Sustainable business growth sprouts from consistent and streamlined business processes. To support business growth, business leaders must focus on strategic initiatives rather than time-consuming, mundane tasks. Repetitive and everyday tasks are part of almost all business functions.
The HR function, for example, comprises employee onboarding, employee information management, and human capital management systems. As business operations scale up, the need for more robust HRMS software also grows proportionally. This blog focuses on the what, why, when, and how of HRMS systems.
Understanding Various HR Processes
An organization’s HR department formulates strategies aligned with the overall organizational goal. Apart from the Finance function, which is the lifeblood of an organization, the HRM function plays a crucial role in ensuring that the organizational policies and procedures are implemented and any employee grievance is taken care of.
The foundation of these strategies lies in the meticulous design of HR processes. Managing human resources efficiently provides several benefits for the business. Using manual methods to manage human resources results in a waste of time and effort on basic and repetitive tasks. Automating various HR processes allows HR teams to focus more on value-adding activities.
The HR function is primarily divided into 4 types of processes:
1. Human Resource planning
Includes recruitment, selection, hiring, training, orientation, evaluation, promotion, and layoff. HR planning is the process of people forecasting, evaluation, promotion, and layoffs. Recruitment aims at attracting applicants that match certain job criteria.
The selection process is the next level of filtration where candidates that are the nearest match in terms of experience, qualification, and performance potential are shortlisted. The hiring process decides the candidate that is the right fit for the job. Training and development processes work on an onboarded employee for his skills and abilities upgrade.
2. Employee remuneration
Includes designing compensation for employees and administering various benefits according to the role. The process of employee remuneration and benefits administration involves deciding upon the salaries and wages, incentives, fringe benefits, and perquisites of employees. Employees who perform well seek raises in salaries and bonuses. The HR department needs to consider the performance of employees while deciding on their salaries and incentives.
3. Performance management
Includes evaluation of employee performance appraisal by team managers and the HR team. The performance management process aims at helping the organization train, motivate, and reward workers. This process ensures that employee performance is aligned with the overall organizational goal. The process begins at the employee level and moves up to the department, product, service, or customer process level, all the while aiming at enhancing or adding value to the process.
4. Employee relations
Includes managing day-to-day interactions between employees and between employees and the organization. Organizations that are competitive in nature are often at risk of losing employees to competitor firms. Although, there may be a myriad of reasons why an employee may stick to or leave an organization, maintaining good employee relations has a direct impact on employee retention.
The HR department needs to constantly review employee relations to ensure that any dissatisfaction does not go unattended. Creating and maintaining an inclusive work environment, maintaining a good quality of work life, organizing employee wellness and assistance programs, and managing employee conflicts effectively are part of maintaining good employee relations.
The efficient designing of these processes depends on the degree of correspondence of each of these. All these processes are essential to the survival and success of HR strategies and no single process can work in isolation. A high level of conformity and cohesiveness between HR processes is essential for smooth business operations and sustainable business growth.
What is HRMS?
It is clear from the above discussion that productive business operations and sustainable business growth stem from a high level of conformity and cohesiveness between various HR processes. How do you ensure that your HR processes are in sync and moving towards the larger organizational goal? Human Resource Management System (HRMS) is the answer.
What is HR software?
A human resource management system software refers to a suite of software that organizations use to manage their internal HR functions. HRMS systems can be used for almost all HR tasks like payroll and benefits management, recruitment, training, talent management, employee engagement, and employee attendance.
HR professionals can use HRMS system software to manage the modern workforce efficiently and effectively. HRMS systems can make information on the most valuable assets (human resources) available to people who need them. HRMS software combines systems and processes for connecting HR management with information technology.
The primary users of HRMS software are HR leaders and staff. Business analysis can also use HRMS to generate workforce data that can be used for the analysis of workforce trends and their business implications. Integrating HRMS systems with accounting systems can be very useful for finance and accounting professionals to track employee-related spending and derive financial insights from HR data.
The main aim of HRMS is to enhance the performance of employees so that they accomplish the overall business goals. The choice of HRMS is based on the needs of the organization. You could either choose a simple HRMS system that helps manage day-to-day administrative tasks or a comprehensive HRMS that addresses strategic areas of HR management like Performance management, Recruitment, and Training and Development.
Why do you Need an HRMS?
The popular conception that the HR function plays a reactive role by attending to grievances has changed to that of being a more proactive and preemptive function that anticipates crisis and prepares for it in advance. As the role of the HR function becomes more critical in an organization, it increases the need for a streamlined and standardized system to manage all the HR processes.
HR executives are often overstretched with multiple roles and responsibilities to fulfil. HRMS software can greatly simplify their day-to-day work so that they can focus on strategic and value-added tasks. Why do you need an HRMS system?
Here is why –
1. Stores critical employee information
HRMS software facilitates the safe and secure storage of critical employee data. HR professionals can easily process employee information on the hr ticket system without wasting time on tedious paperwork. Employee data can be accessed as and when required via the HRMS system.
