The old days of HR relied heavily on time-consuming paperwork and manual processes, creating administrative overload, errors, and delays. Today, modern HR leaders turn to human resource management system (HRMS) platforms to manage their HR functions more efficiently and proactively. These platforms support HR professionals in keeping their main focus on the most important part of the business: the people.

What is a human resources management system (HRMS)?

A human resource management system (HRMS) is a set of software applications that assists HR professionals in managing tasks. An HRMS assists HR with every stage of the employment lifecycle, from recruitment to retirement and everything in between. It automates key HR processes, consolidates team member data, and provides valuable insights for improving workforce management. HR teams can spend less time on manual tasks to focus on team member development and strategic decision-making. 

A brief history of human resource management systems

The journey of human resource management systems began in the 1970s when HR teams began automating payroll, using mainframe computers to calculate earnings, withholding deductions, and printing paper checks. 

In the late 1980s, PeopleSoft introduced a more complete HRMS, adding features like electronic recruiting, benefits administration, and compliance reporting. In the 1990s, the internet boom shifted recruiting online and away from paper job postings, and by the 2010s, companies of all sizes could access cloud-based HRMS solutions. 

Today, advanced human resource management systems integrate AI capabilities like machine learning and predictive analytics to help organizations anticipate workforce needs and make data-driven decisions.

Why is HRMS software important? 

HR leaders use HRMS software to automate their daily tasks so they can manage people data, payroll, and recruitment more efficiently. They can eliminate manual tasks, reduce human errors, and gain real-time insights into workforce trends.

Who uses HRMS software? 

Modern HRMS systems optimize the experience of all team members, including: 

  • HR professionals: HR teams use HRMS software to manage everything from payroll and benefits administration to recruitment and time tracking
  • Recruiters: Recruiters benefit from a centralized portal where they can post jobs, contact candidates, and track the interview process
  • Candidates: Candidates use dedicated HRMS portals to search for jobs, monitor their application status, and accept offers 
  • Managers: Managers oversee team structure, track time and attendance, approve time off requests, and organize performance management reviews
  • Employees: Team members access dashboards to edit personal data, manage their time off, and track their performance
Save precious time with an HRMS that streamlines your HR processes

Human resource management system features

A typical HRMS module helps HR professionals streamline tasks to support day-to-day functions like:

Storing and organizing relevant candidate and staff information 

HR professionals can access resumes, contracts, performance reviews, and other key records in one centralized platform to eliminate the need for paper files and scattered documents. For example, during recruitment, HR teams can store candidate details on the HRMS so interviewers at each stage can track and review candidate progress. 

Planning benefits administration and ensuring timely, accurate payroll

Simplify benefits administration by managing health insurance or retirement contributions across your team. An HRMS can help manage eligibility rules and ensure accurate payments to benefits providers. This reduces manual workload for HR professionals and helps reduce payroll errors, increasing employee satisfaction.

During an open enrollment period, team members can also use the HRMS self-service portal to compare health insurance plans and select the best option.

Enhancing the talent acquisition process for candidates and employers

Streamline talent acquisition by automating job postings, tracking applications, and managing candidate communications. For example, an HRMS can automatically flag candidates who meet the specifications for a particular management role—saving recruiters time and giving qualified candidates a chance to interview.

Boosting retention and engagement 

HR teams can use your HRMS to increase employee retention and engagement by: 

  • Offering personalized career paths: People can map their growth through clear career development plans
  • Conducting regular performance reviews: Real-time tracking allows managers to provide consistent feedback and identify areas for growth
  • Tracking progress toward promotions or new roles: Team members monitor their development and set goals for advancement
  • Implementing recognition programs: HRMS systems can make it easy to recognize team members for their achievements and contributions

This proactive approach ensures employees feel supported, valued, and motivated to stay with the company.

Offering L&D opportunities and tracking people’s progress

L&D (learning and development) refers to programs that build team member skills, advance their careers, and stay aligned with organizational goals. HR and managers can use an HRMS to assign training, track learning progress, and measure skill development over time. 

An HRMS can track course completion, certifications, or specific learning modules. Managers can then review this data to ensure team members are meeting learning objectives, identifying growth opportunities, and providing support for ongoing professional development.

Managing compliance training 

Keep your organization compliant by scheduling and tracking mandatory training on regulations, health, and safety. Reporting tools within the HRMS allow your leaders to monitor progress, identify missing gaps, and generate compliance reports to meet regulatory requirements.

Running reports and preparing KPIs for better analytics 

Leverage your HRMS to generate real-time reports on key HR metrics like turnover, headcount, and engagement levels. With customizable reports, HR professionals can track trends, spot gaps, and make informed, data-driven decisions. 

For example, by analyzing turnover trends, HR can determine if specific departments or teams require new retention strategies. Additionally, tracking engagement levels helps identify areas for improvement, allowing managers to implement timely interventions that enhance satisfaction and performance.

Aligning time tracking and attendance with payroll

Automatically syncing time and attendance data with your payroll software ensures accurate and timely paychecks without manual work, reducing the risk of errors and saving time. This seamless integration between attendance and payroll helps streamline operations, creating a smoother workflow for HR and finance teams. When people get paid accurately and on time, they feel valued and more motivated to contribute their best to the team.

