Most of the information available on HR software solutions is provided by — surprise! — the vendors. While they do know a great deal about their own software and how it works, they will always tout the benefit of their stuff over the rest. This means that they’ll conveniently gloss over the “cons” of that particular HR software solution, and entirely leave out any shortfalls of their option, such as features and functionality the software lacks.
There are real and meaningful differences among HRIS, HRMS, and HCM software, even though all of these are software solutions designed and built to help run HR departments. It is important to understand that many vendors, websites, HR professionals, article and blog writers, and others don’t know the differences and do tend to use the terms interchangeably.
In fact, some resources even outright state that all three terms mean the same kind of HR software solutions, all with the same features and functionality. But with this guide, you can always know what type of software someone is referring to, even if they aren’t using the appropriate term from a technical perspective.
When shopping for HR software solutions, it’s best to ignore the acronyms and make your decision based on the features and functionality of each software package. Here are the basic definitions of each (though there is disagreement within the industry on these exact specifications) so that you can get a general idea of what’s out there and what your HR department needs.
What’s Unique About HRIS?
• Core HR functionality
• Recruiting and ATS (Applicant Tracking System) functionality
• Benefits administration and handling of benefits OE (Open Enrollment)
• Absence management functionality
• Compensation management functionality
• Training management functionality
• HR workflow functionality
• Self-service functionality (such as a self-service portal for employees to use)
• Reporting features
What’s Unique About HRMS?
HRMS stands for Human Resource Management System. This is a step down from HRIS in terms of having a fully-featured HR software solution, but still offers the basics plus some extras. For many HR departments, these are all the features they need or want.
• Employee onboarding functionality
• Performance management features
• Position control functionality
• Succession management features
• Salary planning functionality
• Global management functionality
• Analytical functions
What’s Unique About HCM?
HCM stands for Human Capital Management. This is the most basic of the three options, but still offers all of the features that most small HR departments need. It’s also an excellent option if you outsource some of your higher-level HR processes and only keep the basic essential HR operations in-house. An HCM system typically includes:
• Payroll functionality
• Time and labor management functionality
There are also many HR software solutions that are hybrids of these three, such as integrated functionality of HRIS and HRMS systems.
Since the differences and similarities among these HR software solutions can be incredibly misleading and confusing, it’s essential to begin the selection process with the tools to differentiate among the various options and determine what system best meets the needs of your HR department.