Record keeping is a breeze when you have an HRMS system because paperwork and other record-keeping activities like employment history, education qualification, training certification, and personal identification proof are automated. HRMS also speeds up the documentation process for new hires, which speeds up the hiring and onboarding process.
2. Improves effectiveness of organization –
The company’s organizational effectiveness can be greatly improved with an HRMS solution. HRMS solutions are self-reliant systems that enable consistent management of various HR activities. HR solutions promote transparency and improve employee engagement within the company.
3. Improves employee self-service –
Employees have many queries and doubts for which they seek immediate and detailed answers. HR executives are not always in a position to answer each query of employees, especially when there are 100s of employees. HRMS systems step in to provide better self-service opportunities for employees. Company policies and data can be fed into the HRMS system and employees can simply log into their respective accounts and access all the information needed, without disturbing the HR team.
4. Improve the effectiveness of HR processes –
Key HR processes like hiring, recruitment, payroll management, and employee onboarding can be improved by adopting HRMS solutions. The productivity of HR processes can be greatly enhanced by HRMS systems.
5. Integrations with business systems –
Integrating HRMS with other business systems like finance and accounting is beneficial for the organization. Data gathered from the HRMS system can be used for accurate financial data reporting and budgeting.
When do you Need an HRMS?
While the need for an HRMS system is obvious, the next question is “When” do you need an HRMS? How do businesses decide when to go for an HRMS system?
1. Unexpected delays in HR processes
When approval-based HR processes like payroll, hiring, and recruitment, are delayed for unknown reasons. Manual processes lack the transparency required for staying updated on the status of each step in the HR process. This causes undue delays in the process and more time is spent on spotting bottlenecks and resolving them. An HRMS system speeds up the process and improves the transparency of tasks.
2. Overutilized employees, but underutilized potential
Manual HR processes are labour intensive, which means that HR staff needs to spend a substantial amount of their work time on mundane, admin work. This overstretching of HR staff only burdens them with work but does not utilize their work potential. They lose precious work hours performing low-value tasks instead of tasks that add value to the organization. An HRMS system helps automate labour-intensive, low-value tasks so that the HR team can work to its full potential.
3. Loss or mismanagement of HR data
Employee data management requires very high levels of accuracy and consistency that manual systems cannot provide. HR data is critical for any organization, any mismanagement or failure to update data can prove costly for an organization’s success. Human resource management systems ensure the accurate recording and management of data and provide access to employees as and when required.
4. Compliance issues
Compliance with labour laws and policies is paramount for any organization. Failure to comply with the laws of that region may result in revoking the business license or equivalent legal penalties. Lack of standardization in manual processes is the main reason for compliance issues. Automation of key HR processes brings about standardization and compliance.
Features of HRMS
Each HRMS software comes with its own features. The common features of the HRMS system are listed below:
1. Benefits Administration
HRMS helps HR professionals develop plans, configure eligibility rules, and make payments or deposits to benefits providers. HR, IT, and other stakeholders must assess the HRMS features that are a must-have for their company.
2. Centralized employee records
HRMS provides a centralized repository where employee records are stored, updated, and maintained. Centralized access enables better reporting and lowers the cost of compliance and preparing for audits.
3. Reporting and analytics
The software must deliver the ability to run operational reports that help track HR information, complete compliance reporting, develop key performance indicators (KPIs) for measuring HR process performance, and embed HR metrics into finance dashboards for company-wide analysis and decision-making. It should also provide the ability to create ad-hoc reports.
The software must enable easy and accurate calculation of salaries, hourly wages, variable payments for bonuses, sales commissions, and shift differentials. These calculations consider regulatory and elective deductions so that accurate net payments are given to employees. Some HRMS systems also include the calculation of retirement fund contributions or mobile phone reimbursements.
5. Talent acquisition
The HRMS software must enable recruiters to build career pages on the company website and intranet, create job requisitions and descriptions, manage positions, and integrate open positions with job boards.
6. Talent management
Enables HR professionals to develop and evaluate employees via performance reviews, goal management, and competency and skills test administration.
7. Time and Attendance
Delivers the ability to process time-off requests and manage time-off balances, employee scheduling, and absence management. The software also enables timecards to be integrated with payroll and project management.
8. User interface
A user-friendly interface is critical because an HRMS is open to the entire workforce. Today’s systems feature employee and manager self-service, mobile apps, personalization, localization, workflow automation, and role-based access controls.
9. Workforce planning
The software must provide the ability to plan and budget for workforce costs and measure against actual outlays for current and future scenarios. It should also help in identifying skill gaps, creating succession plans, and prioritizing recruitment efforts.
Main Components of HRMS
The components of an HRMS system vary according to the type and size of the organization. There is a range of HRMS software available in the market that can automate a ton of workflows like storing employee data, saving potential candidates’ profiles, storing and parsing candidate resumes, managing time-offs, onboarding, and offboarding. There are some common components that are featured in every HRMS software, which are listed below:
1. Applicant Tracking Systems (ATS)
The applicant tracking systems help HR professionals manage job postings, source candidates, screen resumes, and assess and make offers. ATS systems enable HR teams to create customized application forms and job descriptions, screen resumes and store them, and source candidates from multiple channels.
