In the 1980s and 1990s, only medium and large companies could afford expensive human resources information systems (HRIS). These programs required large mainframe computers and highly skilled programmers to operate and maintain them. Today, almost any company can not only afford, but needs, a human resources information system. Even a company with fewer than 10 employees can purchase a basic HRIS program that can be installed on a desktop computer to automate basic human resources processes.

What is HRIS?

Essentially, an HRIS is a database or a combination of databases that share information. For example, the employee-hiring database captures all information related to job applications. When a business hires a new employee, the person’s basic demographic information is shared with other HRIS modules so that HR staff members do not have to re-enter the data.

Automating and Streamlining Processes

An HRIS has three basic components -- employee information, payroll and benefits. These represent the core business functions of an organization's human resources department. The HRIS helps automate and streamline these processes, which frees up HR staff to do project work and address problems. For example, employees use an identification number or "swipe" an employee identification card to check in each morning on an electronic time clock that automatically transfers data to the HRIS. This eliminates the need for payroll staff to manually enter employee work hours from paper time cards into the payroll system.

The job application process is another good example of how an HRIS can reduce costs. In many companies, candidates apply for jobs via the Internet. This means HR staff no longer have to physically handle, sort and forward applications to appropriate departments.

Reporting and Decision Support

Because basic HR processes are automated and all necessary information is stored in connected databases, an HRIS simplifies reporting and management decision-support activities. Most systems include a variety of standard HR reports that can be used to manage the business and plan for the future, such as, compensation by pay period and year-to-date, benefits enrollment, and employee time and attendance. Many HR systems will allow users to develop ad hoc reports in order to analyze specific issues or identify trends to help management in strategic planning.

These systems generate reports and documentation required by state and federal agencies, such as the W-2 Wage and Tax Statement, the Equal Employment Opportunity Commission EEO-1 Employer Detail and Summary Report, and the Department of Labor’s Illness and Injury Report (OSHA 301 Report).

An HRIS can help businesses with negotiated labor agreements by incorporating the requirements of the agreement into daily operations, such as tracking seniority for the purpose of promotions, layoffs and pay raises. Information technology also helps the HR Department monitor employee grievance and performance issues.

Depending on the sophistication of the system, an HRIS program will allow for data sharing and integration with other essential business systems, such as finance and supply-chain management. In addition, some systems can provide network links to their health insurance carriers and retirement fund administrators. This allows employer and insurance carrier or fund administrators to share employee information quickly and easily.

HRIS also links a company’s human resources department with its managers and employees. Using an Intranet – a secure private computer network owned and operated by a company – employees can enter their hours worked, enroll in benefit programs or continuing-education courses and receive communications from the HR department.