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Updated Oct 23, 2023

What Is a Human Resources Information System?

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

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Andrew Martins, Business Operations Insider and Senior Writer
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This guide was reviewed by a Business News Daily editor to ensure it provides comprehensive and accurate information to aid your buying decision.

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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 a human resources information system (HRIS) 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 an HRIS?

HRIS software (also known as a human resources 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 also be easily editable in case any changes or additions to an employee’s file are needed. An HRIS can also afford HR professionals the ability to generate in-depth reports, which management can use to find and address ongoing patterns within the workforce.

What are the benefits of an HRIS?

As your team grows and the need to organize sensitive employee data becomes more apparent, implementing an HRIS for your company becomes more important. Here are five major benefits of using an HRIS.

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 morale and employee retention rates.

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. This can be even more beneficial when managing remote employees or hybrid staff.

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 time cards 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.

Did You Know?Did you know
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 do their work manually. The moment you notice a bottleneck in HR is when you consider adopting an HRIS.

What to look for in an HRIS

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

Some factors to consider when choosing an HRIS are your staff size, the reporting and tracking capabilities you need, how the system 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 401(k) plans, manage healthcare plans, and make adjustments when necessary.

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 employees’ time and attendance, while employees can use the system to clock in and out, request paid time off, and view 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.

HRIS types

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

  • Operational HRIS: This system tries to reduce – if not eliminate – the repetition in filing and organizing employee data. It can handle everything from employee needs to the interpersonal aspects of your workforce to compliance with government regulations.
  • Tactical HRIS: This is an employee-facing system 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 HR 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 information.
  • 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 are unionized) and other specialized HR needs.
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 employees' jobs easier and provide insights regarding trends in your workforce.

HRIS pricing

No two HRIS companies have the exact same pricing model. Since each service differs in its features and the number of users it supports, prices will vary.

Since these platforms are usually cloud- or browser-based, they often charge a monthly fee per user. If your company needs access for only 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 $15 per user per month, depending on factors like features and add-ons. Ask your potential HRIS provider about any additional costs, such as setup, consulting and support fees.

Key TakeawayKey takeaway
Depending on the services you need, HRIS software will likely cost you somewhere between $1 and $15 per month for each user.

The best HR software

There is a wide range of software available to address HR needs – such a wide range, in fact, that it can be daunting to attempt to wade through and review them all to determine the best picks. We’ve done some of the legwork for you and have identified some of the best HR software on the market today. Our selections include the following:

  • Gusto: In our Gusto review, we found the platform to be well suited for payroll processing and managing employee compensation.
  • Rippling: In our Rippling review, we found the platform to be best for employee onboarding and setting new hires up for success with robust training options.
  • BambooHR: In our BambooHR review, we found the system’s performance management tools, like employee self-assessments, manager assessments and skill development features, to be outstanding.
  • GoCo: GoCo’s automation tools to be the easiest to use and the most efficient for saving HR professionals time and freeing them up to focus on higher-order tasks.
  • Paychex Flex: In our Paychex Flex review, we found the platform to be best for organizations managing remote teams or hybrid workforces thanks to its ability to improve team communication and run payroll across multiple jurisdictions with ease.

Compare our best picks to learn about the specific features they offer and to determine how they meet the needs of your business. 

Streamline your operations with the right HRIS 

Most companies will agree that an HRIS can help streamline operations, improve service to employees and, ultimately, improve the employee experience. In a hiring landscape that is increasingly competitive and an employee environment where employees are demanding more freedom, flexibility and work-life balance, the right HRIS can ease the burden for you, your HR employees and your entire workforce. 

author image
Andrew Martins, Business Operations Insider and Senior Writer
Andrew Martins is an award-winning business and economics expert who has spent years studying trends and profiling small businesses. Based on his on-the-ground reporting and hands-on experience, Martins has developed guides on small business technology and finance-related operations. In recent years, he focused on the small business impacts of the 2020 presidential election and the COVID-19 pandemic. Martins, who has a bachelor's degree in communication, has been published on trusted financial sites like Investopedia, The Balance and LowerMyBills, on technology outlet Lifewire and in the New York Daily News.
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