We like to start with the “why?” behind any piece of software. With the HRIS, many assume that the answer is simple: it’s a must-have because a database that tracks your employee information is necessary. In fact, buying and using an HRIS is not the no-brainer choice it’s made out to be. It is a major strategic decision that requires a lot of time, thought, and buy-in, and in some cases, it’s just not the right tool for the job. That said, we’ve seen HRIS systems offer tremendous benefits when they are adopted at the right place and time.

Here are the key benefits of using a top-notch HRIS, whether you're a small business or Fortune 500.

Save Time with Automation: By automating recurring tasks like benefits, payroll administration, employee onboarding, time tracking, and attendance management, your HRIS helps make tedious HR processes quick, simple, and less prone to error. According to Nucleus research, companies that do use HR automation reported 67% faster new hire onboarding and 90% time savings on admin work.

According to Jones, if an organization has at least one employee whose full-time job it is to manage people systems and benefits administration, then it is time to start using an HRIS.

Improve the Employee Experience: An HRIS doesn’t just benefit your business and bottom line. It’s also a direct asset for your employees. With a user-friendly employee portal, your employees can navigate benefits options easily, review and update personal information, manage requests for time off, and much more. Employees who feel their employers’ onboarding software is effective are five times more likely to report high levels of engagement

Employee Performance: Beyond simply reviewing conduct and achievements, your HR system can actually drive employee performance. Performance reviews, engagement surveys, performance management capabilities, and customizable integrations with other tools can all be used to build culture and turn company values from ideas to action. Statistically, 72% of HR generalists engaging in self-service HRIS reported a lighter workload.

Increase Compliance: If you are careful with the setup and initial data entry, an HRIS can significantly improve your data accuracy and accessibility. In addition to helping out in a pinch, data accuracy, and task automation support compliance year-round. Automation results in fewer human errors. Many vendors do a great job of staying on top of changes in laws and regulations, keeping you in the loop, and updating their products accordingly.

Better Organization: If a team’s starting point is pencil and paper, using an HRIS will alleviate some data security risks and the hassle of sifting through physical files. For teams who have moved beyond the paper files to a patchwork of spreadsheets and other tools, buying a complete HR suite will help keep everything in the same place.

Richey shared her personal experience with this problem, and how an HRIS solved it.

Early on, her company used multiple tools for people processes: one tool for payroll, one for benefits, one for LMS, one for performance management, etc. Does this sound familiar? She knew it was time for an HRIS.

First, she identified the needed features and set her team off with a headstart and a list of non-negotiables. The result: they identified the right tool for the right price, and today, they save hours each month by not having to switch from one app to another, build integrations, or transfer info.

Streamline the Hiring Process: Some HRIS tools can also act as lightweight ATS, and some have a full-fledged ATS built-in. These features allow you to easily collect resumes, review candidate info, and speed up employee onboarding and training, providing new hires with a seamless transition into your company. Custom workflows also help ensure that the onboarding process does not overlook key steps or necessary documents.

Business Intelligence: Analyzing data metrics becomes increasingly important as your business grows. By creating custom reports, your HRIS makes it easy for your HR team to analyze hiring costs, calculate turnover, employee engagement, and ultimately use data to help inform business decisions.

Workforce Management: The top tools come from best-in-class HR technology companies. Progressive, forward-thinking HR departments can count on an HRIS platform for human capital management.

For example, employee engagement is sometimes built right into an HRIS or HRMS (human resource management software), along with intuitive employee onboarding, easy-to-access payroll and benefits, mobile first-time and attendance, and payroll management. This is done through a cloud-based service that automatically updates as new modules roll out.

Making mistakes is a great way to learn, but with this complex and expensive software, sometimes it’s best to learn from the missteps of others.

The best way to avoid buying the wrong software is to ask the right questions. Keep this in mind as you start working with vendors – check out our suggested questions below, and take note of these shortcomings that are typical traits of bad HRIS software.

Lack of employee self-service: If your HRIS doesn’t allow employees to update their own personal information or choose their own benefits plans, then it’s not really saving your human resources team time. The tools that offer the greatest returns always include employee self-service capabilities.

Inability to integrate with other systems: If you really want to save time with an HRIS, make sure it integrates with your current tech stack. Manually transferring data from one system to another is the exact opposite of saving time.

Take, for example, the integration of a standalone ATS. Though there are some exceptions, most HRIS platforms don’t include an ATS that is sophisticated for high-volume hiring. Remember this as you shop: chances are good that your ATS and HIRS will be neighbors but not roommates. You can ensure they get along if you think ahead about integrations.

