliance situations like the following: 

• Managers can access crucial data in cases of potential employee misconduct, negligence within the company and theft or fraud. 
• Data can be used to recertify employees or the company when certifications expire.
• Businesses can access stored employee citizenship, payroll and accounting data in the event of an audit. 

Lewis stressed the importance of using HRIS data to maintain legal compliance. “You may not know the local laws in place that have a direct impact on your employees and you may wind up breaking the law or violating it if you’re not careful,” Lewis cautioned. “That can be extremely expensive and disruptive to a business.” 

Automated workflows for increased efficiency

HR departments without an HRIS may spend excessive time filing paperwork or searching for information in countless folders. An HRIS efficiently stores all the information needed in one place.

“You’re able to go from using manual methods that are inefficient to being much more efficient with these automated methods,” Latimer explained. “You’re able to accomplish things much faster and you’re going to do them in an automated way instead of moving slower.”

Better data insights for smarter business decisions 

An HRIS allows HR personnel to track data that contributes to departmental and company-wide decision-making, creating in-depth reports and strategies across departments. By analyzing workforce trends, turnover rates and productivity metrics, businesses can make data-driven decisions that improve operations and employee satisfaction.

What functions can an HRIS handle?

HRIS systems and software packages can assist with various HR tasks. When choosing an HRIS, ensure it has the modules you need to address your most pressing HR requirements. Here are some typical HRIS functions.

Applicant tracking system (ATS)

An ATS handles an HR department’s recruiting needs. It tracks potential candidates and matches their resumes against job descriptions and postings on job boards. It also helps recruiters smoothly move candidates through the hiring process.

Payroll

HRIS systems can assist with and automate the process of running payroll. They create payment orders as start dates and other employee changes are updated within the system. This module pulls data from other HRIS functions, including time and attendance and employee status, to determine correct payment amounts. (Check out our review of Gusto to learn about an excellent HR solution with payroll functionality.)

Benefits administration

HRIS systems with efficient user interfaces can help employees manage their employee benefits. They allow employees to schedule time off for vacation or parental leave or sign up for specific benefits when they become eligible. (Visit our review of ADP to learn more about a comprehensive HR solution with particularly good benefits administration capabilities.)

Performance management

Managers can track employee progress through performance management software. This HRIS module provides templates for performance check-ins and guides for creating a standardized rating system.

Time and attendance

Some HRIS software packages integrate with time and attendance modules to track employee hours. For shift workers, this system ensures management can monitor scheduled vs. actual hours worked. If an employee is late or absent, the system can send an alert to the manager.

Training and development

Growing your employees is crucial to develop your company. Many HRIS systems have training modules that track skills, certifications and other professional development activities. Monitoring and encouraging employee growth can also help attract top talent.

Reporting and analytics

Some HRIS systems include a reporting and analytics module that provides in-depth analysis of “transactions,” such as hiring a new employee, employment status changes, employee absenteeism or tardiness and more. The system can analyze this data and provide reports on things like employee turnover rate and employee performance that help HR personnel spot patterns and form solutions.

Pertinent reports for HR personnel can include the following:

• Employee satisfaction in relation to turnover rates
• Hiring costs according to recruitment data
• Performance rating averages by department
• Employee compensation in relation to cost of absence and labor

However, not all HRIS systems can create comprehensive reports. If data is pulled from multiple sources, such as time and attendance software vs. performance management software, it may not sync properly, making it challenging to report possible correlations accurately. If HR reporting functionality is a top priority for your HRIS, ensure the solutions you consider offer reporting and analytics features. Check out our review of Paycor to learn about an HR solution with comprehensive reporting features.

Employee self-service

Many HRIS systems offer employee self-service modules that allow your team to take charge of their HR tasks, including tracking time, requesting time off and viewing benefits. “The employee can log in and update their details — their address if they’ve moved or their availability, like they might be on vacation or sick leave,” des Moulins explained. “And they can do all of that through the system, so HR doesn’t have to.”

However, a user-friendly HRIS is essential to ensure employees can take advantage of these features. Visit our Paychex review to learn about this solution’s self-service capabilities, which are especially helpful for remote and hybrid teams needing flexibility.

How do you implement an HRIS?

Here are the most important steps to take when implementing an HRIS.

Research potential HRIS options.

Your first — and arguably most crucial — step in implementing an HRIS is finding the right software. Many excellent HR solutions are available, each with unique pros and cons. To get the best results, identify your budget and prioritize the features your organization needs. Then, search for a solution that aligns with those requirements. Be sure to consider any additional features you may need as your business grows.

Take advantage of product demos and free trials.

An HRIS plays an integral role in your organization’s success, so it’s essential to choose one that your employees will actively use. After narrowing your search to a few promising HR vendors, arrange software demos to see the platform in action. Some HR solutions also offer free trials, allowing you to test the platform independently before making a commitment.

Set up the software and create your account.

Once you’ve chosen an HRIS that fits your needs and budget, you’ll go through the setup process and establish your account. Implementation varies by vendor — some companies offer guided setup support, while others provide step-by-step prompts for users. Research your vendor’s help resources, including online knowledge bases you can consult during setup.

Migrate your data and explore its features.

Once your HRIS account is set up, take time to familiarize yourself with its features and migrate your company’s data into the system. Be sure to adapt to the HRIS’s specific processes so you can effectively communicate these changes to your employees. Some vendors offer support during data migration, while others rely on self-service tools.

Focus on adoption.

Ensure that both employees and leadership are familiar with the new system. It’s crucial to train everyone on the specific functions they’ll need to perform their roles effectively. Adoption is easiest if you’ve selected a user-friendly HRIS. When used properly, the system’s analytics and reports can benefit employees and management alike.

Lean on the vendor.

Your HRIS vendor is a valuable resource as you learn how to best tailor the system to your organization’s needs. A good vendor will offer customer support for troubleshooting and provide training opportunities to help you maximize the system’s features.

Stay up to date.

Many modern HRIS providers update their software continuously to enhance functionality and provide more value to your business. To take full advantage of new features, ensure your system is updated regularly and on time.

Erin Donaghue contributed to this article.