HRIS vs. HRMS vs. HCM

The HR field is abundant with terms and abbreviations. When searching for the ideal HR software to enhance efficiency and productivity, teams often need to choose between an HRIS, HRMS, or HCM system.

This article will clarify the differences between these three types of HR systems and guide you in selecting the best option to meet your specific business needs.

HRIS vs. HRMS vs. HCM: What’s the difference? 

The terms human resources information system (HRIS), human resources management system (HRMS), and human capital management (HCM) have many similarities. These terms broadly refer to comprehensive tools and strategies designed to manage an organization’s workforce and align its needs with its business objectives.

The key differences between HRIS, HRMS, and HCM lie in their detailed applications: 

• An HRIS focuses on storing, managing, and tracking employee-related data to support core HR processes. This is the foundational HR software type.
• An HRMS is a more advanced system offering applicable tools for managers related to performance management, analytics, and employee engagement, in addition to the HRIS capabilities.
• HCM tools serve a more impactful purpose for high-level HR strategy and planning within a business. They include capabilities around succession planning, industry benchmarking, and compensation management, and they address the entire team member lifecycle. 

It’s important to understand that the specific functions offered by an HRIS, HCM, and HRMS can vary depending on the vendor and organization. 

What is an HRIS? 

An HRIS helps HR teams manage essential functions through team member data storage and workflow automation. Teams use HRIS software to help keep track of critical HR functions, including payroll details, benefits administration, attendance tracking, and document management.

How an HRIS works

An HRIS collects, stores, and manages human resources data. HR teams and individual team members can input personal information, employment history, and compensation details. 

Then, the HRIS can automate processes like payroll processing and time tracking. Whenever the HR team or the team member needs to access a more comprehensive view of one of these elements, they can run reports in the HRIS to view helpful insights.

HRIS main features 

Each HRIS solution has its own suite of features, but most HRIS tools cover a relatively small set of features besides core HRIS capabilities. 

Common features include:

• Secure storage for team member data
• Automated payroll processing
• Organization for resumes, applications, and job postings
• Onboarding processes and training
• Tracking for time off and salaries
• User-friendly document management 
• Benefits tracking and enrollment
• Time-tracking tools, like absence management software 
• An employee self-service portal enabling profile updates, time off requests, and benefits management
• Customizable reporting and analytics

HRIS pros and cons

When deciding what type of HR software your organization needs, consider the following benefits and limitations.

Pros:

• Lean and user-friendly
• Automated calculations for improved data accuracy
• Supports HR compliance 

Cons:

• Usually, basic analytics and reporting abilities
• Less focused on team member engagement features
• May have less flexibility in workflow customization
• Limited strategic planning capabilities compared to an HCM or HRMS 

Remember, all HRIS tools vary in their specific features and capabilities, so it’s entirely possible to find one to tick all your boxes regardless of the more general drawbacks of this type of software.

What is an HRMS? 

An HRMS enhances the basic functions of an HRIS by incorporating advanced management and analytics capabilities. HR professionals, team members, and managers can use an HRMS for core HR functions, tracking performance management metrics, streamlining the employee onboarding process, and improving talent management. 

Whether you take a hard HRM or soft HRM approach, a reliable HRMS will help you take a strategic approach toward acquiring, hiring, training, engaging, and retaining people.

How an HRMS works

An HRMS centralizes and automates a broad suite of HR functions into a comprehensive employee database and applicant tracking system (ATS). These platforms provide reports, store data, track applications, and recruitment initiatives, and enhance performance management workflows. 

Top HRMS tools also integrate seamlessly with other business systems, which makes it easier for teams to incorporate these capabilities into their workflows. 

HRMS main features 

Most HRMS include customizable options to fit the company’s needs. They encompass functions for the entire suite of HR tasks, data, and analytics. 

Most HR teams look for HRMS solutions with the following features, in addition to core HRIS features:

• Navigation of laws and regulation
• Recruiting assistance
• Performance management tools
• High-level reporting
• Employee engagement analytics
• Support for learning and development initiatives 
• Secure storage solutions for large amounts of data
• Extensive automation capabilities 
• Vast integration options
• Data entry automation

HRMS pros and cons

The variety of HRMS solutions on the market can vary in terms of their core features, price, and capabilities. However, most have the following benefits and limitations.

Pros:

• Integrated data analytics for enhanced decision-making
• Better visibility into team member engagement
• Centralized and compliant team member data management
• Robust reporting
• Succession planning capabilities  
• Added learning and development opportunities

Cons:

• Often more expensive than simpler HRIS options 
• It may have a longer implementation time
• Requires extra training to use the platform
• Doesn’t manage entire team member lifecycle like HCM

What is an HCM? 

An HCM balances logistical HR processes and data with high-level strategy and planning designed to move the organization toward larger goals. When organizations want to drive economic value from every team member, they often turn to an HCM. 

HCM tools help track each team member’s status and productivity throughout training, onboarding, and performance evaluations. They provide data points like cost per hire, employee engagement rate, and turnover rate. 

