The human resources system (HRS) is an information technology system that captures, stores and shares information related to the practices, policies and management of human resources in an organization. It is also known as a human resources management system (HRMS), human resources information system (HRIS), human capital management system (HCMS) and human resources information technology (HRIT). An HRS helps an organization manage all the complex and interconnected aspects of human resources, including compliance with federal and state employment laws.
An HRS automates crucial human resources management functions, such as employee management, compensation and benefits, and decision support. It is made up of a set of integrated databases linked to functional processing units, such as hiring, time and attendance, pay, benefits and pensions, employee skills and training. Because the databases are integrated, basic information, such as employee name, address and Social Security number, need only be entered once, after which all the functional processing units can retrieve and use the information.
The HRS captures all information about employees from their initial application for employment to their final paycheck. It captures basic identifying information, job assignments, performance information, pay rate, employee skills inventory and training history. Information captured in the employee management database is also used for required compliance reporting for the Equal Employment Opportunity Commission (EEOC), such as age, gender, national origin, race and disability.
The HRS compensation and benefits functions gather information on hours worked and use it to calculate wages, amount of federal and state taxes and other deductions, such as health insurance and retirement contributions. The system generates paychecks or deposits pay directly into employee bank accounts. It also calculates earned vacation and sick leave with pay-period and year-to-date totals.
An HRS simplifies reporting and decision-support activities by generating standard human resources reports, such as pay, new hires and employee transfers. This information is used to manage the business, measure organizational performance and plan for the future. An HRS also allows users to generate special reports to analyze certain situations and identify trends, such as increased employee turnover in one area of the organization.
Human resources systems facilitate information sharing and integration with an organization’s other essential business systems, including finance, accounting and supply chain. They also allow data sharing with third parties, such as reports for regulatory agencies and data transfers to and from health insurance and retirement plan administrators.
Many human resources systems include an employee self-service function that operates through an intranet link – a company-owned secure and private website. Using this website, employees can update their personal information, enter their hours worked, register for training and look up their accumulated vacation and sick leave without having to contact a human resources representative. Employees can look up their information from the computer on their desks, a laptop computer or from a computer kiosk located on the factory floor or in the warehouse.