It can be tough to distinguish between HRMS, HRIS, and HCM variants of human resources software, despite how frequently these terms are tossed around by marketers, vendors, and analysts.
In recent years, these systems have become more useful and complex, but the terms have become a guessing game. What do they represent? What do they mean? Do each of these systems fill a unique need in human resources management, and if that’s the case, how do the terms differ from one another?
A universal definition has yet to be agreed upon among industry experts, and vendors have trouble helping their customers distinguish between, for instance, an HRMS or HRIS solution. It’s a confusing situation for everyone.
This article will attempt to clear up some of these issues. It’s complicated enough selecting the right software to meet the needs of an HR department, without having to spend lots of extra research on HCM, HRMS, and HRIS software.
Definitions
Here are what the HCM, HRMS, and HRIS acronyms stand for:
- HCM: Human Capital Management
- HRMS: Human Resource Management System
- HRIS: Human Resource Information System
Regardless of which term someone is talking about, it’s clear that all of them are describing software that integrates a variety of elements, including cloud computing and databases, to produce a solution that will handle almost any workforce management requirements.
Human resources software has evolved over the years. Today’s systems include solutions that were totally separate from one another long ago. They’re now streamlined together to create a unique HR software offering.
Interchangeable Terms
Simply put, HRIS, HRMS, and HCM software describe the exact same thing. The reason they are separate terms is because these technologies are being developed at a rapid pace, hence the creation of three different terms.
With this said, there are some slight differences between them. They’re like different restaurants in that they all serve food, but the menus are entirely different, even though there is some overlap.
In addition, vendors will interchangeably use these terms, which is why consumers should never assume that any system being marketed using a specific term will automatically offer specific capabilities or include certain features.
These differences were more obvious in the past, so people could depend on these three terms to mean exactly what they said. The product line was narrower and served certain company needs, which created a larger divide between the three systems as they were focused on a variety of different areas.
The gap began shrinking over the years as technology has advanced. Companies want one solution to solve all of their needs instead of relying on different vendors for multiple solutions.
Most of today’s companies want integrated features from only one provider because it’s easier to obtain unified streamlined management and 360-degree visibility all in one. When companies become more multifaceted and produce additional data that involves training, it’s more challenging to deal with disparate systems and data silos.
In order to accommodate demands from the market, vendors have extended their products’ capabilities to include more functionalities. The caveat is that businesses are unsure of what any term refers to. A term may mean one thing today, but a year from now, it could mean something entirely different.
Business owners will need to do their homework to ensure that they’re getting all of the solutions they require to suit the needs of their company.
Main Objectives of HR Tech Solutions
The terms HCM, HRIS, and HRMS have one common goal: they allow business owners to manage their employees. Some of the most common objectives among these systems include the following:
- Recognizing workforce needs
- Including progress reports for employee and career goals
- Tracking and administering benefits
- Preserving contact information for current employees, potential hires, and job applicants
- Tracking pay history, including bonuses and overtime
- Monitoring the number of hours each employee works
- Systematizing work progress evaluations
Comparing Proficiencies of HCM, HRMS, and HRIS
So far, this article has included some background information about HCM, HRMS, and HRIS software. To make sure that consumers are more knowledgeable about the HR technology solutions that are available, these terms will be explored more in-depth to see what they actually offer.
These lists are fairly general because there isn’t enough agreement in the industry to identify the differences between every product to the letter with confidence.
Core Features of HRIS
According to an overall consensus, HRIS is one of the most basic options. These terms are still pretty confusing, which is why it’s recommended that business owners read the fine print before they choose this option, even though many HRIS solutions have a lot of great attributes.
HRIS manages policies, procedures, and job descriptions at its core. The following capabilities are included:
- Personal Tracking: Maintains detailed employee records including personal information, position, and contact information.
- Compensation Management: Handles compensation, including company-funded activities, bonus programs, overtime pay, PTO (paid time off), salary, and more.
- Self-Service Portal: Lets managers and employees change and manage their information.
- Benefits Administration: Employees can manage their 401Ks, track their information, and enroll in health insurance.
- Development and Tracking: Allows employees to continue developing their skills.
- Workflows: These solutions boost productivity.
- Absence Management: Manages unforeseen absences due to maternity leave, unauthorized leave, injury, or sickness.
- Recruitment: Store resumes, manage and schedule interviews, and post jobs through the use of an applicant tracking system (ATS).
Core Features of HCM
An HCM refers to overarching employee management solutions. This is where things start becoming tricky because not everyone agrees on the differences between HRIS and HCM. Some users think that an HCM is one of the most extensive solutions on the market, while other users think that HRIS solutions are more extensive.
One thing that holds true is that compared to HRIS, HCM is more comprehensive. This solution includes all of the features of an HRIS plus includes talent management capabilities such as career planning, succession planning, development and learning, and compensation planning.
An HCM system includes the following functionalities:
- Global: Multilingual and multi-currency features that support international requirements.
- HR Services: Includes access to data, documentation, procedures and policies, and the knowledge base of a company.
- Position Control: Makes sure that the employees have the correct responsibilities and duties assigned to them.
- HR Analytics: Offers in-depth interpretations of key metrics.
- Onboarding: A streamlined procedure that helps get new hires quickly up to speed.
- Employee Performance: Tracks productivity, performance, and more.
There is a slight overlap with several of the HRIS functions that were discussed in the previous section. HCM software has significantly more features than an HRIS, which has fewer talent management features.
Core Functions of HRMS
The final solution is HRMS. Again, some users think that an HRMS is one of the most comprehensive solutions on the market. It includes every feature that’s offered in HCM and HRIS systems.
HRMS systems include the following capabilities and features:
- Labor and Time Management: Increases employee productivity and company profitability by tracking project times, controlling employee schedules, and more.
- Payroll: Sends direct deposits, deducts taxes, automatically calculates pay, and more.
Which Solution Is Best for A Business?
It’s clear that there are blurred lines between all three of these types of systems. Unless industry professionals reach a conclusive decision regarding the three types of systems, the confusion is likely to continue.
It would be great to say that if a user needed A, B, or C, that there’s an exact solution that would work for them. Unfortunately, that isn’t the case. There’s never a right or wrong answer in this situation.
Regardless of the type of business a person has, they can benefit from using HRIS, HRMS, and HCM software. As far as selecting the platform that will best suit the needs of a company, it’s entirely up to the business owner. Research is strongly encouraged.
Most of a business owner’s effort and time should be devoted to determining which product will suit their company’s needs the best. When vendors discuss their solutions, it’s important for business owners to understand what they mean. If a business only necessitates basic capabilities and the owner has decided that an HRIS is their best choice, it should never be assumed that a vendor will know exactly what they want, because a vendor’s definition of an HRIS may be slightly different from the customer’s.