Human Resources Management System: Features And Benefits

By Indeed Editorial Team

Published 8 September 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

A human resources management system (HRMS) uses various software to store employee data and can ensure the smooth functioning of organisations. As companies gradually become people-centric and focus on the well-being of their employees, HRMS is essential to implement empathetic business processes. This makes it important that HR managers are proficient in using these systems as they directly affect employee retention, employee performance and the growth of the business. In this article, we discuss key concepts of an HRMS, explain its importance, show you how it functions and also enumerate the features and benefits.

What Is A Human Resources Management System?

A human resources management system (HRMS) is a set of software applications for easy management of human resources to facilitate HR processes in an organisation, such as payroll, training, benefits and recruitment. It helps a company to manage, understand its workforce and comply with changing laws and policies. HRMS can be a digital assistant for HR professionals by automating basic tasks so that the manager can focus on more important tasks and activities. It is beneficial for the company as it improves administration and streamlines employee data in the organisation.

Related: Why Is Human Resources Important To Every Organisation?

Features Of A Human Resources Management System

The features of an HRMS may vary with each solution provider. It is essential for every organisation to identify their requirements and choose a system containing those features. Here are some common features that HRMS can offer:

Administration tools

An HRMS can assist HR professionals in several administrative tasks, such as developing plans, configuring rules and regulations and making employee payments or deposits. Automation of such tasks can help the company save time. HRMS also provides easy access to benefits administration modules to document details regarding medical insurance, sick leaves, vacations, maternity and paternity leaves or pension plans. It can help protect the rights and the benefits of the company's employees efficiently.

Time and attendance management

Some management systems have an attendance tracking system (ATS) feature, which allows them to process, monitor and manage the leaves of the employees. It also helps create attendance modules, manage schedules and set notifications or reminders to monitor overtime hours. The HRMS also enables employees to monitor their daily work hours and the status of their leave applications, making the leave management process transparent. Employees can access the HRMS using several options, such as biometric scanners, fingerprint recognition or card readers.

Related: 12 Simple Ways To Save Time And Accomplish More Daily

Talent acquisition

HRMS can empower recruiters to build career pages on the company website, create job descriptions, manage positions, scan resumes and shortlist eligible applications. It also helps the recruiters perform background checks, extend offers, create application forms and perform pre-employment screenings and other processes before moving forward with employee onboarding. With HRMS, human resources managers can evaluate employee performance through reviews, goal management, skill assessments and competency test administration.

Related: 10 Interview Guidelines For Human Resources Professionals

Learning management

Some of the employee learning management features of HRMS software include awarding certificates, training directories, course and curriculum development, testing, certificates and compliance with company policies and objectives. Such learning and development opportunities can boost employee performance and engagement. They may also enhance the employees' user experience by demonstrating the company's concern for its personnel.

Reporting and analytics

Employee management systems enable the collection of valuable data that can help manage the workforce and encourage strategic thinking among managers. They have various analytical functions and tools, such as customisable personal dashboards for every employee, which can be useful for individual performance monitoring. Some systems also offer real-time reporting and information, enabling proactive decisions and the development of key performance indicators (KPIs).

Benefits Of HRMS

HRMS often functions as a central repository for all workforce-related information. It has several benefits for the company and its employees, such as lower compliance risks, offering a rich data set for decision making, keeping the employees engaged and making the HR processes more efficient.

Here are some of the most common benefits of an HRMS:

Offers in-depth employee insights

Traditional management systems include creating and storing data in various places, such as spreadsheets, expense apps and paper records or documents. Though this can be extensive, such management systems can be inconvenient to obtain an in-depth insight into the workforce costs and performance.

HRMS is a single, centralised platform that automates several analytical processes. It offers faster and better decision-making and assists in workforce planning. With the help of HRMS, an organisation can also assess the current workforce and compare it with future goals, depending on the company's objectives. It identifies skill gaps and creates succession plans to manage the labour costs by analysing the effects of overtime or double-time payments on the company's financial performance. HRMS may also assist HR professionals in detecting problem indicators and identifying at-risk employees.

Improves employee engagement

HRMS often plays a crucial role in developing and retaining employees. It helps the HR professionals create training curriculums, learning plans and career paths for employee training and development. It also helps design mentorship programmes where senior management professionals can share their expertise. Employees can check these activities and their milestones using the HRMS. They can also receive instant feedback and suggestions instead of waiting for someone from the management to revert to them. Such processes can encourage employee engagement and can help to keep them loyal to the organisation.

Related: Q&A: What Is Employee Engagement? (And How To Improve It)

Promotes a culture of self-service

Some of the key responsibilities of HR professionals are responding to enquiries and managing large groups, benefits enrolments and employee performance reviews. HR professionals can set up a repository where the employees can find the answers to commonly asked questions, allowing the HR staff to focus on more critical and comprehensive tasks.

HRMS provides an automated approval workflow for HR processes that require multiple approvals, saving substantial time. The automation reduces the processing time and improves the accuracy of results. Employees can also access the company's policies and regulations with complete flexibility. This improves transparency and enhances the efficiency of the organisation.

Related: The Functions And Departments Of HR: A Complete Guide

Faster recruiting

HRMS enables recruiters to connect with candidates electronically, making the entire process efficient. Platforms such as job boards can help attract new talent and build the company's reputation. The HRMS can also help get insights into the candidate's experience, which may be difficult with traditional recruiting methods.

Unlike conventional manual recruiting processes, HRMS processes are often less time-consuming and do not require a team of people. It is a simple and easy-to-use software which reduces human effort by automating various aspects of the recruitment processes.

Related: Recruitment Process: A Step-By-Step Guide

When To Opt For An HRMS?

There are several events where an organisation implements an HRMS. Some examples include recruitment of new HR leaders, expansion of the business to other states or countries, company acquisitions or mergers, an upcoming company audit or the requirement of a new accounting system.

The reasons a company adopts HRMS may vary depending on the organisation and its requirements. It is beneficial for the HR and team leaders to be on board while purchasing the HRMS. Once the options are short-listed, it is helpful to ask employees to test the various software to check their level of comfort and efficiency with the technology. It can also help to check the management system's interface and functionality before implementation.

Related: 10 Careers In Human Resources (With Salary And Job Duties)

Difference Between HRMS And HRIS

HRMS and human resources information system (HRIS) are two systems that often work together closely. Though some may use these two terms interchangeably, they have two distinct meanings. HRIS is used to record and manage static employee information such as contact information, residential address, official ID numbers and tax information. HRMS records dynamic information, such as attendance, payroll, performance and appraisals.

HRMS focuses on the HR processes of recruitment, onboarding and retirement. It enables the users to monitor performance, analyse data and create and manage detailed reports, whereas HRIS usually focuses on collecting employee information. HRMS benefits core HR processes and activities by regulating the workflow for employee activities and performances while HRIS helps the administration department with monitoring activities.

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