Lack of data accuracy: Your HRIS is only as good as the data it stores. A system full of inaccurate data is useless and potentially hazardous, so make sure your HRIS takes measures to ensure accuracy. This applies to data entered manually or via API from another HR or recruiting solution – be sure that your HRIS takes this step seriously. 

Lack of consideration of application’s limits: The HRIS that is right for a business with 5,000 employees is not the right HRIS for a company with 100. Your company’s current size must be a major factor in your decision, and if your business is growing fast, you’ll want an HRIS that can grow with it.

For very large teams, the options are relatively limited compared to what is available for small groups. This owes to the fact that the latest and greatest tech often comes from small, boundary-breaking startups that are too curious (and sometimes distractible) to focus on making incremental improvements to the feature set needed by enterprise-size orgs.

Incorrect or rushed implementation: Take. Your. Time. There are few things worse than technical debt, one of which is technical debt that results from preventable (a.k.a “stupid”) mistakes. Do not rush the data transfer process when setting up a new HRIS. If you cut corners, data will likely be entered or transferred incorrectly. Without a doubt, you will meet that data again during a frustrating and preventable (a.k.a “stupid”) moment when you discover you’ve entered the wrong pay rate or manager permissions.

It’s advisable to get a consultant if you can afford it. Someone who “has been there, done that” when transitioning data from one system to another can be advantageous. And, of course, if your new HRIS comes with a ton of vendor support, use it all!  Many companies offer tremendous support to their new clients to ensure a smooth implementation of their platform.

Non-user-friendly platform: An HRIS is only effective if employees actually use it. A poorly designed platform may generate net-negative productivity and net-positive frustration. Make sure your new system is designed for the humans who will use it: it must be easy on the eyes with good UX in all environments in which it will be used, whether an app, browser, or mobile web.

Insufficient data security: It will surprise nobody to read that a data breach on an HRIS is very, very bad. They store scads of sensitive, personal employee information, so even a  minor instance of compromised security could cause irreparable damage to your business. Be cautious and methodical when setting up your system’s security measures – and remember the sometimes blurry difference between your HR pros and your IT pros. And one rule of thumb: be weary of vendors with fewer than 20 employees listed on LinkedIn.

Insufficient planning: HR teams who have not sufficiently mapped out the process of installing and introducing their HRIS will face tremendous struggles getting their solution off the ground. To prevent this, your team should create a concrete timeline that outlines each implementation phase in great detail. Communicate with the relevant set of employees/managers at each implementation stage. Ask and expect a lot of questions, and remember: no rushing! And remember to save some resources for your future.

Having led many HIRS implementations, Richey has “been there, done that''. In her experience, she found that one of the biggest mistakes companies make is purchasing a product that works only for where they are today, with little thought of where they may be in the near or distant future. She added, "Think of all the possible changes your company might experience in the next five years and plan for that. You want a system that scales with the company to ensure you won't switch HRIS for a long time."

Any time you manage a significant purchase for your business, internal stakeholders will be watching. In fact, part of the process of buying a new HRIS is stakeholder management. You must justify your choices from start to finish, from vendor selection to buy-in to implementation.

Generating wholehearted stakeholder buy-in is particularly important because it is crucial to maximizing the solution's value.

Identify these key stakeholders early and understand how to maintain their support.

Below is a brief overview of the various important stakeholders and advice for managing each.

Company leadership (CEO and rest of C-Suite): If you want your HRIS to have the best chance for success, you’ll need to get buy-in and continuous support from the top leaders at your company. To accomplish this, present the business case to them and carefully lay out the ROI your new HRIS will drive. Present your plan for implementation and provide them with a detailed timeline. Throughout the life of the HRIS, provide leaders with updates about how the system is meeting the goals laid out for it, and how you plan to stay on track to achieve future goals.

Human Resources: The rest of your HR team is one of the biggest stakeholders involved in the implementation and must not be overlooked! A successful solution will make HR functions much easier, and a failed solution will make them much, much more difficult. It is important to use their help to get this right.

Because they will lead in handling employee questions, issues, and possibly grievances with the system, make sure your People team feels good about the selection and is properly trained to use it. Communicate to all human resources team members how a new HRIS will change some employees’ duties, especially with the automation of tasks that we previously performed manually.

Benefits Brokers: Some of the HR professionals we talked to consider it essential to involve benefits brokers in the process. First, ensuring that the HRIS vendors you're considering work with the benefits carriers you currently use is vital. If they do not, part of your implementation process will include justifying to your employees why they are being forced to make a difficult change. In some (but not all) cases, a benefits broker can help with this.

