Human Resource Management Software

October 14, 2022

What Is An HRM Software? Why Is It Essential For Your Business?

Human resource management software has been around since the dawn of time, as soon as the first business realized they needed to track employee hours and that kind of thing. However, it’s only recently that this area of technology has started to take off and improve exponentially largely due to the recent popularity of cloud computing and its effects on the tech industry in general. Now, human resource management software is available to everyone, whether you need it for your small home-based business or you’re running a huge multinational corporation with thousands of employees spread all over the world.

What Is Human Resource Management Software (HRMS)?

An HRMS, or human resource management system, is a collection of programs used to oversee HR functions and activities at all stages of an organization's workforce's existence. With the use of an HRMS, a firm may get a thorough understanding of its personnel and ensure continued compliance with ever-evolving tax and labor rules.

Human resources managers and employees make up the bulk of the system's users since they oversee the day-to-day operations of the workforce and are accountable for ensuring compliance and producing reports on the results of their efforts. But it's not only HR that reaps the rewards. Self-service for routine work is a major selling point for millennial workers since it gives them more control over their time and their jobs. With the help of an HRMS, upper-level management may compile information on staff dynamics and their effects on the company.

Financial teams benefit greatly from HRMS integration with the accounting system since human resources-related charges are among the most expensive business outlays. The best service providers will go deeper than simple bookkeeping to assist your business get actionable financial insights from your human resources data.

Why is HRM so Vital for Modern Businesses?

However, organizations still need to precisely assess labor expenses in order to maintain revenue per employee KPIs up-to-date, even while HR expenditures, particularly office space, are in flux due to transitions to a work-from-home model. A senior professor at the MIT Sloane School of Management Joseph Hadzima believes that the sum of a person's yearly wage plus employment taxes and perks amounts to 1.25 to 1.4 times their base salary. As a result, the true cost of employing a person earning $50,000 per year might be between $62,500 and $70,000. This does not account for the need to provide office space or purchase necessary technology.

Human resources departments that are already at capacity should also implement self-service features in order to relieve some of the pressure. It's not necessary for a human resource professional to support a manager with daily things like updating workers' hours worked or facilitating the distribution of tax documents like W-2s.

Two of the many advantages of a state-of-the-art HRMS Systems are reliable tracking of financial information and safe employee self-service.

Origins Of An HRMS

Payroll was the first HRMS function to be automated, beginning int he 1970s as businesses sought to automate the administration of their personnel. The only way to figure out a worker's salary, withholding, check processing, and payroll obligations were to use a mainframe computer. Only when direct deposit and employee self-service became standard practice in the early 2000s did payroll transition to an entirely digital operation.

In the late 1980s, PeopleSoft was one of the first to provide a more comprehensive human resource management system software. It provided HR managers with tools to automate a wider range of the employee lifecycle and make smarter workforce choices, including record keeping, recruitment, time and attendance, benefits administration, compensation, compliance reporting, and more.

The advent of the World Wide Web in the late 1990s extended the advantages of automation to a broader range of human resource tasks. For instance, internet job boards have mostly supplanted traditional help-wanted advertising, facilitating new forms of communication between employers and potential employees. By the 2010s, cloud computing has been widely used, making it possible for human resources departments of any size to purchase a suite of apps without having to allocate resources to purchasing costly computer hardware or hiring dedicated IT personnel to run and keep the system up-to-date.

Future HRMS developments beyond 2020 are highly anticipated. Many existing systems already incorporate machine learning and predictive analytics; with the advent of genuine AI, businesses will be better able to foresee the skills they'll need in the future, identify workforce dynamics, and speed up the process of matching suitable talent with available positions.

Functionalities of Human Resource Management System Software

HRMS feature sets may differ greatly from vendor to vendor, and if you try to patch together different solutions, you may end up with a less-than-ideal solution. The HR department, IT department, the finance department, and anybody else with a stake in the HRMS should take some time to determine which of these functionalities is really necessary.

1. Management of benefits

Facilitates the creation of plans, the configuration of eligibility requirements, and the transfer of funds to benefit providers for use by HR personnel. Supports open enrollment with a self-service portal and can synchronize benefit expenses with financial records.

2. Systematized employee data storage

Gives you access to a central database for managing your staff's information. facilitates enhanced reporting while decreasing compliance and auditing expenses.

3. Learning administration

Course management, curriculum creation, assessment, and certification are just a few of the ways in which this system aims to assist employees to advance their knowledge and expertise. It also lets businesses implement and monitor compliance education initiatives.

4. Data analysis and reporting

Provides the tools to create financial dashboards with HR Software metrics for enterprise-wide analysis, planning, and decision making; generates operational reports for keeping tabs on HR data; handles compliance reporting; creates key performance indicators (KPIs) to gauge the success of HR processes; and more. Look for ad hoc report generation as another feature.

5. Incentives

Accurately determine the net amounts owed to workers on a regular basis by calculating salary, hourly wage, variable payments such as bonuses, overtime, sales commissions, shift differentials, and merit raises, and withholding the necessary statutory and voluntary deductions. Within this collection of perks may be things like matching funds to a retirement fund or money toward the cost of your cell phone bill.

6. Finding and managing top talent

Recruiters may post open positions, write up job descriptions, and make career pages on the firm's site and network. Job boards should be linked to the position management system and resumes, and candidates should be tracked as they go through the hiring process. When onboarding new employees, make job offers, do verification processes, conduct pre-employment tests, and develop job applications.

HR departments may use this to help their staff grow and improve using tools like goal setting, regular evaluations, and competence and skills testing.

7. Keeping track of Employee's time and presence

Provides tools for handling employee requests for time off, tracking unused vacation days, managing staff schedules and absences, and integrating timesheets with payroll and projects.

8. Single, Consolidated Dashboard View

Best HR Software is often made available to all employees, its ease of use is crucial. Employee and manager self-service, mobile applications, translation, customized dashboards, automated workflows, role-based access restrictions, and alerts are just some of the modern features that may be found in today's systems.

9. Organizing the workforce

Allows you to predict how much your staff will cost you and how well your projections match up with actual spending, both now and in the future. Potentially helpful for identifying knowledge gaps, planning for employee succession, and ranking job candidates.

Not every business needs a feature rich HRMS, and some niche options do exist. If you're going to be putting together the HRMS from products from different vendors, be sure that everything has an open architecture that will provide a two-way data flow, the necessary integrations, and the uploading of files. Because of the complexity, cost, and difficulty of maintaining and updating one-off connections, it is often preferable to use a single supplier for HRMS.


Human Resource Management Software has become increasingly important to businesses of all sizes, from startups to global enterprises. With an effective HR software solution in place, organizations can more effectively manage employee records and data; as well as standardize their onboarding, payroll, performance review, and other HR processes, while also minimizing the amount of time it takes to complete them. In short, HRMS can help you streamline your business processes and make more informed decisions about your workforce.


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