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Human Resource Management System(HRMS) is a software application or HR platform that automates, integrates, and controls an organization's everyday HR processes and procedures (such as managing Employee Information, Payroll , Compensation & Benefits, Workforce Management, Leave & Expenses Claims Management, Talent Engagement & Management, Talent Acquisition, Learning & Development and much more).

HR teams can optimize their operations and boost their productivity by leveraging such platforms, which are now available online i.e. in the cloud. They are now available to SMEs in an user-friendly, easy-to-manage format and can be used by someone with little or no technical experience. In fact, managing the workforce is now possible with a single click of a button.

While HRMS, HR Information Systems (HRIS) and Human Capital Management (HCM) are often used interchangeably, there is a slight difference between the three:

  • HRMS is a software application that automates, integrates, and controls an organization's everyday HR procedures
  • HRIS enables companies to employ technology to improve their people operations and optimize HR and Business operations, and enable them to keep up with the changing workplace trends.
  • HCM is used to refer to a whole suite of cloud-based HR software aimed at improving the employee experience.

Why are HRM Systems in High Demand?

  • Remote and Hybrid Workforce: Today's employees demand a hybrid work environment that offers great flexibility.. The right technology to support this new workplace reality is critical, as it can improve employee engagement, reduce turnover and help businesses gain and maintain a competitive advantage.
  • Focus on Employee Experience: The pandemic has challenged HR departments to rethink employee life cycle while assessing the employee experience virtually from hire to retire. HRMS software is expected to become more "employee-focused" as new features such as employee profiles, organizational charts, mobile-first, self-service portals, and other user interaction tools are added.
  • Employee Wellbeing: Employee wellness programmes and perks, such as physical wellness, mental health, flexible work hours, child care, elder care, paid time off, and more, are already being rethought holistically by organizations, as there has been an increased focus on the mental health of the employees and HR department can truly make a difference.

Types of HRMS

An HRMS can be a Specialized HR Software or a Comprehensive HR Software as detailed below:

  • Bundled HR Suite:b Certain HRMS products are sold as a single bundle, which means that the system includes many modules for various HR services that must be purchased as a single platform.
  • Modular HR Suite:b An HRMS product consists of many modules that can be purchased in various combinations or package levels or separately, depending on the functions required by the buyer.
  • HRMS for Small and Mid-sized Businesses:b SMEs always face challenges of limited resources and often overlook HRMS that can provide them an edge in the market.
  • HRMS for Large Enterprises:b An HRMS designed for enterprise-level businesses (more than 1,000 employees) will offer similar modules as those designed for smaller businesses.
  • HRMS for MNCs:b Organizations that function in multiple countries require an HRMS that can support them seamlessly across geographies. These platforms can manage recruiting, benefits, payroll, and other areas with custom workflows tailored to the company needs and the countries in which it operates.

