HRIS vs HRMS vs HCM: Understanding the Terms

Deepak Juneja

Human resource processes are complex and companies are increasingly looking for software solutions to help them simplify these processes. But you will find vendors and analysts often using these HR-related terms interchangeably – HRIS vs HRMS vs HCM.

To select a system that works best for your company’s workforce management needs, it is important to understand the basic difference between the three and their utilities.

For starters, here’s what the three terms stand for:

  • HRIS - Human Resource Information System
  • HRMS - Human Resource Management System
  • HCM - Human Capital Management

What Is HRIS?

HRIS is the smallest bundle of HR software. At its core, HRIS manages people, policies, and procedures. If your company needs software to automate the most essential HR processes and functionalities, then HRIS is for you. HRIS can easily take care of employee data such as demographics, job information, leave balances, performance reviews, etc.

You are likely to find the following features in an HRIS:

1. Application Tracking Systems

HRIS can perform all the tedious processes associated with recruitment such as sourcing candidates by getting to advertise your job on different platforms, checking and tracking applications, creating a resume repository, filtering the applications, etc. more efficiently than traditional methods.

2. Employee Onboarding

Familiarizing new hires with checklists and workflows can be automated to a great extent using HRIS, making the experience smooth and quick.

3. Attendance and Leave Management

You can use HRIS to calculate and store employee attendance data, unplanned absences, leave application status, and much more.

4. Management Of Business Workflows

HRIS helps you create and manage organizational structure, hierarchies, and business workflows for smooth functioning and enhanced productivity of teams.

5. Benefits Management

Administration tasks related to benefits such as employee insurance, vaccination, 401(k) plans, and others can be performed effortlessly on HRIS.

6. Salary Calculations

Monthly salaries of all employees can be calculated within minutes using data from HRIS such as paid time off, overtime compensation, work from home, outdoor duty, etc.

7. Conduct Training

Every organization needs its employees to undergo mandatory training such as POSH, IT Security Awareness, or briefing on any new company software. This can be centrally managed on HRIS.

8. Employee Data Repository

All personnel tracking can be done on HRIS with several data points stored in a single repository.

What Is HCM?

Add talent management capabilities to the above features, and you get a more comprehensive HR tool, called HCM. It specializes in effective employee management. HCM provides smooth ways to conduct talent acquisition, management, and organization.

You are likely to find the following features in an HCM:

1. All HRIS Capabilities and Features

Includes everything from applicant tracking systems to the employee data repository.

2. Employee Performance Management

Track employee productivity and performance through HCM. It also helps with career pathing, competency tracking, succession planning, and other talent management capabilities.

3. Onboarding Control

Streamlines the process for new joiners like submission of various forms, verification processes, employee data entry, etc.

4. HRAnalytics

Data analytics like employee headcount, hiring trends, attrition rate, performance trends, training status, etc. can help you identify the root cause of any persistent issues in the organization.

5. Regulate Positions and Responsibilities

Through HCM, you can ensure that the concerned person has the right duties and responsibilities meant for that position.

6. Company and HR Policies Overview

Gives access to employees regarding company knowledge base, HR policies, and procedures. It also helps them keep a track of their documentation and task status.

7. Global Capabilities

HCM can support multi-lingual, multi-currency, localization, and country-specific formatting. This is useful for multinational companies with global operations.

What Is HRMS?

HRMS is an all-inclusive HR system that encompasses all the above features and many more like taxation, payroll management, and advanced analytics.

You are likely to find the following features in an HRMS:

1. All of the most common features of HRIS and HCM

2. Automated Payroll Processing

Deducting taxes, automatically calculating salaries, sending direct deposits and more can be easily done through HRMS.

3. Time and Labor Management (TLM)

Track employee schedules and keep a tab on project times to enhance productivity and ROI.

Regardless of the terminology, HRMS, HRIS, and HCM all share the same basic aim: to allow business owners to manage employees and related processes effectively.

Out of the three, HCM refers to comprehensive HR software suits, while HRIS and HRMS are mostly similar with the latter offering more capabilities than the former. However, the HR system you choose for your organization completely depends on your goals, size of the organization, and needs.

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