The Importance of a Human Resource Information System

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Although your human resources department (HR) exists to deal with people, it still runs on data. A human resources information system (HRIS) or management system (HRMS) is software that stores the employee information HR needs to operate. The objectives of a human resource information system are to keep data accurate and more usable to speed up HR's operations.

Objectives of Human Resource Information System

The objectives of a human resources information system software are to collect data and make it easily accessible. HRIS typically collects and manages employee data: names, addresses, Social Security numbers or equivalent identifiers, visa information and records on dependents.

HRIS also has functions for managing recruiting, applicant tracking, attendance, time management, performance appraisals and benefits.

HRIS may also provide employee self-service options for requesting reimbursement or applying for benefits. That saves HR time spent dealing with your other employees and it's often quicker to process the requests.

Benefits of HRIS

The importance and benefits of having HRIS within an organization are that it makes finding and managing information easier for HR, which benefits the employees they work with too.

  • Organization. With all the information in a single database, it's easier for HR to find the information they need, track how it's handled and update it when necessary. 

  • Accuracy. If HR has to transfer information between multiple software systems or software and paper files, errors inevitably creep in. Using one single system eliminates that problem. As more functions are automated, there's less need for manual data entry, which also reduces errors.

  • Security. Paper files are easy to access, even by people who have no right to the information. HRIS can restrict access to those who need to know.

  • Saving time. Accrued time off and the unused balance are easier and faster to track and adjust with a computer than with a spreadsheet.

  • Compliance. Good HRIS vendors keep the software updated to comply with relevant government regulations.

  • Employee satisfaction. The easier it is for employees to deal with HR and get information like their PTO balance, the happier they'll be working for you.

Reports and Analysis

Another of the objectives of a human resources information system is to make it easier for HR to generate reports in different formats, such as a nine-box grid or an automatically rendered organizational chart. HRIS can also simplify analysis for headcounts, turnover, onboarding time and other important metrics.

Elements of HRIS

HRIS software packages aren't identical because companies aren't identical. The HR needs of an international corporation and a local business with a dozen employees aren't the same. A business with only a few employees may not need HRIS until it grows.

Still, there are some features that are common to most HRIS:

  • Job-applicant tracking
  • Onboarding
  • Time and attendance tracking
  • Generating reports
  • Data analysis
  • Benefits administration
  • Payroll
  • Learning management
  • Training tracking
  • Performance appraisals

Some vendors don't provide payroll management in HRIS or sell it as a separate system that integrates with the rest of the software. Some systems have all the features but don't manage all or any of them effectively. Research the software before you buy.

Buying HRIS

To enjoy the importance and benefits of having HRIS within an organization, you'll need to shop wisely and then see that your employees and HR get the maximum mileage out of your purchase.

  • Whatever features HRIS offers, use them. Migrate your HR data to the new system so that you can take advantage of the data management features.

  • Encourage employees and HR staff to actually use the system. Push employees to try the self-service features. Encourage your managers to access HRIS and generate the reports they need.

  • If the vendor updates the software with new features, use them 

Part of shopping wisely is choosing the right vendor. The ideal vendor is one who'll help you get the full use of the system, for example, by providing your team with whatever training they need. They should also be willing to update and improve their HRIS.

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About the Author

Fraser Sherman has written about every aspect of business: how to start one, how to keep one in the black, the best business structure, the details of financial statements. He's also run a couple of small businesses of his own. He lives in Durham NC with his awesome wife and two wonderful dogs. His website is frasersherman.com

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