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HRIS vs. HCM vs. HRMS: What’s the Difference?

HRIS vs. HCM vs. HRMS Blog Image

We explain the difference between HRIS vs HCM vs HRMS to help you determine which type of HR software solution will work best for your needs. Learn more!

22
March, 2022

HRIS vs. HCM vs. HRMS: What’s the Difference?

Types of HR Software Applications

In times like these, you may not be receiving the support you need from your current payroll and HR provider. Your everyday processes may be outdated and no longer work to meet your business needs. You’ve probably heard terms thrown around like HCM, HRIS, and HRMS when researching HR technology, and you may wonder what is a HRIS system? Or, what is a HCM platform? These terms can spell confusion and indecision if you don’t know the definitions and differences.

While these terms are used rather loosely and interchangeably in the HR technology world, we’ve reached a consensus on what we believe each of these solutions best encompasses. Let’s take a look at HCM vs. HRIS vs. HCM solutions. So, when you’re ready to make a switch and invest in a new HR software, you are selecting a best-in-class system that provides what your organization needs.

What is HRIS Software?

A Human Resource Information System (HRIS) is a central platform to store employee data needed to complete core HR processes. A lack of an HRIS system means that HR personnel must rely on spreadsheets and a paper-based filing system. A manual approach can lead to easily misplaced documents, a lack of standardization in data entry and storage, and the potential for errors.

HRIS software enables you to manage information like full names, addresses, Social Security numbers, work permits, and information about dependents in less time and with greater accuracy. Some HRIS systems generate reports on HR metrics and employee data that help you plan and manage resources better. And when an HRIS system offers employee self service, processes become more efficient, take up less time, and make it easier to drive organizational change.

HRIS systems typically provide the following functionality:

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Payroll and Tax Compliance: Process payroll using correctly calculated wages and salaries, and manage deductions for taxes and benefits.

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Attendance: Track employee hours worked, accrual balances, PTO, and manage schedules.

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Benefits Administration: Manage benefits information, track compliance, and allow employees to enroll online.

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Personnel Tracking: Manage an online employee directory that includes contact information, position details, and personal information.

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Self Service: Provide employees with access to data and functionality like updating personal information, enrolling in benefits, and checking accrual balances. This delegation of responsibility also creates a more engaged work culture.

What is HRMS Software?

A critical goal of human resource management is to ensure that an organization maximizes productivity. This goal is achieved by optimizing employee effectiveness, hence the need for a system that helps an HR department keep track of and better understand their employees.

So, while HRIS manages employee records, a Human Resource Management System (HRMS) focuses more on tracking employee lifecycle management processes, which isn’t just for the benefit of the HR department. By using the data generated on workplace trends in an HRMS, management can gain better insight into the business implications of those trends.

HRMS applications can include the following components:

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Performance Management: Establish employee performance standards and evaluate performances based on those standards.

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Recruiting: Manage the hiring process by posting job openings, receiving online applications, and tracking candidates.

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Onboarding: Streamline the new hire proces by automating paperwork and tracking training progress.

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Reporting: Pull metrics and analytics for company trends and actionable insight.

By using an HRMS, companies can promote engagement from the recruiting process, just like with an HRIS. The difference is an HRMS can help companies maintain engagement by assigning personalized employee goals and conducting regular performance tracking in a simplified, all-in-one system.

Why are performance reviews the deciding factor between an HRMS and an HRIS solution? As your company grows, you will hire more employees. Investing time and money in those employees to ensure they have a career path outlined for them will reap higher rewards. Companies will experience reduced turnover and increased employee engagement.

What is HCM Software?

Human capital management (HCM) refers to practices designed to acquire, manage, and develop a workforce within an organization. HCM practices aim to maximize the business value of an organization’s employees, or human capital, to raise the organization’s competitive edge. Effective HCM practices can include learning and development initiatives and health and wellness benefits.

Thus, a human capital management (HCM) system comprises core HR functions for workforce acquisition, workforce management, and workforce optimization. By using human capital management technology, you’ll be able to use the data to drive workforce initiatives like talent optimization strategies, create attractive compensation packages, increase the ROI of human capital, and encourage business growth.

Here are some key capabilities of an HCM platform some companies might find helpful:

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Administrative Functions: Employee data, benefits administration, payroll administration, and self-service portals for employees.

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Company Data: Access to company documents and data and an organizational knowledge base.

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Talent Management: Recruiting, onboarding, training, applicant tracking, online job board posting, performance tracking, and management.

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Labor and Workforce Management: Time and attendance, scheduling, self-service options, budgeting.

Biggest Differences Between HRIS, HCM and HRMS

There are many opinions on the differences between HRMS, HCM, and HRIS platforms. These opinions, along with the letters making up these acronyms, can create a confusing game of catchphrases.

