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Does Our Company Actually Need an HRIS?

Explore who should buy an HRIS system, and who should either wait, or pursue other other options...

Phil Strazzulla
HR Tech Expert, Harvard MBA, Software Enthusiast
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Buying a human resource information system (HRIS) is a big decision for any organization.  It’s expensive, it’s time consuming to implement, and purchasing the wrong solution can lead to a host of problems for your company and for your individual career as an HR professional!

So, you may be wondering if buying a core HR software suite is a good idea in the first place.  This article will explore who should buy an HRIS system, and who should either wait, or pursue other options like a PEO.

We don’t have a dog in this fight - we aren’t a vendor, just a website that tries to help HR teams make the right decisions when it comes to tech.  If you find our advice useful, please share it with friends!

What is an HRIS?

A human resource information system (HRIS) is the core software that HR teams use to manage employee records in their company.  This system will also typically include functionality like payroll, performance, time and attendance, and benefits administration.

The best HRIS’s will also include modules like employee recognition, engagement, DEI reporting, onboarding, and potentially an applicant tracking system.

Be aware that all-in-one solutions which cover a broad breadth of use cases typically have weaker modules vs the best of breed point solutions. For example, these performance management systems are almost all 10x better than the performance management module within an HRIS.

However, if you’re reading this and considering your first HRIS, you probably work at a smaller company. This means you should save the time/resources needed to buy best of breed solutions and go with a strong human capital management (HCM) suite that checks the boxes you need.

In other words, one solution that’s a B+ at everything is a better option for smaller companies vs 10 solutions that are A+, but cost in aggregate 5x more, and take 2x the time to manage. 

If for some reason you work at an organization that has a PeopleOps team of >10 and are reading this post, then pick 2-3 best of breed solutions for the use cases that are most important to your business (performance, recognition, onboarding, etc).

Human resource information system on laptop

Why should you buy an HRIS?

As we mentioned, buying the right HRIS is a big decision given the time and money that it will take to be successful.  Let’s take a look at who an HRIS is a good fit for. 

You’re drowning in paperwork

If your HR team (and maybe you’re a team of one!) is spending tons of time trying to remember where files are located either physically or on company shared drives, that’s a big issue.

If you are doing a lot of work that a computer can do: managing employee data, collecting onboarding paperwork from new hires, time tracking, keeping tracking of PTO - then you probably want to get an HR management system that will take care of this for you.

Employee experience is important

Some organizations prioritize the employee experience and company culture, some don’t. If you’re looking to level up your employee experience, you may want to go straight to employee recognition software.

However, don’t discount the impact even a simple HRIS can have on talent management. The ability to lookup time off policies, change schedules, onboard new employees, understand benefits, etc are important.

More than that, some of the modern hr suites also have strong performance and engagement modules built in where you can better understand employee engagement across your workforce.

If this is your rational for buying a new HR platform, make sure you look for a user friendly solution that employees and HR managers alike are bought into.

Your company is growing quickly

If you are hiring more than a few people per quarter, or have more than 20 employees, and don’t have HRIS software, you are making a poor decision.

Many of these solutions will be as cheap as $100/mo for smaller companies, and can save so much time managing employee information. Beyond that, there are the very real consequences on compliance issues.

Compliance is key

Of course, in human resources, we are always concerned with compliance!  Managing employees through a paper or spreadsheet based system leads to errors. These errors can come up in industry specific audits, or in various lawsuits that may be filed from disgruntled employees, etc.

An HRIS is a great way to make sure you have a firm grasp on compliance issues. This is especially true where rules and regulations change often enough to where it’s hard to keep track. Your vendor will almost certainly keep you abreast of these types of updates.

HR is time strapped

If you are an under resourced HR team, a great way to free up time is to automate human resources blocking and tackling through an HRIS.  Data entry and other common HR tasks should not be the main part of your HR department’s job.

Employee self service via web or mobile app can help streamline your HR processes for employees, recruiters, and really anyone in your company.

See point 1 above - switching from paper or excel based employee management to an actual solution is a game changer!

You want to get deeper into analytics

Many of the modern HRMS’s we linked to above will have analytics on compensation, diversity, retention, engagement, and other key employee metrics.

These stats can be useful for everything from planning next year’s hiring to board meetings.

Who shouldn’t you buy an HRIS?

If you don’t meet any of the above criteria and you’re not feeling the pain each day of not having this type of system, then hold off.  Whatever you’re doing now (spreadsheets, maybe no records at all for the smallest of companies, or a simple module within your payroll app), just keep doing it.

Buying a new HRIS can be pricey ($10-15 per employee per month is good pricing guidance for a simple HRIS). It can be hard to implement (integrations with other systems, getting employee records migrated, customizations, etc).

That said, the vast majority of companies should have an HRIS of some sort. The one pitfall we’ll say here is that many companies hear that and say “ok, I’ll buy whatever my payroll provider sells.” Make sure to look at 2-3 vendors at least - many payroll providers have weak HRIS’s that they sell to existing customers who don’t do their homework.

A human resource management system is also the most basic type of hr technology that small businesses can use to automate their HR processes.  So, it’s a stepping stone.

Lastly, you may also want to try partnering with a tech enabled PEO that can handle some of the basic HR functions for your company while also supplying you with a decent tech platform that does everything you’d expect from a solid HRIS. In general, companies with <150 employees are the best fit for a PEO.

That’s it - I hope this advice is useful to you - good luck and please use our website to learn about the various solutions out there!

Phil Strazzulla
HR Tech Expert, Harvard MBA, Software Enthusiast
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Phil is the founder of SelectSoftware Reviews, a website dedicated to helping HR and Recruiting teams find and buy the right software through in-depth, expert advice. He has bought over $1 million worth of HR and Recruiting tools. Additionally, as of 2023, nearly 3 million HR professionals have relied on his advice to determine which business software they should buy.

Phil studied finance at New York University and started his career working in venture capital before getting his MBA from Harvard Business School. His in-depth understanding of the Saas landscape, especially HR Tech, stems from nearly a decade of researching and working with these tools as a computer programmer, user, and entrepreneur.

Featured in: Entrepreneur Harvard Business School Yahoo HR.com Recruiting Daily Hacking HR Podcast HR ShopTalk Podcast Employer Branding for Talent Acquisition (Udemy Course)

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