11 Best HRMS (Human Resource Management Systems) - 2023

While some people new to HR software think of an Human Resource Management Systems as little more than a database to keep track of essential employee records, these tools can offer much more nowadays. Here are the key benefits of using best-in-class human resource management software whether you're a small business or a Fortune 500 company:

• Better employee experience: The benefits of an HRMS don’t just fall on your business, but also on your employees. A user-friendly employee portal can allow your employees to review and update their info, navigate benefits options, and request time off. All of this can lead to increased employee satisfaction and engagement.
• Drive employee performance: Your HR system should actually drive employee performance through performance reviews, engagement surveys, performance management capabilities, and customizable integrations with other tools you use to build culture.
• Save time with automation: With the right HRMS, tasks like new employee onboarding, offboarding, benefits and payroll administration, and time tracking and attendance management, can all become quick and simple. For example, once they are set up, HR doesn’t have to spend tons of time each day maintaining or editing the system’s policies unless there are drastic changes that need to be made. In turn, with fewer operational tasks to manage, the HR department can focus their time and energy on more strategic initiatives. These can include optimizing employee lifetime value, lowering the turnover rate, and improving employee productivity and wellbeing.
• Increased compliance: Provided that you and your team are careful with the setup and initial data entry, an HRMS can greatly improve HR’s data accuracy. This would come in handy during EEOC audits, wrongful termination lawsuits, and all the other fun stuff that HR pros have to deal with. Also, since many tasks are automated, the right HR software can also avoid human input error. Lastly, some vendors even adapt to unforeseen circumstances like the pandemic and vaccine mandates, expanding their offering with immunization tracking and other safety and compliance tools, for example.
• A more organized HR department: If you’re starting from a handful of spreadsheets and manual processes, an HRMS eliminates the hassle of sifting through files to find the employee data that you need. Since many of these systems have searchable databases, you can easily access the information you need in seconds. Also, in the case of an HRMS, since it would also include payroll, the platform can become a one-stop-shop for all your employee info. 
• HR intelligence: As any operation grows, it becomes increasingly important to analyze its data. An HRMS lets you create custom reports, making it easier for your HR and finance teams to analyze metrics like turnover rate, hiring costs, and employee engagement, as well as using that data to make more informed decisions.
• Workforce management: The HRMS vendors that are best-in-class HR technology companies will offer tools that help progressive HR departments with human capital management. For example, you will find employee engagement built right into many new human resource management software options, along with intuitive employee onboarding, easy-to-access payroll and benefits, mobile-first time tracking and attendance, and payroll management.  All of this is done through a cloud-based offering that updates as new modules roll out.‍
• Streamline recruiting: Some HRMS platforms can also act as a lightweight ATS (and some have a full-fledged ATS built in). The recruiting features of an HRMS could let you 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 you ensure that no key steps or necessary documents are overlooked in the onboarding process.

The benefits of using HR management software are substantial, but there are many common mistakes made when buying and implementing a new tool that you should consider at every step of your search. We list them below along with ways to avoid them: 

• Rushing the decision: Often teams get carried away by the look of an interface, good reviews, and functionality of a product while neglecting their needs. They then realize that their new, shiny tool is lacking a key feature when it’s too late. Design and reputation are important when vetting any software, but they must be considered at the service of a broader goal. Any software decision must be preceded by the proper identification of a team’s needs, past issues, the main concerns of the workforce, and the overall objectives of the company.
• Lack of awareness: This is probably not your case because you’re reading this, but some HR managers tend to choose a tool without fully understanding the kind of features available and what they do. It’s common for them to be looking for new software systems to address one or two major pain points without considering that the same decision could alleviate lots of other HR processes.
• Not consulting teammates: This can be disastrous when implementing HR software. Employees won’t need the same features as managers, and they’ll each weigh the importance of each feature differently. Checking with other employees in every department can be a painstaking process, even in a small business, but in the long run it’s worth it. ‍
• Overlooking security and support: Just because there’s a budget constraint doesn’t mean these important aspects should be ignored in favor of whatever software can do the most for the least. Often, and particularly among the vendors we’ve selected for this guide, the handling of sensitive employee data and customer support can still be excellent. However, as with any other feature, it should be considered with your team’s particular needs in mind.

With most of the vendors listed on this roundup, pricing is on a per-user-per-month basis. Some of them will have an additional monthly base rate, and the majority of them will offer custom pricing based on your business’s needs. Some of them also offer independently priced add-ons, which is great for small businesses who want to pay only for the features they’ll actually use. 

Now if you’d like to get a rough idea of what you can expect to budget based on your organization’s size, we’ve put together the following estimates taken from our own experience and conversations with our HR expert council:

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In order to build a list of requirements and use it effectively to evaluate vendors, it will help to know which are the key HRMS software features and how these can support your goals. 