HRMS Modules

  • Core HR is the centralized employee information database, is an important part of any HRMS software. The employee records are stored in an HRMS and can range from a simple name, address, phone number, and job title to a detailed work history that includes performance management assessments and training.
  • Benefits Management modules provide timely information and assist employees in choosing the best healthcare and pension/welfare packages as well as track enrollment options and any financial consequences.
  • Recruitment Management modules track applicants and streamline the entire recruitment process. These modules also allow managers and HRs to post job openings, track applications, parse resumes etc
  • Onboarding Modules help HR staff in streamlining the process of preparing new recruits to be productive and keep track of activities that they must accomplish.
  • Performance Management modules, which are an important part of the talent management tools in an HCM or HRMS, manage processes related to evaluating and developing employees. Conducting performance reviews, providing feedback to employees and managing goals are all basic functions.
  • Learning Management modules can automate the delivery of online training materials and courses and are included in many HCM and HRMS products.
  • Workforce Management modules include a variety of functions for both day-to-day workforce management and strategic workforce planning, ranging from managing employee schedules to forecasting labor needs.
  • Compensation Management modules help in managing employee compensation, assist organizations in setting compensation budgets, viewing existing compensation levels, reviewing merit increases, and generating reports that provide a comprehensive view of compensation across the business.
  • HR Compliance Management modules assist businesses in staying up-to-date with changing regulations in areas such as work eligibility, healthcare, and data reporting, as well as ensuring that their policies meet regulatory compliance.
  • Reporting and Analytics modules help review and analyze data gathered and stored with the HRMS in order to provide strategic and predictive insights that may be utilized to steer the organization's business strategy.
  • Talent Management modules focus on identifying people with potential, help set up talent pipelines with specific roles and succession planning in mind. All gaps between hiring, L&D, and performance management can get bridged.
  • Travel and Expense modules eliminate the need for paper in the expenditure management process, and automated alerts keep you informed about the status of reimbursements. Employee's expenses, such as travel, hotels, meals, and fuel, can be handled without any confusion or complication.
  • Payroll modules in an HRMS manage all aspects of an employee's payroll accounting and management. These modules assist HR professionals in ensuring the accuracy of their computations and the efficiency of their payments allowing administrators to automate computations, set up payroll procedures and distribute payments to employees.
  • Time and Attendance Tracking modules include features such as:
  • Attendance tracking
  • Clock in and Clock out time management
  • Biometric systems
  • Functionality for remote and mobile workers

Features of HRMS

  • Self-service Portals: Employee Self-Service (ESS), sometimes known as Employee portals, is an indispensable part of HRIS or HRMS. Employees can use these portals to view, manage and access their payroll and other HR information.
  • Mobile Access: Many HRMS software also offer easy-to-use mobile applications.
  • Voice Assistance: HRMS have a built in voice bots/ assistants that ease reduce time to action and enhance the employee experience.
  • Free Trial Period: Most HRMS come with a free trial period of a few days for you to experience the platform
  • Multilingual Support: Multilingual support helps streamline operations for businesses operating globally.
  • Shift Scheduling: Employee shift schedules can be simply created, managed and tracked with an HRMS. This assists in easing the difficult task of shift management by allowing users to establish and manage employee’s shift schedules.
  • Capacity Management: HRMS solutions allow you to develop facilities, set capacity limits, and establish approval processes.
  • Vaccination Management: Some HRMS platforms offer workflows to record and manage vaccination status as well as antigen test results.

Benefits of HRMS

  • Improves HR Staff eEfficiency: Having a single system that stores all or most of the company's HR procedures, reduces the amount of time spent switching between apps to complete a task.
  • Increases Employee Engagement: HRMS allows HR managers to acknowledge even the smallest things, such as an employee's onboarding experience, providing consistent feedback on their work, and showing appreciation when they do their job well.
  • Automates Payroll and Compliance Processes: Compensation tools help organizations set compensation budgets, view existing compensation levels, review merit increases, and generate reports that provide a view of compensation across the business.
  • Improve Employee Feedback and Performance: HRMS can greatly help in gathering accurate data, increasing employee engagement, and providing transparency throughout an organization.
  • Tracks Employee Turnover: Finding the actual rate of employee turnover and the reasons for it is critical - a task that can be made easier with a good HRMS. A comprehensive feedback system linked into the HRMS can not only assist in understanding the issues that lead to employee dissatisfaction, but it can also assist in identifying individuals who are most likely to quit the company soon.
  • Optimizes Business Operations with Analytics: More complex analytics reports and dashboards are made possible by centralising operations in an HRMS, providing company leaders with insights that would not have been available if data from numerous sources had not been combined into a single system.
  • Improves Employee Experience: Modern HCM & HRMS packages include robust talent management modules, giving HR managers a new set of capabilities for providing a better employee experience. Conducting successful performance talks, giving relevant learning experiences, providing fair compensation, and assisting employees with career planning are all examples of this.