HRIS vs. HRMS: The critical difference between HRIS and HRMS systems is the complex tools provided. While HRIS is more basic, providing functions like payroll and attendance, HRMS extends those functions by offering functionality like performance management and reporting.

HRIS is ideal for a smaller company with more straightforward HR needs. However, a company that’s growing fast and looking to enhance HR management can benefit from a user-friendly HRMS that simplifies HR workflows and offers actionable data.

HRMS vs. HCM: There are also differences between HCM and HRMS technology. HRMS supports the more complex and extended HR actions such as recruitment management and performance analytics in the form of software that is easy to use, speeds up tasks, and increases productivity. HCM is a broader management platform encompassing all HRIS tools and offers even more complex features than HRIS or HRMS.

Due to the depth of its functions, HCM can be seen as a strategic approach to an organization’s human capital. Human capital management technology combines various features to manage the day-to-day HR operations and the employee lifecycle. HCM capabilities can also include talent development pipelines to retirement and pensions. These are the most notable differences between HRMS and HCM platforms.

HRIS vs. HCM: The key difference between HCM and HRIS solutions is that an HCM suite encompasses all HRIS processes and systems. In addition to managing all HRIS subprocesses, HCM also performs functions like:

  • Onboarding
  • Performance management
  • Position mapping
  • Benchmarking salary and benefits
  • Global compliance
  • HR analytics

As you can see, there is a difference between HRIS, HRMS, and HCM software. Therefore, it’s essential to understand how each system can potentially fit your business needs.

HRIS, HCM and HRMS Similarities

HRIS, HRMS, and HCM all deal with workforce management issues like recruitment, employment, orientation, training and development, payroll, benefits, performance analysis, and other workforce concerns.

Hence, the three systems often overlap in their features and functions. Although often used interchangeably, HRMS is sometimes viewed as the more complete version of HRIS, and the two tend to share more features in common. HCM is the most diverse as it encompasses the elements of HRMS and additional unique features.

Since the definitions of HRIS, HRMS, and HCM all cover HR issues and concerns, it’s always advisable to examine the benefits and features of a solution to ensure that it aligns with what your organization is seeking in HR software

HRIS HRMS HCM
Payroll HRIS Capabilities HRMS Capabilities
Tax Compliance Performance Management Scheduling
Benefits Administration Succession Planning Applicant Tracking
Time & Attendance Recruiting Training
Personnel Tracking Onboarding Budget Planning
Reporting   Absence Management
Employee Self-Service Options    
     
Information

Workforce Management vs. Human Capital Management (HCM)

Heard of Workforce Management? Don’t be confused. WFM is also a phrase used in HR conversations but differs from the solutions we’ve described. It revolves around labor utilization.

WFM focuses on managing compliance risks and optimizing worker shift schedules. An HCM takes WFM to the next level by encompassing the full range of HR management.

Which System Should You Choose?

We hope we’ve cleared the confusion for you surrounding the HCM vs. HRIS vs. HRMS technology topic by exploring the key difference between HRIS and HCM, as well as HRMS. When choosing the best HR software, you’ll need to assess your company’s needs and determine which solution is the right fit for your organization.

No matter the size of your business, all these tools help manage employees. It is up to you to determine the set of goals you wish to accomplish with your system and which will be most beneficial to you.

Selecting the wrong software could have significant implications when choosing HRMS vs. HRIS vs. HCM technology. HR technology that does not meet your specific needs can cause your business to lose money, time, and even jeopardize data integrity. When Investing in HR software, a few things to consider are functionalities, data recovery, cost, analytics, limitations, and customer service. Systems designed to unify different aspects of HR in one place increase efficiency, improve usability, reduce operational costs, and bolster security.

Furthermore, the right human resource management system helps your organization manage HR-related tasks and facilitates a positive onboarding experience for new employees and candidates. HR software that provides an easy-to-use, self-service user platform that digitally supports onboarding and employee management processes can increase productivity and efficiency.

When deciding whether to invest in HRIS vs. HRMS vs. HCM, it’s crucial to do your research to make an informed decision. As your business grows, having an intuitive HR system that can grow with you is a must.

How APS Can Help

APS is an all-in-one HR software that helps manage your workforce’s lifecycle. We are a cloud-based system that securely stores and manages employee data from hire to retire. Our employee self-service software makes it easy for managers to engage with and oversee employee schedules and compliance anytime, anywhere.

We have continued developing and expanding our technology over the years while ensuring our system is unified for the best possible user experience. In addition to Core HR, we offer Payroll, Attendance, Scheduling, Recruiting and Onboarding, and ACA Reporting. With our solution, you can start with payroll and expand to our other offerings as your organization grows.

Schedule a demo today to find out how our HR technology can help your business.

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