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What Is a Human Resource Information System?

Andrew Martins
Andrew Martins

Find out how your company's HR department could benefit from a human resource information system.

  • With a good human resource information system in place, your HR department can collect and parse workforce data to streamline processes.
  • By putting all relevant HR data in one location, an HRIS can make sure your business is properly organized and compliant with existing regulations.
  • When looking for an HRIS, consider features such as automated applicant tracking functions, payroll processing and customizable reports for your business.
  • This article is for any small business owner, employer or HR professional interested in learning about human resource information systems and their potential benefits.

As your small business grows and your need for detailed employee data increases, it may be difficult to keep everything in order. You'll need to track your employees' contact information, salaries, benefits and a host of other HR data. Many businesses rely on human resource information systems to organize all this data in a single place. With the right criteria in mind, you can find a solid HRIS platform that provides numerous benefits to your small business.

What is a human resource information system?

As an integrated system, HRIS software (also known as a human resource management system, or HRMS) organizes all kinds of worker-related data points, including sensitive identifying information like a worker's age, gender and address; an employee's workplace information like their title, pay scale and department; the benefits they've opted in to; and their timecard and time-off requests.

Like other HR software platforms these days, HRIS programs are browser-based SaaS solutions that serve as an all-in-one destination to store up-to-date information on a company's workforce.

Though most of this information can be collected and entered into the HRIS software at the time of an employee's hiring, the system must facilitate any changes or additions to an employee's file. Over time, an HRIS can afford human resources professionals the ability to generate in-depth reports, which management can use to find and address ongoing patterns within the workforce.

Key takeaway: An HRIS is a comprehensive software platform that can help companies manage more tedious and technical HR functions.

What are the benefits of a human resource information system?

As your team grows and the need to organize sensitive employee data becomes more apparent, implementing an HRIS for your company becomes more important. Though they can functionally cover a range of uses, HRIS platforms are built to provide immediate benefits to your human resources.

1. It keeps everything organized.

Before the days of cloud storage and high-speed computing, HR professionals had to collect, organize and retrieve employee data by hand. This usually meant relying on physical documents, bulky filing cabinets and time-consuming manual processes. Leveraging modern technology, an HRIS creates an easily searchable database of items that administrators can access in seconds.

2. It frees up HR professionals to handle more important tasks.

Since an HRIS mitigates the tedious aspects of HR, it allows your HR leaders to work on new initiatives that could benefit your overall company. A good HR department will be able to react to employee trends more easily and work on fostering a company culture that increases employee engagement and retention.

3. It ensures regulatory compliance.

As a small business owner, you are beholden to local, state and federal regulations. Whether it's the Health Insurance Portability and Accountability Act (HIPAA), the Worker Adjustment and Retraining Notification (WARN) Act or any other major HR-related legislation, a good HRIS assists your team in ensuring the company stays on the right side of the law and away from costly penalties.

4. It helps HR staff work efficiently.

With the ability to file, retrieve and edit employee information quickly, an HRIS package allows your HR professionals to do their job without all the tedium and repetition. What used to take minutes or hours could be trimmed down to seconds, as requests are approved, timecards are validated and payroll is processed in moments.

5. It makes the company look good to employees.

You may think that your non-HR employees won't notice a difference once you implement an HRIS, but that's not true. A good HRIS will be immediately visible to any new hires, since the platform can help with the talent acquisition and onboarding process, while existing employees will be able to manage their timecards and request vacation time more easily through the system. By investing in an HRIS, you can show your employees that you're willing to invest in them.

Key takeaway: With the ability to organize and store employee data, an HRIS serves as a force multiplier that can empower your company's HR team to operate more efficiently.

When to get an HRIS

You will most likely see some growth within your company before you need an HRIS. How much growth you'll need to experience for an HRIS to be worth it depends on your company's circumstances, but a good indicator is when it becomes unwieldy for your HR employee or department to conduct their functions by hand. The moment you notice a bottleneck in HR should be the moment you consider adopting an HRIS.

What to look for in a human resources information system

The right HRIS can provide a huge boost to your company's HR department. It's not all about the tools, but what purpose those tools will serve for your business. As such, you should look for an HRIS that fits your company's needs.