As mentioned at the beginning of this article, the key difference between an HRMS and HCM software and an HRIS is that an Human Resource Management System also includes payroll, budgeting, and time and labor management. Let’s look at each of these in more detail: 

• Payroll: An HRMS is great for paying your employees in the same platform where all their other HR processes are handled. A regular payroll solution has features like automated deposits, pay slip generation, and calculation for vacation days, sick days, overtime, etc. Some of the vendors we mentioned here can help you pay people in several parts of the world, not just the U.S., but you can also look at our global payroll roundup if that’s important to you. 
• Budgeting: Some of these systems also let you create and approve budgets for the entire Human Resources department. These can cover expenditures, adjust forecasts, and plan for future costs. Some of these may also provide a cost analysis overview, reporting, and integrations with some of the main accounting software. ‍
• Time and labor management: This concept encompasses everything related with managing time for a workforce. A module with this name should support all types of time entry for employees, let you create time cards, calculate overtime, keep track of absences, and of course, integrate all this with the payroll system.

As you start demoing various HRMS software solutions, it’s important to prepare and attend these meetings with some questions already in mind. These inquiries should aim to answer whether the solution in question will indeed address the main use cases and core needs you’re looking for.

Of course, the most concerning of these questions shouldn’t be saved for the demo at all, but rather handled prior through an email thread, for instance, so you won’t waste time on a demo if X or Y solution turns out to be incompatible with your core needs. 

Further, the demo should also help check certain boxes that your internal stakeholders care about, such as integrations, security, data management, self-service portals, features, etc. 

You should write down a list of those questions, share it with your team, and maybe have stakeholders add to it as well. While that list will be unique, here are some common questions when demoing an HRMS (Human Resource Management System) that should help get you started: 

• What integrations are key for us? Does it integrate with ATS, payroll, or any other systems you might have that impact workforce management?
• Does this solution have single sign-on (SSO) capabilities?
• Are there multiple authorization levels for different types of users?
• Is there a maximum number of employees it will support across the workforce?
• What types of reporting capabilities does it have?
• Does it include features to help HR communicate with employees (i.e. mass emails, filtering messages by criteria)?
• What kind of tasks can we automate or streamline with this tool? How many hours can we expect to save doing so? 
• 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?
• How will information be exchanged with carriers (for employee benefits)?
• Does it accommodate benefits carriers’ rules?
• How can we import employee data into this system? (API, Excel spreadsheets, employee records, other databases, and paper documents)
• What built-in security measures does it contain?

Moving on, here are some of the most frequently asked questions from HR professionals when it comes to human capital management software: 

What is the best HRMS system?

While some of the top vendors in HRMS software are UKG, SAP SuccessFactors, Namely, and Rippling, “the best” is really a matter of your business size and requirements. There are many HRMS vendors, out of which there are likely one or two that will align with what you’re looking for. 

What is the difference between HCM, HRMS, and HRIS?

The main difference between HRIS, HRMS, and HCM is that the former two refer to a specific type of software, systems of information, as their names imply (human resource information system and human resource management system). HCM, on the other hand, stands for human capital management. This is a set of business practices around the acquisition, management, and optimization of a business’s workforce. 

What is HCM software?

HCM software is a software tool that takes most features you would expect out of a labor management platform but builds it purposefully for the business practices that encompass human capital management. This software puts together widely varying features such as workforce planning, performance reviews, and employee onboarding in a single management platform where they can all help to generate insights that drive broader business decision making.

How come definitions of HCM, HRMS, and HRIS vary so much? 

This is a good question precisely because the definition of each term varies widely from vendor to vendor, and among HR professionals as well. That being said, the differences between each software category are all about features and use cases. Most thought leadership indicates that HRIS is the most circumscribed type of solution, focusing on core HR needs. HRMS takes it up a notch in features, while still sticking to HR use cases, and HCM is about rounding up all those features with strategic planning for the business in mind, with the workforce as the main component to analyze and optimize.

To wrap this up, we’ll assume you’ve read everything above and have a couple of vendors in mind to reach out to and book a demo with. To send you off to this part of the buying process, there’s one last piece of advice that can help a great deal when evaluating HRMS software providers. 

These demos should revolve around your HR requirements, and you should try to avoid having one-size-fits-all demonstrations whenever possible. To do this, share your list of requirements and questions beforehand, asking them to show that specific functionality. Since reporting is such a big part of HR management these days, you could even give them data for them to run into the system.

This way, you and your team will get to truly see how much of a fit the tool is for you, as well as gauging other factors like intuitiveness and overall user experience. Couple this guide with our very own HR and recruitment software buying organizer and you’ll be on your way to find the perfect platform for your HR needs.