Improving workforce management and succession planning

Improve your workforce planning process by helping HR teams budget for workforce costs, forecast talent needs, and align staffing levels with business needs. An HRMS can track roles, performance, and development plans so HR can identify skill gaps and strong performers. 

This streamlines succession planning since HR can identify high-potential team members and create pathways for leadership roles. 

Monitoring progress and performance reviews for talent management

HRMS platforms offer a centralized place to manage performance reviews by documenting feedback, setting goals, and tracking improvements. Performance reviews involve regular assessment of a team member’s achievements, areas for improvement, and career progress. 

Managers can use an HRMS to automate review reminders, store past evaluations, and track progress toward performance targets. For example, for an HRIS analyst, managers can set measurable goals like improving the accuracy of HR reports or reducing the time needed to generate workforce analytics. They can use an HRMS to track the analyst’s performance against these goals, such as meeting deadlines for data analysis, identifying trends in turnover, or delivering actionable insights. 

Upholding privacy rights and compliance

An HRMS safeguards sensitive information by enforcing essential security features like role-based access, data encryption, and two-factor authentication. HR teams can restrict access to payroll data or performance reviews so authorized personnel can handle confidential information. This reduces the risk of data breaches or information leaks.

HRMS

Benefits of using a human resource management system

The HRMS has played a critical role in HR evolution, upping the HR game from paper pusher to strategic people manager. It benefits companies in five core ways: 

  • Increased efficiency. By streamlining all HR functions with self-service and automatic digital filing, HR professionals can adjust their energy away from administrative work toward managing people. 
  • Better workforce planning decisions. An HRMS provides centralized, accessible data and accurate analytics, enabling data-based decisions regarding hiring, upskilling, and succession planning. 
  • Improved employee retention. Customized career planning and L&D opportunities enable people to pursue and achieve career goals and create a more meaningful and engaging work experience. 
  • Better recruitment. Using AI, an HRMS enables recruiters to source suitable candidates faster while offering them a smoother candidate experience. 

A smaller margin of error. Typically, HRMS software includes automatic updates regarding labor laws and regulations, ensuring HR compliance with critical new legalities.

How to choose an HRMS

First, consider your organizational needs and goals the HRMS can help you with. Do you need a platform that allows for multi-site teams? Do you need a platform with built-in payroll? How many people do you need the system to handle? 

Involve HR, IT, and any decision-makers to get a complete picture of what your team needs from the HRMS. Then, you can submit a request for proposal to different providers to evaluate which one suits your company the best.

Once you narrow down some HRMS options, it’s time to: 

  • Evaluate key features: Look for features like automation, reporting, self-service options, and integrations with other tools
  • Consider scalability: Ensure the system can grow with your organization and accommodate future needs
  • Assess user experience: Check for an intuitive interface and ease of use for internal HR teams and your people
  • Check security and compliance: Confirm that the HRMS offers robust security and compliance features for data protection
  • Evaluate vendor support: Consider the level of customer support offered, including onboarding, training, and ongoing technical assistance
  • Compare pricing and ROI: Weigh the cost against the features and long-term benefits, ensuring the HRMS offers good value for your organization
  • Check for customer reviews: Look for feedback from other companies in your industry to assess the system’s reliability and performance

What’s the difference between an HRIS and HRMS?

Often, people use these two terms interchangeably. Yet, a human resource information system (HRIS) emphasizes storing information, while a human resource management system (HRMS) prioritizes managing information and providing advanced talent management services. 

What’s the difference between an HCM system and HRMS?

The terms HRMS and human capital management (HCM) also have many similarities. They both refer to comprehensive HR tools and strategies designed to manage an organization’s workforce and align its needs with business objectives. The key differences are in their detailed applications: 

Using an HRMS as part of your modern HR strategy

An HRMS enables companies to keep pace in today’s accelerated work world by helping them manage their people effectively. This allows companies to compete in the current market, satisfy customers, and recruit and retain top talent.

HRMS FAQs

What is the difference between ERP and HRMS? 

While an HRMS focuses on HR-specific functions like attendance and recruitment, an enterprise resource planning system, or ERP, supports broader business processes like finance, supply chain management, inventory management, and procurement. 

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Is payroll part of HRMS?

Yes, HRMS systems often integrate with payroll software to automate salary calculations, determine tax deductions, and manage benefits for accurate and timely payments. 

What are the functions of an HRMS?

HR leaders use HRMS platforms to streamline a wide variety of HR functions:

  • Recruitment: Streamline job postings, candidate tracking, and application processing
  • Payroll management: Automate salary calculations, deductions, and tax compliance
  • Time tracking: Log hours, vacation days, and sick leave for accurate paychecks
  • Benefits administration: Manage health insurance, retirement plans, and other benefits
  • Performance management: Track performance reviews, goal setting, and team development
  • Onboarding: Facilitate a smooth start for new joiners with welcome flows, task checklists, and team introductions
  • Learning and development: Assign personalized training modules, track progress, and identify opportunities for recognition
  • Workforce planning: Budget workforce costs and plan future talent needs
  • Reporting and analytics: Generate reports to track KPIs, headcount, and team engagement
A single HRMS for your people data and processes