In addition, C-suite executives will often leverage HCM tools for workforce planning and strategic decision-making.

How an HCM works

An HCM has broad applications, including talent acquisition, onboarding, company culture building, career pathing, succession planning, and more. HCM systems integrate with various data sources to create a comprehensive, user-friendly, secure, and compliant data source.

Strategic capabilities like succession planning features and business intelligence analytics set HCM tools apart from other HR solutions.

HCM main features 

To make the most of an investment in HCM tools, look for the following capabilities:

• Goal setting and performance review tracking
• Robust reporting and analytics
• Self-service portals for team members
• Business intelligence insights
• Succession planning tools
• Access to industry data and benchmarks for advanced comparative analytics

HCM pros and cons

HCM systems play an important role in a broader set of organizational practices and processes. Consider the following pros and cons to determine whether an HCM is the right investment for your organization.

Pros:

• Manages the complete employee lifecycle 
• Considers your workforce as a valuable asset
• Improves employee retention and company culture
• Provides data-driven insights for strategic decision-making
• Scalable for future growth

Cons:

• It can be costly to adopt and maintain
• Requires buy-in and regular use from C-suite management
• Adds training requirements for new joiners 

Benefits of using an HR system 

Why invest the time and money to adopt an HR system in the first place? Organizations leveraging an HR system enjoy the following advantages.

Improves onboarding 

When you choose an HR system with built-in onboarding capabilities, you can streamline a repetitive, manual process while improving employee satisfaction. You can use the HR system’s onboarding software to manage the tasks of welcoming new joiners, ensuring a smooth transition into their roles.

Streamlines HR processes 

HR processes, including recruitment, payroll, attendance tracking, scheduling, benefits administration, and compliance, can all demand extensive staff hours and careful attention. With the help of HR software, HR teams can create systematic HR processes to boost productivity, retention, and engagement in the workplace.

Reduces costs

Efficiency saves organizations money and time. With streamlined HR processes, smoother onboarding, and strategic decision-making, organizations can use advanced HR systems to reduce costs over time significantly. 

Boosts employee retention 

Your people are your business’s most valuable asset, and the right HR tool can play a huge role in a successful employee retention strategy. HR systems with a user-friendly interface and self-service capabilities allow team members to take a more active role in their career advancement and personal development. 

HR systems allow HR teams to perform their roles efficiently, allowing them to better support their people while maintaining a work-life balance.

How to choose between HRIS, HRMS, and HCM systems 

Since each HR system offers unique benefits and drawbacks, take time to carefully select which type to adopt based on your business needs. 

You may want to choose HRIS if:

• You’re working with a smaller budget
• You need a simple system for managing data securely
• You don’t have big plans for scaling soon

You may want to choose an HRMS if:

• Your budget allows for a higher tier of systems
• Your existing tech stack allows for integrations
• You need high-level reports on your HR data
• You’re looking to decrease turnover rates
• You want visibility into your team member engagement data

Or, you may choose an HCM if:

• You have a robust HR budget
• You have a large, more complex organization
• You want more in-depth analytics and reporting
• You’re looking to scale and hire quickly
• You’re working to improve your onboarding processes
• You want to drive people-focused initiatives
• You need visibility into the entire team member lifecycle

Once you have a clear understanding of all of the above factors, ask yourself these questions: 

• What are our most crucial HR challenges?
• How would advanced analytics change our broader strategy?
• What HR technology do we currently use, and what is working about it? What isn’t?
• How do we manage team member data?
• How do we keep team member data secure?
• Could our onboarding process improve?
• Would more strategic talent management benefit our business?

When you analyze the factors and questions above, you can find your ideal type of HR system. Select the type that fits your current reality and budget while giving you room to grow toward your goals. 

Learn more about HRIS vs. HRMS vs. HCM 

Get answers to the top questions about HRIS, HRMS, and HCM.

Are HCM and HRIS the same thing?

While they are similar systems, an HRIS focuses on basic HR tasks, while HCM systems offer support for more advanced HR needs. 

What is the difference between HCM and HRM? 

HCM describes a broader suite of activities and functions that aim to manage talent, plan the workforce strategically, and ensure alignment between HR activities and business goals. 

HRM, or human resource management, is a more basic and straightforward term encompassing core administrative HR tasks like recruitment and team member relations. 

What are the two types of HCM?

HCM includes strategic HCM and operational HCM. Strategic HCM focuses on long-term workforce planning and performance management, while operational HCM centers on administrative tasks like tracking attendance.

Choose the right HR software for your company 

Your company’s struggles, goals, and future plans will determine whether an HRIS, HRMS, or HCM software is the right fit.

Whether you need a secure place to store team member data, want to dive deeper into trends and patterns, or seek to fully understand every data point along your team member lifecycles, HR systems can improve your daily processes and business outcomes. From the simplicity of an HRIS to the visibility of an HRMS to the robust analytics of an HCM, there’s an ideal solution for every business need.

No matter which HR software you choose, always put your people first. Look for a system that enables personalized people management, fosters employee engagement, and drives a positive company culture.