Today, many companies are dedicating growing budgets to HR technology.
According to SHRM, organisations increased their tech spending by 57% in 2021 from 2020, which is also higher than in recent years before the pandemic.
Working in Human Resources, it's likely that you've already implemented or are considering buying HR technology for your organisation. If you're thinking of purchasing HR software, you'll likely come across a lot of acronyms: HCM, HRIS, HRMS, ERM, and more.
So, what are the differences between HCM (Human Capital Management), HRIS (Human Resources Information System), HRMS (Human Resources Management System) and ERM (Employee Relationship Management)? And which of these terms should you be searching for when you research HR systems for your organisation?
- What are HRIS (Human Resources Information Systems) and HRMS (Human Resources Management Systems)?
- What is HCM (Human Capital Management)?
- What is ERM (Employee Relationship Management)?
- How can HR software help with ERM?
What are HRIS and HRMS?
HRMS and HRIS are types of HR solutions. They are HR software systems that HR departments and employees can use for a range of functions.
The difference between HRMS and HRIS is often unclear. Some websites, including Wikipedia, use the terms Human Resources Management System, Human Resources Information System, and Human Capital Management interchangeably. Many vendors of HR software also use these terms interchangeably.
However, it is useful for Human Resources professionals to understand some key differences between HRMS and HRIS. If you are researching which HR software to use in your business, it's important that you know which features you are paying for.
So, without further ado, here are the key differences between HRMS and HRIS.
Human Resources Information System (HRIS)
An HRIS is a type of HR software which centres around a database of employee information. Users can track, update, manage, and automate HR processes using an HRIS. They might also include some capabilities for reporting and analytics.
An HRIS will usually do the core, essential functions of Human Resources. It might have the capabilities for:
- Payroll processing: it will automatically calculate salaries and wages as well as tax deductions
- Recruiting: HRIS can automate job opening postings, track applications and candidates and manage hiring
- Benefits: employees can use HRIS to enroll in benefits.
- Personnel tracking: records employee data and contact details
- Attendance: it can track and categorise absences.
- Time: HRIS can be used to track working hours.
Be wary: although a vendor might label their HR software as an HRIS solution, it may not have all these capabilities.
In short, the key word of Human Resources Information System is 'information'. HRIS software is based around storing information in databases, which can be on-premises or cloud-based depending on your organisation. Therefore, if you're looking for HR software with only the core, essential information-storing capabilities, HRIS software might be what you're seeking.
Human Resources Management System (HRMS)
HRMS is a type of HR software that has the same capabilities as an HRIS but is able to manage additional HR processes - hence the 'management' in the name. These additional functions of an HRMS might include:
- Reporting and analytics: HR professionals can analyse employee data from a HRMS system to inform strategies and logistics.
- Importing data to employee profiles: a HRMS system can action employee data rather than simply storing it.
- Recruitment and candidate management: HRMS aids shortlisting, screening and contacting candidates throughout recruitment.
- Talent management: HRMS systems compliment the ongoing process of talent management including recruiting and onboarding.
- Succession planning: the people management functions of a HRMS enable future planning in an organisation.
- Performance management capabilities: such as evaluations and reviews, including employee engagement.
- Document management: storing key documentation as well as employee information.
- Managing expenses: some HRMS have payroll functionalities which aid expenses management.
- Self-serve and mobile capabilities: some cloud-based HRMS systems, like XCD, utilise self-service in a handy mobile app.
Some HRMS software is based on-premises but much is cloud-based.
Large and small businesses alike use HRMS software to help automate otherwise time-consuming HR processes, meaning that Human Resources staff are freed up to do more strategic work. Using all-in-one self-service HRMS means that HR employees don't have to spend as much time helping employees access data or submit documents.
If you're an HR manager who wants an all-in-one HR software with more benefits and capabilities, HRMS might be what you're looking for. Be wary though - vendors of HR systems still often use these terms interchangeably, so the name is no guarantee of which functionalities you're getting. The labels vary - HRIS, HRMS, HCM software - so you'll have to research which functionalities different vendors offer with their HR systems.
You might be interested in: 5 ways to get the most from your HR tech.
What is HCM?
As a HR professional, you know all about Human Capital Management. However, there's some confusion online about how HCM is precisely defined, which this article will clarify.
As you know, Human Capital Management is a function of Human Resources. It's a set of practices relating to how people resources are managed. It's all about the practices your organisation uses for recruiting, onboarding, managing, optimising, and developing employees across their employee lifecycle within the company.
Aspects of HCM involve workforce management (processes like tracking time, payroll and benefits administration), workforce optimisation (using automation to improve performance in line with business goals), and workforce acquisition (posting job listings, reaching candidates, etc). You might use HR systems to automate some of these functions.
What is HCM software?
When you're researching HR software, you might see mentions of HCM software. Some vendors use HCM to refer to a specific type of HR software.
They usually define HCM software as a a cloud-based, all-encompassing HR software suite. You might see the term Human Capital Management used to describe HR software that is cloud-based, cloud-built, and uses tools like AI and digital assistants to help automate workflow. Therefore, HCM software is a label used by some vendors to refer to the best-in-class HR software solutions.
You might be interested in: 7 Human Resources trends to look out for in 2022.
What is ERM?
ERM, or Employee Relationship Management is about building stronger relationships between employees, employers, and HR. ERM is about managing interactions between these parts of an organisation and making sure they are smooth and free of friction. In practice, this can involve Human Resources focusing on a range of things including communication, conflict management, and the growth of employees.
Many HRMS software platforms and HCM software will have ERM capabilities incorporated into their platforms.
The benefits of good ERM include:
- Strengthening employees' bonds and team spirit.
- Improving company culture, employee experience and employee engagement.
- Boosting performance and productivity.
How can HR software help with ERM?
Employee Relationship Management is one of the things we're most interested in at XCD. We've built our one-stop, single-solution HR software with employee relationships management in mind.
There are many ways our software can help with employee relationship management, including:
- Self-service: everyone can easily access their resources and data from any device and anywhere.
- Easy-to-use mobile app: increased flexibility for employees to check and update information.
- Easy requests: employees can submit requests, such as for annual leave, simplifying and streamlining the process.
- No delays or errors: everyone is paid on time, keeping employees happy!
- Automation: processes are consistent and free of bias or friction.
- Personalisation: there is customised service for employees.
- Data-driven: real-time insights inform employee relationship management.
Industry experts predict that HR technology will continue to boom in 2022, responding to the needs that have arisen from the Covid-19 pandemic and increasing remote and hybrid work. So, many HR teams want to know how HRIS or HRMS software can help with their Human Capital Management and Employee Relationship Management.
Are you interested in learning more about how HR technology can help with HCM and ERM in your organisation? Check out our resources on the topic: