HR systems - what are they?

In today’s fast-moving and rapidly changing economy, it’s not necessarily businesses with the most resources that outpace their competition but those that make the most of their resources. To get the most out of what they have, companies need to have systems in place that cover every facet of their business. HR systems, for instance, are used by companies of every size across every business sector. The range of HR processes that HR systems cover includes core HR administration, which aids in organizing essential business and employee information. The use of HR systems enhances productivity and collaboration across the business, making them a vital tool for modern organizations.

Now, considering that every company’s most important resource is its people, perhaps the most important system for a business to get right is its HR system. With modern HR systems, the whole workforce, including job candidates and possibly external suppliers, can interact with the system. Additionally, HR compliance is a critical feature of these systems, supporting organizations in meeting legislative requirements through functionalities like document tracking, e-signatures, and tools for managing grievance and disciplinary events. With that in mind, this post delves into what an HR system is, what they do, and the benefits they offer businesses.

What is an HR system?

An HR system is a tool, or collection of tools, that allows a company’s human resources (HR) department to record, store, process, and report on data related to its staff. These systems help manage, organise, and report on all HR processes and data, making them indispensable for modern businesses. The best human resource management systems (HRMS) are comprehensive platforms that encompass various HR functionalities, such as talent management, ensuring all employee information is centralised and easily accessible. A single online HR database makes HR information easier to manage and use, streamlining operations for HR teams.

HR systems can be non-automated systems, comprised of documents and spreadsheets, or automated systems like dedicated software. A human resources information system (HRIS) is a comprehensive software platform that enables organizations to manage their HR processes and data online. Organisations use different systems according to their specific needs, including their size, structure, industry, etc. Modern HR systems must adapt to fit an organization’s specific processes, ensuring they meet unique business requirements effectively.

HR functions that can typically be conducted through HR systems are:

• Storing employee records

• Maintaining attendance records

• Managing payroll and employee benefits

• Handling holiday requests and tracking annual leave allowances

• Managing the recruitment of new employees

• Onboarding new staff

• Managing staff training needs and tracking professional development

• Monitoring staff satisfaction and levels of engagement

Recognising that their needs as a business have outgrown their HR system is a widespread issue amongst companies of all sizes and in every industry. However, because HR systems are responsible for many core functions within a business, an inadequate HR system is also a common productivity bottleneck for companies. Businesses must also ensure the HR system they choose supports legislative compliance to avoid potential penalties for missing filing deadlines. Data protection legislation requires companies to safeguard employee data, making it essential for HR systems to include robust security measures. Some HR software providers might charge extra for data storage, customer support, or system updates, which should be considered in the selection process.

HR Management System Definition and Importance

A Human Resource Management System (HRMS) is a sophisticated software application designed to streamline and automate various HR processes within an organization. From recruitment and payroll to time and attendance, performance management, and employee data management, an HRMS covers a wide array of HR functions. The importance of an HRMS cannot be overstated; it significantly reduces administrative burdens, allowing HR professionals to focus on strategic initiatives. By centralizing HR processes, an HRMS provides valuable insights into workforce performance and productivity, enabling better decision-making and enhancing overall organizational efficiency.

What are the benefits of an automated HR system?

Depending on its type and the company that utilises it, an automated HR system offers a range of benefits. Here are some of their most significant advantages.

• Time-saving: Without a doubt, the biggest advantage of an HR system is the huge amount of time they save organisations: cutting down the completion time of certain tasks from hours to minutes and others from minutes to seconds. Better still, this frees up HR to undertake other duties that are more valuable to the business

• Accuracy: As well as saving time, automating tasks also makes them less prone to human error

• More secure: As they centralise data and are backed up, automated HR systems are less susceptible to loss or damage

• Decision making: HR systems make it easier to not only access information but to process that data as well. This subsequently makes it easier for management to make decisions dependent upon said data. HR systems save time by automating tedious administrative processes, allowing the HR team to focus on more strategic and value-added activities such as recruitment, training, development, and employee engagement.

Types of HR system

Now, an important thing to note about the term ‘HR system’ is that it can be used to describe a variety of systems that have different uses. Also, while some HR systems are multi-functional solutions, others are standalone software that streamlines a particular business process. There are many factors to consider when selecting a new HR system, including cost, features, scalability, and accessibility. Software as a Service (SaaS) HR systems do not require installation, allowing for easier access and reducing upfront costs. A cloud-based HR system requires no installation; users simply sign up to the service online.

Human capital management solutions provide comprehensive HR software that supports various organizational needs and improves employee experience.

An online HR system securely stores employee records in a centralized digital format, eliminating the need for paper files and facilitating remote working by allowing employees easy access to their personal records and benefits.

Human Resources Management System (HRIS)

An HRIS helps a company collect, organize and manage data related to its employees. As well as record keeping, it’s used to assist HR with a variety of employee management tasks such as recruiting and subsequently tracking applicants, the onboarding of new employees, managing attendance and payroll, and handling annual leave requests. Systems should have a single source of truth for HR data to help maintain efficiency and streamline processes.

