If you haven’t caught up on our post discussing the differences between an HRIS and an HCM - now is a good time to head on over and read it before digging into this content. It’s possible you have not heard of an HCM, so our blog post would be a good place to start especially since you are probably evaluating and researching all your options if you are reading this article. To recap, an HRIS is a human resources information system software, in other words, it is software that is used as a tool to manage people, policies and procedures. An HRIS is the “basic” solution when looking for this type of software - and we use the term “basic” loosely, because there is a lot that is jam-packed into these applications.
Essentially when the market first erupted with these software solutions, many different acronyms were developed with the ever-changing software. Oftentimes, it’s normal to find a software provider that uses any of the acronyms synonymously, when in fact their software doesn’t have the core functionality that would differentiate it from one solution or another.
The way that we look at human resources software is in tiers, with HRIS at the lowest tier. Don’t let the lowest tier fool you, an HRIS has robust functionality and features that ensure it is one of the most sought after platforms, especially for small to medium-sized businesses. HRISs are mostly used within the United States as they were initially made for companies that employed U.S. citizens, if you are looking for a global solution - an HCM or HRMS is a better bet. A standard HRIS typically comes with this functionality:
Recruiting and application tracking system, core HR, benefit administration, absence management, compensation, training, workflow, a self-service component and reporting capabilities.
Oftentimes, this functionality is all a company needs at the time of adoption. When we discuss an HCM (human capital management), we are talking about all the functionality of an HRIS with an added component of Talent Management (which includes onboarding, performance management, position control, succession, salary planning and analytics). But now onto an HRMS (human resources management system) - this system typically embodies everything that goes into an HRIS and an HCM, and adds payroll, time and labor.
It’s standard to see that a company has payroll, time and labor already sorted out within another system - but worth adopting an HRMS if you are looking for a total redo of all associated softwares within one large system to handle all the day to day processes within the human resources department.
While there is some controversy in the Human Resources world about the exact definitions of each of these systems, especially since human resources technology space is rapidly changing, growing and shifting as new technology emerges and the importance of the technology is recognized. It’s important to develop some sort of baseline guide for these different acronyms to begin setting standards, but in the meantime, as you are shopping around for different software alternatives - it is important to ask as many questions about the functionality that you need and want in a software for it to be a viable option for your company.
Check out this article if you are looking for more information on the subject.