Types of HRMS Deployment

HRMS can be deployed in one of the following three ways:

  • Cloud: A cloud-based HRIS/HRMS/HCM centralizes the entire data on a single online platform for easy data access and management. That enables better informed decision making by providing insights on employee data.
  • On-Premise: An on-premise system is an in-house HR solution. Its maintenance and development are carried out within the company. As a result, the company has complete control over any changes or updates. An on-premise HRMS has a one-time license fee but it requires huge expenditure & management.
  • Hosted: The vendor can either host it or can be hosted by the buyer by an upfront purchase.


  • Large and enterprise-level companies
  • Small and medium-sized businesses (SMBs)
  • Best-of-breed buyers

Challenges with HRMS

  • Lack of Integrations: A major part of HRMS that appeals the most to the leadership group is the integration of modules. However, in other cases, a firm may desire to incorporate a product from a different vendor since the HRMS module does not meet the organization's needs, which might not provide a seamless user experience due to lack of integrations.
  • Data Migration: Extracting data from multiple sources and shifting it to a cloud based platform can be challenging.
  • Lack of Mobility: The inability to access records and data when on-the-go is a significant roadblock. Users will be put off if there isn't a mobile app for mission-critical operations including leave applications and shift scheduling as it becomes impossible to sync real-time data.
  • Lack of Customizability: Human resources software packages are frequently sold as "all-in-one" products that cover all of the functions required by the HR department. Buyers should understand that "all-in-one" does not imply "one size fits all." The capacity to modify an HRMS or HCM system to meet a company's existing operations is a critical aspect in determining whether new HR technology is broadly embraced and successfully used by employees.
  • Resistance from IT, Top Executives, and Managers for HRMS Implementation: HRMS is a considerable financial and time commitment for any firm. Depending on the size of the firm, implementing a whole new HR system can take months, if not years. Buyers should think about what sort of support the HRMS vendor offers to ensure a smooth and efficient deployment, as well as whether it makes sense to hire a third-party consulting firm to help with the process.
  • Rewards and Recognition: When it comes to selecting the appropriate recognition system, most businesses are torn between using their HRMS platform's recognition module or investing in specialist recognition software as some HRMS might not be suitable for global organizations or might not have the industry best practices that a specialized recognition platform might have.

How to Choose Right HRMS Software for your Business

HRMS must be tailored to the demands of businesses of different sizes. There are a number of HR software suppliers in the market that appear to provide similar services. Some might be right fit for your needs. Here’s how you can find them.

Pre Qualification Checklist : Answer these Questions before buying an HRMS Software

  • What is the headcount of your Organization?
  • What is the specific Business need?
  • How does the technology align to Business/ Talent Strategy?
  • Who are the Stakeholders involved in the HRTech buying/ implementation process?
  • What is the Budget for the solution?
  • What are the criteria for measuring success?

Additional tips:

  • Start with a Problem not the Solution: Identify your organization’s requirements, needs, challenges and goals.
  • Plan your Budget: The cost of HRMS varies depending on your requirements and headcount. However, you do not need to spend a fortune on all of the HR features you require. Several low-cost software packages include both basic and advanced HR capabilities.
  • Customization: There is no one solution for all problems, an HRMS should be tailored to fit your needs. Choose the HRMS that you can adjust to meet your specific requirements and that is simple to update with a variety of additional packages for further features.
  • Watch Demos: Do not miss out on demos. To provide a good user experience, sellers should walk you through how each HRMS module functions. The easiest method to see if a product will deliver is to watch the demos that illustrate the exact processes for workers.
  • Read Use Cases: Read use cases to understand others tech adoption journey, deployment and adoption challenges. Request references from providers who can provide straight answers to your queries.

The continuous innovation and advent of HR technology promises an even brighter future of HRMS that will optimize the world of HR operations. It’s high time organizations leverage HRMS for efficient functioning, especially with a burgeoning emphasis on remote workforce. Automating administrative HR tasks and processes will enhance employee experience and provide HR teams with bandwidth to focus on strategic aspects, and thereby be seen as a Strategic Business Partner.

Let's start revamping our HR functions before it’s too late!

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