2. Employee Onboarding/Off-boarding Systems
Onboarding of new employees involves multiple tasks like monitoring onboarding tasks, sending out onboarding checklists to new hires and internal teams, distributing welcome kits, and getting candidates to e-sign joining documents. HRMS can automate all of these tasks to save time and effort for the HR teams.
3. Time-off management systems
Managing multiple remote offices can be a challenge for the HR team. Communication between the HR team and employees regarding public holidays, time-offs, etc. as per particular regions/locations. One of the main challenges of time-offs is to keep track of carryovers and available leaves.
HRMS software helps automate time-off management and helps employees check their time-off balances and book time-offs easily with a click. Once a leave request is submitted, the manager gets an instant notification for review and approval. An automated time-off system helps managers keep track of unauthorized leaves, thus keeping admin time and costs under check.
4. Payroll systems
Maintaining and managing employee payroll systems can be effectively done using automated payroll systems. Employee payroll is calculated based on the role of the candidate.
5. Employee information systems –
Human errors are very common in human resource management tools. Understanding who belongs to which team, who reports to whom, and the complete organizational structure can be challenging when businesses operate out of multiple locations. This is where organizational charts can be helpful.
Employee information systems (HRIS) help record and maintain employee records in one place. Whenever HR wants to look up the employee details, they can directly look into the employee directory for details like joining date, email ID, or phone number. These systems can also be configured to restrict access to sensitive employee information.
What are HRIS Systems?
A human resource information system (HRIS) is a software application that uses technology to help businesses meet core HR needs and improve the productivity of managers and employees. This is in large part possible via workflow automation and data synchronization. Organizations can enhance their people processes and HR tasks by using HRIS systems.
Making data-driven business decisions is easy with an HRIS system. User experience can be greatly enhanced with an HRIS system. Compliance with changing regulations and data security measures is easy when you have an HRIS system.
HRIS vs HRMS vs HCM
HRIS, HRMS, and HCM are terms that are used interchangeably. HRIS is actually a type of HRMS that is designed to track numerical data and employee information. It also helps HR departments manage their policies, procedures, and people in general. An HRIS system takes care of reporting, training, recruiting, and benefits administration.
HRMS on the other hand is a robust system consisting of IT and HR management technology. Human resource management systems include features like onboarding, employee satisfaction, job performance, analytics, and profitability. The core function of HRIS is the electronic recording and management of employee records.
Human capital management (HCM) systems take care of talent acquisition and workforce management areas of HRMS.
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Benefits of HRMS
There are several benefits offered by HRMS systems. The top 5 benefits of using HRMS are listed below:
1. Better, Deeper insights
Without an HRMS, employees, and managers create data in various places, which makes it impossible to gain a comprehensive view of workforce costs. An HRMS consolidates all the data into a single bucket and brings integrity and consistency into data management. A complete view of data enables better, faster decision-making, and helps in workforce planning and analytics initiatives.
HRMS enables a comprehensive assessment of the current workforce and compares the reality with future needs as per business objectives. With an HRMS, HR teams can easily spot indicators of problems and connect the dots to identify employees at risk.
2. Better employee engagement
An HRMS system is an invaluable tool in developing and retaining talent. HR teams can create training curriculums, personalize training plans, set up mentors, and personalize career paths. All these development activities are tracked in the HRMS to recognize development milestones.
3. Lowers backend overhead
The centralized nature of HRMS requires less hardware, data centre space, and IT and development, staff. This rationalizes IT expenditure for HR technology and the requirement for help desk staff also reduces.
4. Improves process efficiency and culture of self-service
Tasks like responding to inquiries or administering large programs take up 40% of HR professionals’ time each week. Within an HRMS, HR can set up a knowledge base so that employees can find answers to FAQs. Employees and managers can securely access their own records so that HR can focus on more value-added services.
5. Faster recruiting
Attracting top talent and building a company’s reputation are other areas HR professionals are passionate about. HRMS connects recruiters and candidates electronically through job boards and mobile applications. Advanced candidate pooling technology accelerates passive recruiting when new positions open up.
Top 10 HRMS Systems
The best HRMS software for 2022 according to People Managing People is given below. Some of these systems can be considered as top 10 HRIS systems as well.
4. Keka HR
9. Collage HR
10. Built for Teams
The best HRIS systems can be used by organizations to solve their HR issues. Top HRMS systems help large organizations and startups increase their rate of growth and productivity.
Automating the HRMS workflow helps streamline and standardize the process workflow. Using workflow automation software like Cflow eliminates redundant and repetitive steps in the workflow. The visual workflow form builder in Cflow simplifies creating customized workflows. HRMS software is essential for organizations to standardize their HR processes. To explore various automation features of Cflow, sign up for the free trial today.
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