Although keeping current benefits unchained may narrow down and simplify your search from the start, brokers can be helpful to help navigate the notoriously tricky ins and outs of benefits and coverage.  Finally, some benefit brokers have an internal HRIS team you can partner with during the RFP (request for proposal) process.

Operations team: Your operations team will be involved in the budgeting, reporting, and legal compliance of your HRIS. They may also communicate with benefits management providers and external partners affected by your new HRIS. Communicating with your operations team is crucial to their continued support of your HRIS solution.

IT teams: Your tech teams will play an important role in helping implement and update new software, so involve them in the decision-making process to ensure they are comfortable with the technology and any security implications. It may also be helpful to open a communication channel between the vendor’s tech people and your IT team, so if they do run into problems, you are already one step closer to a solution. If the system will require a lot of updates, especially if they are not the automatic, cloud-based type, make sure that your tech team is aware and prepared.

All employees: Every employee has a stake in the success or failure of your HRIS. A successful, easy-to-use HRIS is a massive benefit to workers. At the same time, the success of your HRIS is dependent on your employees using it correctly, so be sure to provide the necessary training and communicate about the solution clearly and early. You should listen to your employees' feedback at every step of the road and take their complaints and concerns seriously.

Be sure to carefully explain the positive ways an HRIS will impact their day-to-day work and focus specifically on how the system will benefit them now and in the future.

Pricing of HRIS software depends on the breadth of the feature set offered and the size of your organization. Typically, it is charged on a per-employee/per-month basis.

Price ranges vary a lot for different solutions. You can find an HRIS that will charge you $2/employee/month and solutions that run as high as $30/employee/month (plus additional fees for payroll and benefits, as well as extra modules for hiring and onboarding).

As with many things in life, you get what you pay for. If you just need to check the box, a cheaper solution makes sense. Suppose you want to use your HRIS to be a tool for increasing employee engagement, retaining employees, and generally driving business value through human capital management. In that case, you’ll have to pay up for one of the better solutions.

Some vendors will also charge ancillary fees in addition to the recurring SaaS cost. Be aware that these add-ons can add up, and realize that you can often negotiate these fees much more easily than the recurring per employee/per month cost of the cloud-based solution. Setup, consulting, support, and software fees are all fair game for negotiation.

A quick note: we are continually crowdsourcing data on HRIS pricing through a survey. We do this to increase transparency and help HR teams better understand their options. It's anonymous and takes only two minutes; anyone who helps the community by filling it out will get access to the entire data set.

When looking for an HRIS, it’s essential to think about your goals and codify them into an organizer spreadsheet to make notes throughout your vetting process. In addition to the demo questions below, it’s worth thinking through some of the key features of your new system. Here are a few you’ll want to consider as you start watching demos for potential vendors.

Employee Self-service portal: Keeping employee information current can be a lot of work for your HR department. The self-service function of many human resource management tools helps eliminate this challenge by empowering employees to view and edit their own information, including benefits selection, time off, and more. It’s worth taking the product for a spin with the employee user in mind to make sure the system is set up for their ease of use.

Time and Attendance Management: An HRIS simplifies tracking time off and planned and unplanned absences due to sickness, injury, maternity leave, or unauthorized leave.

Onboarding Capability: While onboarding typically involves a lot of paperwork, with an HRIS, employees can complete much of the onboarding process electronically, including open enrollment. Most HRIS platforms even have electronic signature functionality, allowing employees to sign scanned documents that can be stored in the system.

Custom Reporting: As HR increasingly relies on data and trends, it’s crucial to have a system that can create reports to help improve business decisions. A powerful analytics system takes the manual labor out of preparing reports and replaces it with empirical evaluation speed,  accuracy, and objectivity.

Learning Management: Though a learning management system (LMS) may be baked into your HRIS software, it's much more likely that, like the ATS, you’ll use this tool as a standalone solution. Whether integrated or built-in, the LMS is critical for managing educational materials during employee onboarding and throughout the employee lifecycle.

Employee Database: The employee database of an HRIS allows you to store all employee records and information in a centralized location. The data is searchable, making finding details on employee salary and position, performance appraisal histories, disciplinary histories, and training records easier.

Recruiting functions: Many HR solutions allow you to post new roles on job boards, manage interviews, store resumes, and transfer information when a new candidate is hired. While not all HRIS platforms have their own recruiting and applicant tracking functions, they should at least be able to integrate with your current ATS so that you can transfer new-hire information to your system quickly and smoothly.

