The COVID-19 pandemic profoundly changed the traditional workplace, forcing employers and employees to adapt to unprecedented challenges that paved the way for more flexible and resilient work models. Remote work’s dominance at the height of the pandemic required human resources (HR) departments to pivot and quickly adopt new technology that enabled them to continue to meet their companies’ needs.
According to WFH Research, as of 2023, 12.7% of full-time employees still work from home, while 28.2% work a hybrid model. Meanwhile, a University of Birmingham study found that 73% of managers believe flexible working arrangements have increased productivity, with 60% of managers believing the same about employees who work from home.
HR leaders have indicated that poor or non-existent technology and infrastructure for remote work are among their most significant barriers to success with this model. With remote and hybrid opportunities now here to stay, there is opportunity to reevaluate current business processes, systems, and technology needs as they relate to supporting remote work in human resources.
An overview of HR systems
An HR system electronically stores employee data, supporting a wide range of human resources tasks. Its core functions typically include payroll management, timekeeping, reporting, and data analytics. Beyond these essential functions, an HR system can serve as an operational hub, helping to enhance employee communication and engagement, foster collaboration among team members, boost overall efficiency, and ensure regulatory compliance.
There are three core types of HR systems for businesses to consider, each with various features and benefits. It is important to understand the similarities and differences between them to determine which best suits a business’s needs.
1. Human Resources Information System (HRIS)
The human resources information system (HRIS) covers all basic HR functions, keeping track of each employee’s current and historical data in one place. An HRIS enables paperless benefit enrollments, tracks employee eligibility, and maintains audit trails of enrollment activities. It also streamlines compensation management processes, offers workflow automation, and provides standard and customizable reporting options. Employees can use self-service features to update their personal information and report life events. Paperless onboarding simplifies administrative tasks—including tax forms, direct deposit, employee handbooks, and other policy compliance documentation. HRIS also offers easy mass communication functionalities to ensure effective employee outreach. While an HRIS is easy to use, understand, and maintain, some drawbacks exist. The cloud-based platform allows mobile access without network
requirements, so security can be a concern. It also has limited customization and integration capabilities with other software systems.
2. Human Resource Management System (HRMS)
The human resources management system (HRMS) incorporates all the same functions of HRIS but goes even further to manage internal HR functions. It also includes payroll processing and a time and attendance system, allowing import functionality into pay data entry. In addition, it integrates an applicant tracking system for recruiting operations. HRMS also manages paid time off (PTO) for current employees, ensures compliance with the Affordable Care Act (ACA), and facilitates annual IRS and state filings. Security of an HRMS can still be a concern if unsecured mobile access is allowed. Some systems are cloud-based, while others are tied to a domain or network. While an HRMS is more customizable than an HRIS, it is also limited in its integration with other software systems.
3. Human Capital Management System (HCMS)
The human capital management system (HCMS) can be described as a “complete suite” of HR software, building on the functions of HRIS and HRMS. In addition to what the other two systems offer, an HCMS integrates performance management, goal-tracking, and succession planning features. It also includes pyramid tracking by categorizing roles based on position, location, department, and job function. An HCMS supports global operations with multi-currency capabilities, and its finance module enables seamless data exchange and collaboration between HR and finance departments. An HCMS has stronger security protocols than HRIS or HRMS because it is always tied to a domain or network and has no mobile access. This system is also the most customizable option. Additionally, companies are responsible for all their own maintenance, upgrades, patches, and updates to an HCMS.
Insights on pricing and value
Several factors determine pricing and overall costs for HR technology systems. Subscription-based systems, which are often cloud-based (SaaS), charge a monthly fee driven by the number of users or headcount, and the vendor remains responsible for upgrades and maintenance. Meanwhile, license-fee systems involve on premise servers, networks, or domains, and the business manages upgrades and maintenance independently.
Implementation costs vary based on the system selected, as well as the cost of any additional hardware requirements. Potential expenses range from hundreds to thousands of dollars per user, with an HRIS costing the least and an HCMS costing the most to implement. Installation, setup, and consulting also add to the overall cost.
Be wary of “free” downloadable systems. They often lack comprehensive features and may lead to additional expenses for upgrades or other systems to fill gaps. The company may try to sell support, service, maintenance, or security features to make up the cost.
When considering HR technology, make sure to consider the total cost of ownership beyond the initial price tag, factoring in installation, maintenance, labor, hardware, and training. It is also important to focus on the potential return on investment (ROI) over time, as prolonged use can lead to financial savings. The system a business selects should enhance efficiency, streamline processes, and be easy to use for HR, managers, and staff.