Businesses are projected to invest $35.68 billion USD in HR solutions by 2028, according to a report by Human Resource (HR) Technology Market, 2021-2028.
Before the urgent need to implement an HR solution arises in your business, it’s best to have a solid background on different HRIS components and what they bring to the table. We’ll get you started with this thorough guide about different HRIS components.
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In this article, we’ll get into:
What Is HRIS?
HRIS (human resource information system) is a type of software that helps you manage the employee lifecycle end-to-end.
An HRIS takes on the excess workload of your HR administrators. From keeping track of employee information to helping you stay on top of tax and employment regulations, HRIS improves workflows and the employee experience. Key considerations to gauge the effectiveness of a solution are system quality, information quality and ease of use.
Some aspects to consider when implementing a new HRIS include IT staff competence, top management support, perceived cost, compatibility, vendor support and government regulations.
Since HRIS is often used interchangeably with human resource management (HRM) and human capital management (HCM), it’s important to keep their unique approaches and distinctions in mind when you’re in the market for a solution.
Types
- Operational HRIS: It focuses on standard employee database management, relieving your HR team from repetitive people management responsibilities. Operational HRIS also simplifies performance management and internal personnel changes by reducing the need to manually search for and process employee data.
- Tactical HRIS: Tactical HRIS helps managers make effective decisions regarding resource allocation, job analysis, training and development. It also processes external data like competitor information, government regulations and union information.
- Strategic HRIS: Strategic HRIS aids businesses with analytics and data-based decision-making. For instance, it aids workforce planning and goal-setting using data points like market information, operations budgets and staff availability.
- Comprehensive HRIS: Comprehensive HRIS, as the name suggests, is an A-Z solution for core HR needs. Comprehensive HR provides the ability to review and manage a database for different HR functions, including skill inventory, job analysis and design, employee safety guidelines, performance management and more.
- Limited-function HRIS: A limited-function HRIS is a more niche solution for your specific HR-related needs. The exact function varies between systems. For instance, a limited-function HRIS for hiring and recruitment processes.
Key Benefits
- More efficient recruiting cycles for quality hiring and improved onboarding.
- Improved employee engagement with self-service capabilities.
- Smarter decision-making with data from employee-, work-, finance- and outcomes-focused reports.
- Simplified HR compliance with automated alerts and easy access to information required for auditing.
- Insights into opportunities for internal promotion, due to ongoing performance management.
- Data-based planning and forecasting to align HR activities with organization goals.
Components
Now that we’ve covered the basics of HRIS, it’s time to look at its different components.
HR administrators rely on HRIS to store and collect employee information, improve efficiency and engagement, and facilitate better workflows. But how do the different components of HRIS enable these things? Let’s find out.
1. Database Management
HRIS plays a key role in the secure storing, processing and managing of employee information. It ensures personnel data is seamlessly accessible to the right people as and when required.
An employee profile on the database.
Some examples of databases are:
- Performance reviews
- Benefits information
- Emergency contact details
- Compensation data
What good does database management do for a business? It reduces the need to maintain and update tedious paperwork.
A report about the common causes of data leaks highlights misconfigured software settings, social engineering and recycled passwords as the top three concerns.
With its restricted accessibility, HRIS secures all employee data against theft and corruption. On top of that, cloud storage ensures that data isn’t lost due to system failure.
2. Time and Attendance Management
Manual time tracking and attendance for every employee can be tedious for HR administrators. How does an HRIS help in this case?
Time off tracking.
- It allows automatic input of an employee’s work hours to track their time and attendance.
- Employees can request time off through the system, where their managers can approve or reject the request.
- Time and attendance data is forwarded to payroll to ensure accurate compensation.
- Consolidating all employees’ time and attendance data helps optimize workforce planning to improve overall efficiency and productivity. It also helps address individual performance issues before they escalate.
3. Payroll
This component automates payroll and provides tools for tax compliance. But how exactly does it work as a part of an HRIS?
Payroll dashboard.
- It processes work hours and ensures accurate calculation of an employee’s pay.
- It offers tools to handle relevant tax and other payment deductions to ensure tax compliance based on different criteria.
- Most HRIS can integrate seamlessly with check printing software or directly deposit paychecks to employees’ bank accounts.
Similar to most HRIS components, payroll also reduces the administrative burden for HR professionals. More importantly, though, one of its main perks is its accuracy and ability to minimize the risk of errors in compensation.
4. Benefits Administration
According to the Bureau of Labor Statistics, a whopping 47.4 million U.S. employees voluntarily left their jobs in 2021. The data speaks for itself. Employees are no more apprehensive about quitting their jobs if employers aren’t meeting their evolving demands.
Benefits dashboard.
How is this relevant? Benefits are the key factors for attracting and retaining quality talent in an organization.
This HRIS component simplifies benefits administration in several ways:
- It allows employees easy access to all benefits-related information.
- HR professionals can update benefits information on the system without any hassles.
- Most HRIS facilitate medical benefits deductions for payroll.
- Users can entertain employee’s benefits-related queries and provide feedback about various benefits.
5. Employee Interface
The employee interface of HRIS can make or break the experience. After all, that’s where people will spend most of their time interacting with the software. An employee self-service portal ensures that employees feel self-reliant and control their information. It also saves HR professionals’ time and efforts by reducing the manual work of maintaining and updating employee information.
Employee interface.
What specific capabilities does the employee interface cover?
- Employees can update their personal information and direct deposit information.
- It allows employees to review pay scales.
- It lets employees review and change benefits programs.
- Employees can download benefit election documents.
- Employees can request PTO, and managers can approve or deny requests.
6. Talent Management and Training
The SHRM State of the Workplace Study 2021-2022 highlights talent acquisition and employee training and development as the specific HR areas with the most planned budget increases in 2022 — 45% and 35%, respectively.
What justifies these planned budget increases? The end goal of implementing an HRIS for talent management and training lies in improving onboarding processes and employee engagement to retain high-quality talent.
Talent management dashboard.
How does talent management and training benefit you?
- Creating and sharing a job posting on relevant platforms.
- Seeking out the most suitable candidates from your applicant pool.
- Supporting clear onboarding processes to acclimate new hires with payroll, benefits enrollment, productivity tools and more.
- Providing additional training, tracking progress and recognizing improved performance.
What’s Next? Key Takeaways
Now that you’re well-versed with the different HRIS components and what they bring to the table, you may evaluate the need for an HRIS in your business.
Here are a few questions worth asking yourself to determine whether you need an HRIS:
- Are you currently using multiple systems for your HR processes? Are they difficult to integrate?
- Are you spending a lot of time and valuable resources on duplicating tasks?
- Do you feel like you’re missing out on high-quality talent?
- Are you losing track of important responsibilities because of manual processes and spreadsheet maintenance?
If you answered yes to at least two of the above questions, it might be a good time to consider making an investment in an HRIS. If you need some help kickstarting the process, our HR requirements template will help you sort out which features you need and rank them according to priority.