HRMS vs. HRIS: Which Is Right For Your Company?

July 19, 2024

Did you know that 80% of businesses now use HR software to stay ahead? If you're unsure which HR software to choose, you're not alone. Let's clearly difference between HRMS and HRIS to help you make an informed decision.

HRMS vs. HRIS: Which Is Right For Your Company?

At first glance, HRMS and HRIS might seem similar, with overlapping functionalities. But they’re actually different types of systems with their own set of features. Understanding these differences is key to picking the right tool for your HR needs. Let’s break down what HRMS and HRIS mean, how they work, and what they can do for your business.

What is an HRIS?

An HRIS (Human Resource Information System) is a software system or online solution designed to store and manage employee data. It automates HR processes and streamlines the management of employee information, making it easier for HR professionals to handle day-to-day tasks.

How does an HRIS work?

An HRIS works by integrating various HR functions into a unified system. This system shares data and outputs reports across the entire platform, creating a centralized hub for all HR-related information and processes.

What are the main features of an HRIS?

An HRIS is a comprehensive software solution that streamlines and automates various HR processes. The key features of an HRIS are:

Centralized storage: An HRIS provides a single location for all personnel, policy, and procedural information. This makes it easy to access and update employee data as needed.
Recruitment management: It offers tools for managing the recruitment process and maintaining relationships with potential talent. This can include applicant tracking systems and candidate databases.
Onboarding: An HRIS streamlines processes for bringing new employees into the organization, ensuring a smooth transition from candidate to team member.
Performance management: These systems include tools for tracking and evaluating employee performance, making it easier to conduct regular reviews and identify areas for improvement.
Employee self-service (ESS): This feature allows employees to access and update their own information, reducing the workload on HR staff.
Time and attendance: HRIS platforms often include tools for managing work hours and absences, simplifying payroll processes.
Training and development: Many systems offer features for overseeing employee training and development, helping to track progress and identify skill gaps.
Analytics: HRIS platforms typically include tools for analyzing workforce data to inform HR decisions, providing valuable insights for strategic planning.

What is HRMS?

An HRMS (Human Resource Management Systems)is an expanded version of an HRIS. HRMS bring cost-benefit to business when provides much of an HR department’s business logic, helping organizations understand their workforce while staying compliant with changing tax laws and labor regulations.

How does an HRMS work?

An HRMS uses digital automation to organize and display candidate and workforce data. It automates and optimizes manual tasks and processes, significantly reducing the time spent on paperwork and allowing HR professionals to focus on more strategic initiatives.

What are the main features of HRMS?

An HRMS builds upon the foundation of an HRIS, offering more advanced and comprehensive features. These additional capabilities are designed to provide deeper insights, automate more complex processes, and support strategic decision-making. Here are the main features that set an HRMS apart:

General HR functions: An HRMS includes all the features of an HRIS, plus additional capabilities such as administration of employee benefits.
Absence management: These systems help manage absences and ensure compliance with related laws, such as the Family and Medical Leave Act (FMLA).
Advanced analytics: HRMS platforms often offer real-time reporting, predictive analytics, and financial analysis tools to support data-driven decision-making.
Paperless processing: Many HRMS solutions provide paperless forms, reports, and management of probation periods, reducing administrative overhead.
Automated compliance: An HRMS can automatically update to reflect changes in labor laws and regulations, helping to ensure ongoing compliance.
Enhanced training management: These systems often include advanced features for course management and updating of training materials.
Comprehensive payroll management: HRMS platforms typically offer robust payroll features, including bulk processing, reprocessing, online payroll management, and overtime tracking.

HRMS vs. HRIS: What’s the difference?

While both systems aim to improve HR operations, HRMS offers a broader range of functionalities and is geared towards strategic management of human resources, whereas HRIS is more focused on the informational and administrative aspects of HR. The terms are sometimes used interchangeably, but the distinction lies in the extent of their capabilities and the strategic value they add to an organization.

To better understand the differences, let’s compare HRMS and HRIS across several key areas:

Aspect	HRMS	HRIS
Definition	Comprehensive suite that manages the entire range of HR functions, including advanced features like performance management and analytics.	Focuses on the core HR functions, primarily dealing with data management, payroll, and benefits
Scope	Focuses on all HR processes from recruitment to retirement, integrating core HR functions with employee tracking	Limited to managing employee information
Information Management	Handles dynamic information (changes regularly): attendance, leaves, payroll, ESS, performance, rosters, appraisals, meetings, schedules	Manages static information (changes less often): addresses, contact info, qualifications, tax details, official IDs, benefits
Functionality	Allows users to perform tasks, analyze data trends, create and manage reports. Incorporates HRIS features	Primarily for information storage and basic HR administration
Workflow Benefits	Benefits core HR activities with regulated workflows for internal employee activities and performances	Benefits regular tracking for administration department
Automation	Highly streamlined with automation, supporting decision-making at all levels (management, HR heads, managers, team leaders)	Less emphasis on automation, focused on data storage and retrieval

Which businesses might use an HRIS?

An HRIS is ideal for small companies with limited HR staff that require basic HR functions such as payroll, benefits administration, and time tracking. These businesses typically need a straightforward solution to manage their core HR processes without the complexity and cost of more advanced systems. Top HRIS solutions for these needs include: ADP Run, BambooHR, Gusto Simple.

Which businesses might use an HRMS?

An HRMS is typically more suitable for small to medium businesses that need to manage and act on more data to support growth and development. These organizations often require more advanced features to handle complex HR processes and gain strategic insights from their workforce data. Some of the leading HRMS providers: ADP Workforce Now, Zoho People, Rippling HR Cloud, Gusto Plus, Zenefits.

The distinction between HRIS and HRMS is often unclear in practice. Many vendors offer scalable solutions that can grow with your business, starting with basic HRIS features and expanding to full HRMS capabilities as needed. When choosing a system, focus on your specific business needs rather than getting caught up in terminology.

Whether you choose an HRIS or an HRMS, implementing a dedicated HR technology solution can significantly improve HR processes, leading to better employee management, increased efficiency, and more strategic decision-making capabilities.

Now that we’ve explored HRMS vs. HRIS, you can see that while they share some features, they’re designed for different needs. Remember, the goal is to find a system that makes your HR work easier and more efficient. Whether you choose HRMS or HRIS, you’re taking a big step towards modernizing your HR processes.

If you’re still unsure which system is right for you, Talentnet can help. We offer Payroll system leasing that can be tailored to your needs. Explore our options now and see how our payroll software can help streamline your HR processes!