Table of contents
A human resources management system (HRMS) is a digital platform that helps manage the day-to-day tasks required of HR teams. This could include keeping records of time-off requests, managing payroll and benefits, onboarding new employees, and much more.
A reliable HRMS is considered essential at many large companies that have a lot of employees, and a steady stream of incoming and outgoing employees. The capabilities of an HRMS vary from one software platform to another and can even be tailored to the specific needs of an organization.
What can an HRMS do?
An HRMS is the central nervous system of many HR departments. It’s used for record-keeping, task automation, compliance auditing, and more across a wide range of essential HR functions—such as payroll administration, recruiting, and time off management.
Here are some of the key capabilities of an HRMS.
- Recruiting: An HRMS can be used to manage job postings, accept and store candidate applications, track candidates through the interview and hiring process, and make formal offers to top job candidates. It can also be used to collect feedback from candidates about the hiring process, allowing companies to improve their hiring processes over time.
- Onboarding: An HRMS can be used to create onboarding checklists and ensure that new employees complete these checklists. It can also be used as a self-service portal for new employees to complete required online training or to sign employment documents.
- Record-keeping: An HRMS can serve as a central, secure location for storing records such as employment contracts and employee files.
- Employee scheduling: Companies with hourly employees can use an HRMS to schedule employees to shifts and keep track of attendance.
- Leave and time off: An HRMS can coordinate requests and approvals for leave or paid time off, including creating automated approval workflows from employees to supervisors.
- Payroll management: An HRMS can be used to request and store timesheets and integrate them with payroll software.
- Benefits administration: An HRMS can manage aspects of a company’s employee benefits—such as tracking benefit enrollment forms and notifying employees of special enrollment periods.
- Performance evaluations: An HRMS can be used to administer quarterly or annual performance evaluations and securely record responses.
- Self-service portal: An HRMS can also be a tool that’s available to all employees in a company. A self-service portal may enable employees to get copies of their paystubs or tax forms or to access a company’s employee handbook.
- Offboarding: When employees leave a company, an HRMS can be used to manage the offboarding process. This includes ensuring that company property is returned and coordinating an exit interview or outgoing employee survey.
Why Is an HRMS Important?
An HRMS is crucial to the smooth functioning of many HR departments—especially in companies with a lot of employees to manage. An HRMS can be used to automate day-to-day tasks such as tracking timesheets and approvals that could otherwise occupy an HR employee’s entire day.
This frees up HR employees to focus on important strategic objectives such as instituting a company culture change or finding new ways to attract talent to a company in a shifting labor market.
An HRMS can also make a company’s HR tasks more efficient. That’s good for the company’s bottom line because it needs fewer HR employees. It’s also beneficial for employees since they don’t have to wait as long for answers to HR questions and can use self-service portals to do many tasks themselves—such as putting in a request for time off.
In addition, an HRMS can play an important role in compliance with labor laws. An HRMS may provide a compliant way to store sensitive employee records or enable HR administrators to quickly audit a company’s benefits plan to ensure it remains in compliance as laws change.
Finally, an HRMS can make companies more competitive when recruiting talent. This is because it can make the application and interview process more efficient and user-friendly—ensuring that top candidates get seen by a company’s hiring managers.
💡 Pro Tip:
You may want to invest in an employee-self service portal so employees can access their own personal information and make changes on their own, such as their contact information. It also reduces the burden on your HR staff because employees can access the system without needing to ask for help.
HRMS vs. HRIS
An HRMS may also be called a human resources information system (HRIS). This is an older term that dates back to the early days of digitized employee records. HRIS is used synonymously with HRMS today.
How Much Does an HRMS Cost?
The price of an HRMS can vary widely depending on the capabilities a company needs and how many employees they have. Most modern HRMS systems are cloud-based and require an ongoing subscription that can cost anywhere from $5 to $100 or more per employee per month. HRMS systems that include payroll processing can cost $150 to $250 per employee per month.
Keep in mind that HRMS systems provide a return on investment in the long run. They significantly reduce the demand on a company’s HR department and play an important role in recruiting and retaining employees.
An HRMS plays a central role in coordinating a company’s HR department and streamlining processes such as recruiting, payroll, and scheduling. A reliable HRMS is considered critical to the functioning of many large companies. While these systems can be expensive, they can ultimately save companies money by making their HR processes more efficient and helping companies attract and retain talented employees.