For Dan Bailey, CEO of WikiLawn, the best HRIS was one that had a good applicant tracking system, as well as "payroll, time tracking for hourly employees, and performance management. All of these help our very small HR department function more efficiently. We only have one person covering HR, so anything to help speed up the process – especially for onboarding – is a big help."

Some factors to consider are your staff size, the reporting and tracking capabilities you need, how the HRIS in question handles processes like training and payroll, and how intuitive the system is for your employees.

As with most services you can add to your small business, you should look for a feature-rich solution that will best address your company's needs. Look out for these features in your search for an HRIS.

Employee database

A good HRIS gives you, your HR department and your other employees access to contact information for anyone on the team. By providing a database and directory for each employee, an HRIS can engender communication between employees and departments, thus creating a more productive workplace.

Applicant tracking and onboarding

It takes a lot of effort to recruit, hire and train new additions to your team. With a good HRIS, your company's hiring managers can see any hopefuls who apply, leave notes about interviews, and track where any candidate is in the application process. Once hired, that new employee can use the HRIS to go through company-sanctioned training modules and continue the onboarding process.

Benefits administration and tracking

Your employees need to keep track of their enrolled benefits, and you need to make sure the benefits you offer are working. With an HRIS in place, both parties have a centralized location to track their 401(k) plans, manage their healthcare plans and make adjustments when able.

Payroll and scheduling

There are plenty of online payroll solutions out there, some of which are part of an HRIS platform. Through an HRIS, managers can track staff's time and attendance, while employees can use the system to clock in and out, request paid time off, and track their paychecks.

Customizable reports

With so much data at your fingertips, you'll want to do something with it all. Through an HRIS, you can create meaningful reports that highlight where your company is succeeding and where it can improve. By quantifying the data, you can ensure that your company operates at peak efficiency.

Types of HRIS

Along with the different features you can look for in an HRIS, there are different types of platforms that ascribe to different aspects of HR and use cases for data.

  • Operational HRIS: These systems try to reduce – if not eliminate – the repetition in filing and organizing employee data. These systems handle everything from employee needs and the interpersonal aspects of your workforce to compliance with government regulations.
  • Tactical HRIS: These are employee-facing systems by nature. Built from the ground up to inform and support the allocation of company resources, a tactical HRIS helps with processes like recruitment, onboarding and job analysis.
  • Comprehensive HRIS: As the name suggests, a comprehensive HRIS closely organizes and examines human resource files. The platform serves as an integrated database to keep all sensitive worker data together in one place. These data points include an employee's position within the company, affirmative action files, skill inventory and other HR implements.
  • Strategic HRIS: A strategic HRIS deals with the entire workforce rather than just employee-facing functions. Some uses for this style of HRIS are workforce planning, labor negotiations if your employees operate under a union, and other specialized HR needs.

Key takeaway: The HRIS features and type you should look for depend on what your business needs at its current stage, but a good HRIS should always make your HR staff's jobs easier and provide the insights you want on your workforce trends.

HRIS pricing

No two HRIS companies have the exact same pricing model. Since each service varies in the features it provides and the number of users it supports, prices fluctuate accordingly.

Since these platforms are usually cloud- or browser-based, they often charge a monthly per-user fee. If your company only needs access for a handful of users, some vendors will offer their services for free, since you won't be taking up much bandwidth and you'll already be in their ecosystem once you start experiencing growth. Paid accounts range from $1 to $20 per user per month, depending on other factors like features and add-ons. Ask your potential HRIS provider about any additional costs, such as setup, consulting and support fees.

Key takeaway: Depending on the services you need, HRIS software will likely cost you somewhere between $1 and $20 a month for each user.

Image Credit: Ridofranz / Getty Images
Andrew Martins
Andrew Martins,
Business News Daily Writer
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I am a former newspaper editor who has transitioned to strictly cover the business world for business.com and Business News Daily. I am a four-time New Jersey Press Award winner and prior to joining my current team, I was the editor of six weekly newspapers that covered multiple counties in the state.