Human Resource Information System: Functions, Advantages, Risks, Types

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Human resources (HR) specialists, as professionals in many other fields, use new technologies to optimize their activities. Human Resource Information System (HRIS) is “a system for collecting, storing, maintaining, retrieving, and validating data needed by an organization about its human resources” (Sharma, 2020, p. 47). Thus, an HR manager can use various software for data collection and analysis. In other words, HRIS keeps records of all employees of the company and information about them to which the specialist has access. The functioning of such a system implies the availability of not only hardware and appropriate software but also the coordination of many departments. HRIS also includes various procedures, forms, data, and people themselves (Kavanagh & Johnson, 2017). However, from a formal point of view, the system is defined as a package of necessary programs with which HR interacts. In many small organizations, HRIS can operate in paper form because it is not economically viable to purchase the required software. However, investment in technology for more massive companies is beneficial in terms of time and cost.

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HRIS Functions

In the modern world, HRIS means precisely the computer systems which help optimize the work of HR. Such systems can perform three main functions: strategic, operational, and administrative (Gregg Learning, 2017). The strategic function is linking human resource strategy with organizational mission and the performance of people. HR can be more productive since HRIS assists “by providing more information, by helping HR reshape practices, and by freeing up HR employees’ time” (Kavanagh & Johnson, 2017, p. 8). Thus, the specialist can pay more attention to maintaining the strategic mission of the organization. The operational function assumes managing functional human resource activities and optimizing employees’ performance. In particular, by providing accurate and timely information and data, the system can help HR and other managers make decisions. The administrative function is recordkeeping, process administration, and compliance effort. Additionally, HRIS “allows a company to plan its HR costs more effectively, as well as to manage them and control them without needing to allocate too many resources toward them” (“HRIS,” n. d.). Thus, the system provides more efficient personnel management and optimizes the economic side of the specialists’ activities.

Advantages of HRIS

HRIS has many benefits in terms of both cost and managers’ time savings. First of all, the systems are most effective and relevant in companies with more than 30 employees (“What is an HRIS?” n. d.). HRIS provides all the necessary information as a single database, which ensures more efficient communication within the structure and increases the speed of information exchange. The system also improves the personal productivity of managers and employees, as some programs offer self-service HR. The most important benefit of HRIS is the improved quality of decision-making and timing. HR can analyze the comprehensive information provided by the system, which will allow him or her to take more appropriate actions in the shortest possible time. The time which the specialist used to spend collecting and organizing data can be utilized for other tasks. Moreover, HR can focus more on strategic management as administrative and operational functions are simplified. Finally, a more efficient delivery of HR services within the company ensures employee and manager satisfaction.

HRIS has a positive impact not only on the efficiency and productivity of HR professionals but also on various aspects of a company’s costs. Kavanagh & Johnson (2017) report several specific examples of cost savings when implementing these systems within the organization. These include a 95% reduction in the cost of recruitment, a 40-60% reduction in the cost of training with e-learning functions, a 25% reduction in the cost of HR staff when using self-services (Kavanagh & Johnson, 2017, p. 10). However, the effectiveness of HRIS depends on many factors in each case.

First of all, the size of the company is important, since the larger it is, the greater the benefits the system brings. It is also necessary to ensure support from the top management and its active participation in the development of HRIS within the organization. The availability of resources in the form of money, time, and personnel also has a significant impact. Since an HR specialist plays a key role in working with the system, the level of its efficiency directly depends on his or her skills and vision. It is also necessary to consider the degree of involvement of employees in the process of implementing HRIS and their attitude to organizational changes. Thus, a significant number of factors affect the efficiency of the system and the result of its application. This fact is associated with the presence of some risks which may accompany the work with HRIS.

HRIS Risks

In the process of working with any computer system, a number of dysfunctional problems can arise, which is no exception for HRIS. Among them is excessive trust in databases on the part of management and employees, which can negatively affect soft skills such as customer service or teamwork. Electronic information systems are always associated with privacy concerns which can diminish the motivation of some employees. Additionally, many systems may not be flexible enough to accommodate non-standard data or occurring changes in HR’s activities. Optimizing more basic processes can lead to reduced productivity, as workers will focus exclusively on complex tasks and neglect the simple ones. These risks accompany the use of any data accounting and analysis system. Thus, the HR specialist should also be involved in monitoring the HRIS performance and eliminating the negative impacts which arise.

