The modern HR department is full of technology. Organisations have adopted multiple software solutions. These solutions provide plenty of benefits in terms of cutting costs and improving efficiencies. But navigating the world of HR technology systems can be difficult.

If your organisation is considering the use of HR technology, it’s important to know your business needs and what these different options are meant to do. The software space is full of acronyms, out of which three of the most commonly used are:

  • Human Resource Information System (HRIS)

  • Human Capital Management (HCM)

  • Human Resource Management System (HRMS)

These systems are associated with key HR functions such as payroll and talent management. While many can sometimes be used interchangeably, causing a bit of confusion in the process, there are certain differences between all of them.

Each organisation has to always consider their HR needs from two perspectives and knowing how the different options affect these two issues is important. A good HR software is both able to meet the needs of the organisation and consider what the organisation wants.

Here’s what you should know about each of these software solutions.

Human Resource Information System (HRIS)
 

Human Resource Information System software is used by HR departments to manage people but also policies and procedures. The most common functions of this type of software are:

  • Recruiting procedures

  • Benefit administration

  • Management of employee absence

  • Management of employee compensation

  • Training employees

  • Tracking workflow

  • Provision of self-service solutions

  • Reporting for both employees and HR staff

Many popular Human Resource Information System solutions are currently aimed at the US market, although local solutions are available in different regions.

Human Capital Management (HCM)
 

On the other hand, HCM adds to the functionalities, especially in terms of global use. For example, global software adds options for the use of different languages, currencies, and country-specific formatting. These options are more prevalent than in HRIS software.

When software calls itself Human Capital Management software, it also adds a few other functionalities to its core. In addition to the functions already mentioned in the case of HRIS, Human Capital Management software also offers:

  • Onboarding solutions

  • Performance control and management

  • Position control and succession planning

  • Salary planning tools

  • Analytics functionalities

In that sense, HCM software can add a deeper layer to an organisation’s HR management. The big benefit of HCM is often the policy delivery advice and especially procedural guidance. This can be valuable for small and medium-sized enterprises because it allows access to HR information that can be costly.

Human Resource Management System (HRMS)
 

In terms of enhancing the functionalities even further, HRMS software takes a step forward. The software solutions that are categorised under this umbrella term tend to cover both the elements of HCM and HRIS. But Human Resource Management software also adds a few more functionalities. These are:

  • Payroll management

  • Time and labour controls

Human Resource Management System often provides the most comprehensive cover. Because it has a strong global presence, it’s easy to find options whether your organisation is small and local or big and global.

HRMS can have to most fluidity in what software offers – because the term covers so many functions, it can be hard for vendors to provide the same level of functions. It’s crucial to vet HRMS vendors carefully to ensure your organisation knows exactly what it’s getting.

Finding the right software solution
 

Now, vendors don’t necessarily provide all the functionalities listed with their software. For instance, good Human Resource Management System software can be built around payroll and employee absence management. It could also include succession planning and so on. Therefore, the key to finding the right solutions depends on the organisation’s needs and the benefits it’s looking for.

So, the key to knowing if your organisation should adopt HRMS or HRIS software depends largely on what you need. The truth is that the acronyms are not always perfectly used – meaning that one vendor calling itself HCM might provide functions similar to HRMS software. For organisations, this means that focusing purely on the label won’t help.

When it comes to finding the right software for HR needs, knowing the terms will help. However, you should simply start by identifying your needs and starting your research after this. It will help you narrow your focus and stop wasting time on unnecessary points.

Published by Peter Garlow