As well as HRIS, there’s also Human Capital Management (HCM) software or Human Resources Management Systems (HRMS) software. A human resources management system is a comprehensive business information system that aids in managing, organizing, and reporting on various HR processes and data. Both of these HR systems offer similar functionality to HRIS software and you’ll tend to find all three terms used interchangeably. However, some HCM software allows for greater emphasis on employee efficiency and satisfaction and feature performance management and employee engagement software as a result.

Attendance management software

Used to track the attendance of your employees, which may include clocking in and out.  

Payroll software

Used to manage staff remuneration. Because attendance and compensation are so inextricably linked, payroll is often combined with attendance management software. 

Absence management software

Also commonly referred to as a staff holiday planner, this software is used to administer and track your employee’s annual leave, as well as other types of absence including sick days and maternity leave.  

Applicant tracking systems (ATS)

Used to help to organise candidates during the recruitment process. This includes posting job openings on multiple sites concurrently, processing and sorting through applications, storing applicant data, and tracking communication with applicants.  

Onboarding software

Used to streamline the onboarding process when new employees join your company and ensuring they’re compliant with your industry regulations. This includes collecting essential employee data, educating them with your business processes, and introducing them to your company culture. Employees can manage their own HR-related administration through self-service features offered by HR systems, making the onboarding process more efficient.

Performance management software

Designed to evaluate your staff’s performance and skills, set goals for improvement, and subsequently track the progress of those goals and each employee’s growth. 

Employee engagement software

Designed to stimulate employees in an effort to increase motivation, job satisfaction and productivity. Software that encourages and records employee feedback, through surveys, etc., is often categorised as employee engagement software. Modern HR management systems can be an invaluable tool for employee engagement, helping to foster a more motivated and satisfied workforce. HR systems help improve employee engagement by tracking performance and identifying training opportunities. Cloud-based HR systems enable remote and hybrid working, allowing essential HR processes to run regardless of employee location.

ScheduleLeave is absence management software that streamlines requesting, booking, approving, and tracking your staff’s annual leave. Employees can check the availability of their desired dates before requesting time off and you can then approve or deny them with a few clicks. Not all HR systems require large upfront costs; the cost is typically spread over low monthly subscription payments in cloud solutions. To discover how much time ScheduleLeave can save your company, book your free trial today

Key Features of HR Systems

A comprehensive HR system should include the following key features:

• Employee Data Management: A centralized database to store and manage employee information, including personal details, job history, and performance records. This ensures that all employee data is easily accessible and up-to-date.

• Recruitment and Onboarding: Tools to manage the entire recruitment process, from job postings and applicant tracking to onboarding workflows. This streamlines the hiring process and ensures a smooth transition for new hires.

• Payroll and Benefits Administration: Automated payroll processing, benefits management, and compliance reporting. This reduces errors and ensures that employees are compensated accurately and on time.

• Time and Attendance Management: Tools to track employee work hours, manage time-off requests, and automate attendance tracking. This helps in maintaining accurate records and managing workforce schedules efficiently.

• Performance Management: Features to manage employee performance, including goal setting, performance evaluations, and development planning. This fosters a culture of continuous improvement and professional growth.

• Reporting and Analytics: Real-time reporting and analytics to provide insights into workforce performance, productivity, and compliance. This enables data-driven decision-making and strategic planning.

Choosing the Best HR System for Your Business

When choosing an HR system, consider the following factors to ensure it meets your organization’s needs:

• Scalability: The system should be able to grow with your organization and adapt to changing HR needs. This ensures long-term usability and investment protection.

• Customization: The system should be customizable to meet your organization’s specific HR processes and requirements. This allows for a tailored solution that fits your unique business model.

• Integration: The system should integrate seamlessly with other business applications, such as payroll and accounting software. This ensures smooth data flow and reduces the need for manual data entry.

• User Experience: The system should be user-friendly and accessible to all employees, including those with limited technical expertise. A good user experience encourages adoption and maximizes the system’s benefits.

• Cost: The system should be cost-effective and provide a return on investment. Consider both upfront costs and ongoing expenses to ensure the system fits within your budget.

HR Data Management and Security

HR data management and security are critical components of an HR system. To protect sensitive employee data and ensure compliance, the system should include the following features:

• Data Encryption: To protect sensitive employee data from unauthorized access, ensuring that all information is securely stored and transmitted.

• Access Controls: To ensure that only authorized personnel have access to employee data, safeguarding against internal and external threats.

• Data Backup and Recovery: To ensure that employee data is safe in the event of a system failure or data loss, providing peace of mind and business continuity.

• Compliance Reporting: To ensure that the organization is compliant with relevant labor laws and regulations, reducing the risk of legal issues and penalties.

By incorporating these features, an HR system can effectively manage and secure employee data, supporting the overall integrity and efficiency of HR processes.