Training and Development Management: Tracking employee training is essential, particularly in an industry where employees require specific certifications or licensing. An HRMS lets you see what training employees need or want and helps you stay current on any required recertifications.

Central Storage for Company Documents: As a centralized location for any information your employees might need, your HRIS should be where employees can find employee handbooks, emergency evacuation procedures, safety guidelines, and more.

Benefits Administration: Your HRIS software should enable employees to enroll in health insurance, manage their 401(k), and track their benefits information. Many systems also have built-in payroll solutions, so when employees update their benefits information, that information is automatically updated in the payroll system and reflected in their compensation. Often, the payroll feature is an additional charge that your HR department needs to be aware of.

Compensation management: To reduce the risk of error when handling employee compensation, HRISs often offer payroll and compensation management functions. This allows you to handle many forms of compensation including salaries, paid time off, overtime pay, and bonus programs automatically.

The next step is working with vendors and doing demos. For this step, it’s essential to come prepared with questions that address the core needs of your organization from a functional standpoint, as well as the various items internal stakeholders are looking for (security, data migration, self-service portals, etc.).

Here are questions you should have in your back pocket to ensure your company's needs are met by the tool your vendor is selling.

• How will information be exchanged with carriers (for benefits)?
• How can we put important data into this system? (API, Excel spreadsheets, documents, other databases, and paper documents)
• Does it accommodate benefits carriers’ rules?
• Does it integrate with ATS/payroll system/any other systems you might have that impact workforce management?
• What built-in security measures does it contain?
• Does this solution have SSO (single sign-on) capabilities?
• Are there multiple authorization levels for different types of users?
• Is there a maximum number of employees it will support?
• What types of reporting capabilities does it have?
• Does it include features to help HR communicate with employees, like mass emails or sophisticated message filtering?
• How much technical training will be required?
• What kinds of technical support are provided?
• What recruiting capabilities are built in?
• Which HR processes will be automated?

Richey points out, "Demoing software can be painful, but it pays to go into the weeds for every single module." When approaching a demo, Stacey likes to get a feel for what every workflow will feel like for her employees. She believes they must be getting a tool that makes their lives easier, and often, this commitment requires a trial version to test out the software after the demo.

While tiny businesses may be able to handle all of their employee information in spreadsheets, an HRIS becomes increasingly essential as your business grows. If you’re still not sure if an HRIS is right for your business, here are some key signs that you should be thinking about implementing one:

You have more than 25 employees: While 25 employees is not a rigid threshold, it is an excellent place to start thinking about using an HRIS. With more than 25 employees, keeping track of data becomes a chore, and at a certain point, it becomes impractical (and error-prone!) to manually enter and update all employee data.

Many of your jobs require licensing or certification: If you are in an industry where employees require up-to-date certifications for legal reasons, staying on top of the schedule is critical. An HRIS can streamline the process by setting up automated reminders when certificates are due to expire.

You’re growing fast: Companies face changing legal requirements as they pass different size thresholds. Keeping up with the legal requirements of a growing company is much easier to do automatically with an HRIS than by hand in spreadsheets.

You want your HR team to play a more strategic role: Having one easily searchable system that stores employee information, runs payroll, and handles benefits saves a lot of time for your HR team. It allows them to focus on more strategic projects for your business, like increasing employee engagement and retention or improving company culture.

You manage hourly employees: With hourly employees, you often have to track hours and manage changing schedules. This is another process that is made infinitely easier with an HIRS system.

You need custom data reports: As businesses become increasingly data-driven, accurate and readily available data-based reporting about the life of your company becomes more and more critical. Many HRIS solutions have features that easily create custom reports for you so you can get a better idea of your company's health.

What is an HRIS?

An HRIS is an employee management platform that allows HR teams to store and manage employee records. They generally include or integrate with standalone tools that offer core HR functions like payroll, performance reviews, and ATS.

What does HRIS stand for?

HRIS stands for Human Resource Information System.

What’s the difference between HRIS, HCM, and HRMS?

HCM stands for Human Capital Management. HRMS stands for Human Resource Management System. On the surface level, there isn’t a massive difference between HRIS, HCM, and HRMS. They are all people management systems that help companies optimize their HR processes.

However, there can be some subtle differences.

• An HRIS is an all-encompassing in-house software for managing people, procedures, and policies.
• An HCM has all the features of an HRIS but often includes talent management capabilities.
• An HRMS is an end-to-end system with all of the features of an HRIS and HCM but often includes payroll and time and labor management capabilities.