HRIS Types

Since HRIS is used for a wide range of tasks, the types of such programs vary. HR systems are subdivided into three categories, which are responsible for different functions. Although these types are often referred to under the general term HRIS, they have a number of different characteristics. First of all, HRIS itself “is designed to manage people, policies, and procedures” (Maiorino, 2019). This type has a number of key characteristics, including:

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  • ATS (Applicant Tracking System) and recruiting
  • Open enrollment and benefits administration
  • Core human resources
  • Compensation management
  • Absence management
  • Development and training
  • Self-service for employees, managers, and candidates
  • Workflow
  • Reporting

Thus, these systems are responsible for monitoring the recruiting needs of the organization. In particular, ATS helps to track suitable candidates, analyze their data and make hiring decisions. The system of benefits and the service itself can serve to increase the motivation of employees since they can choose certain benefits on their own or through HR. HRIS also helps to track workflow, track absences and provide training for staff, in particular through electronic platforms. Thus, these systems are responsible for the key aspects of HR work with both current and potential employees.

Human Capital Management (HCM) focuses on improving the quality of work of current employees and increasing their satisfaction. Such a system “includes every element of an HRIS, but adds Talent Management and global capabilities such as multi-lingual, multi-currency, country-specific formatting and possibly localization” (Maiorino, 2019). Key characteristics of HCM are:

  • Onboarding
  • Position and budgeting control
  • Succession planning
  • Salary planning
  • Performance and goal management
  • Global needs
  • Analytics

Thus, HCM is a more advanced version of HRIS which focuses not only on HR management but also on strategic development. With the help of this type of system, a specialist can work to achieve goals aimed at the growth and development of not only existing personnel but also hiring candidates with the necessary skills. The analytical function of HCM seems to be the most important since it provides the opportunity for strategic planning.

Human Resource Management System (HRMS) focuses primarily on payrolls, as well as time and labor management. In addition to these features, it includes the characteristics of HRIS, HCM, or both. Despite combining essential functions in one program, HRMS often lacks features such as talent management, for which HCM is mainly responsible. Thus, this type of software is used primarily for efficient administration. HRMS is most important for extensive organizations as it helps optimize HR costs. These types are often used in combination, as effective HR management through programs requires a package. However, for small companies, basic HRIS functions may be sufficient. The most common and convenient ones at the moment are Namely, Workday, BambooHR, Exelsys, and OptimumHRIS. These programs provide mainly HRMS functions, but each of them also has additional features (Brown, 2021). For example, some of them have support for multilingual communication or information on the legal aspects of HR activities.

References

Brown. F. Best HRIS systems & platforms for 2021. TechnologyAdvice. Web.

Gregg Learning. (2017). HR basics: Human resource information systems [Video]. YouTube. Web.

HRIS. (n. d.). HR Payroll Systems. Web.

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Kavanagh, M. J., & Johnson, R. D. (2017). Human resource information systems: Basics, applications, and future directions. SAGE Publications.

Maiorino, M. (2019). Types of HRIS systems: HRIS vs. HCM vs. HRMS. HRMS Solutions. Web.

Sharma, F. C. (2020). Human resource management. SBPD Publications.

What is an HRIS? An HR practitioner’s guide. (n. d.). AIHR Analytics. Web.

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BusinessEssay. (2022) 'Human Resource Information System: Functions, Advantages, Risks, Types'. 30 June.

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BusinessEssay. 2022. "Human Resource Information System: Functions, Advantages, Risks, Types." June 30, 2022. https://business-essay.com/human-resource-information-system-functions-advantages-risks-types/.

1. BusinessEssay. "Human Resource Information System: Functions, Advantages, Risks, Types." June 30, 2022. https://business-essay.com/human-resource-information-system-functions-advantages-risks-types/.


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