INFOLINK UNIVERSITY COLLEGE

MASTERS OF BUSINESS ADMINISTRATION

DEPARTMENT

MANAGEMENT INFORMATION SYSTEM ASSIGMENT

ABOUT HUMAN RESOURCE SYSTEM
TO DR. YILMA

NAME ID
KALEAB GIRMA 1008-20
SELAM GIRMA 13966-20

Contents
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What Is a HRMS?.........................................................................................................................................1
HRIS vs HRMS..............................................................................................................................................2
What’s the Difference between HRMS and HRIS?.......................................................................................2
History of HRMS..........................................................................................................................................3
Why HRMS is important..............................................................................................................................4
Functions of an HRMS.................................................................................................................................4
HRMS Features............................................................................................................................................6
Benefits of an HRMS....................................................................................................................................7
Common Functions of HRMS Systems.......................................................................................................10
HRMS Security...........................................................................................................................................10
Choosing an HRMS....................................................................................................................................12
Type of HRS software................................................................................................................................13

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What Is a HRMS?
HR work is more complex and involved today than it ever has been. There’s so much that goes
into the management of employee information, which is used for everything from recruiting and
hiring to training, evaluations, and so much more. The importance and manpower behind these
tasks make it critical for human resources professionals to have HR management software for
more efficient management of HR information.

This is why many companies are now use a HRMS (Human Resource Management System) — a
combination of systems and processes that connect human resource management and
information technology through HR software. A HRMS can be used in candidate recruiting,
payroll management, leave approval, succession planning, attendance tracking, career
progression, performance reviews, and the overall maintenance of employee information within
an organization.

An HRMS, or human resources management system, is a suite of software applications used to

manage human resources and related processes throughout the employee lifecycle. An HRMS
enables a company to fully understand its workforce while staying compliant with changing tax
laws and labor regulations.

HR leaders and staff are the primary users, given that they run day-to-day workforce operations
and are responsible for compliance and performance reporting. However, HR isn’t the only
department that benefits. Companies can empower managers and employees with self-service for
common tasks—an important selling point for younger hires. Executives can use an HRMS to
generate data on workforce trends and their business implications.

And given that HR-related costs are some of the largest expenses incurred by a company, HRMS
integration with the accounting system is invaluable for finance teams. Leading providers will go
beyond basic accounting to help a company wring more financial insights out of HR data.

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HRIS vs HRMS
You may hear the term “HRIS,” an acronym for human resources information system, used
interchangeably with HRMS. The roots of that stem from the 1980s, when IT departments were
commonly known as management information system (MIS) departments. When HR
information and processes became computerized, a derivative of MIS—HRIS—was born.

A core HRIS function was electronic recording and management of employee records. Thus,
HRIS is the acronym many HR pros use to describe when human resources records, processes
and reporting become electronic through the use of software.

As technology evolved and the system expanded beyond keeping employee records, HRIS
became known as HRMS. Today, the terms are still used synonymously to describe the software
systems that record employee information and automate HR processes at a company.

What’s the Difference between HRMS and HRIS?

The term HRMS is sometimes used synonymously with HRIS (Human Resource Information
System), but a HRIS is really a type of HRMS. Functionally, however, there is no real difference
in the type of systems offered going by one title or the other. At one time, a HRMS was a more
complete automated solution to human resources management than software labeled as HRIS or
even HCM, but rebranding by many companies has worked to make the different software titles
generally indistinguishable. The notable differences are mentioned below.
Today, a HRIS is designed to track numerical data and employee information, such as an
employee’s schedule or SSN. A HRIS also helps HR departments manage their policies,
procedures, and people in general. Tasks at the heart of a HRIS include reporting, training,
recruiting, compensation, benefits administration, data tracking, workflow automation, and
accounting functions.

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On the other hand, a HRMS is more robust and is comprised of both IT and HR management
technology. It deals with all the same information as a HRIS and a HCM in addition to non-
quantitative information surrounding employees and applicants. Some unique HRMS features
include onboarding, employee satisfaction, job performance, analytics, profitability, and more.

History of HRMS
In the 1970s, as companies looked to automate management of their people, payroll became the
first HRMS function to be computerized. But it took mainframe technology to calculate a
worker’s earnings, withhold deductions, print a paper check and track payroll liabilities. It
wouldn’t be until the early 2000s, with widespread adoption of direct deposit and employee self-
service, that the payroll process became wholly electronic.

PeopleSoft was among the first to pioneer a more complete HRMS system in the late 1980s. In
addition to payroll, it offered employee record management, recruiting, time and attendance,
benefits administration, compensation, compliance reporting and other features to help HR
professionals automate more of the employee lifecycle and make better workforce decisions.

The rise of the internet in the late 1990s brought the benefits of automation to even more HR
processes. For example, paper-based help-wanted ads were replaced by electronic job boards,
giving recruiters and candidate’s new ways to connect. By the 2010s, cloud technology was
mainstream—now, HR teams at all-size companies could afford a suite of applications without
investing in expensive computer hardware or IT staff to operate and maintain the system.

What’s next?

2020 and beyond promises even more HRMS innovation. Machine learning and predictive
analytics are built in to many current systems, and the advent of true artificial intelligence will
help companies anticipate future skills requirements, detect workforce trends and match best-fit
candidates to open positions faster.

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Why HRMS is important
While HR expenditures, especially office space, are in flux now given shifts to a work-from-
home model, companies must still accurately calculate labor costs to keep revenue per employee
KPIs current. Joseph Hadzima, a senior lecturer at the MIT Sloane School of Management,
estimates that base pay plus employment taxes and benefits typically add up to 1.25 to 1.4 times
annual salary. Thus, a $50,000 per year worker might actually cost $62,500 to $70,000, not
including real estate and equipment, like PCs and phones.

Moreover, companies with overstretched human resources departments should be rolling out
self-service capabilities. There’s no reason for an HR specialist to spend time assisting a
manager with routine updates to hours worked, for example, or helping employees access forms
like W-2s.

Fortunately, accurate financial data reporting and secure self-service are just two benefits of a
modern human resources management system.

Functions of an HRMS
When considering which HRMS is right for your company, it’s helpful to think in terms of
functional components. Generally, modern systems cover seven areas, with varying levels of
focus.

Candidate management: Relates to employment offers to candidates and how you promote

your brand to both the outside world and current employees who may wish to apply for internal
jobs or make referrals. Critical for companies for which the candidate experience is a primary
concern—from applying to resume management to interview scheduling to making offers, all the
way through onboarding.

Employee engagement: People who are more engaged tend to produce higher-quality work and
more fully adopt the company’s values and execute its vision, so how an employee connects with
leadership and colleagues is important. Often, the HRMS is the route to complete a training
course, acquire a new skill, develop a career path, gain recognition or become a mentor.

Employee management: There’s a reason this function is often referred to as “core HR.”

Delivers a central portal to support analysis, reporting and compliance processes. It’s where you

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structure your workforce into organizational units, like departments or locations; define reporting
relationships between managers and employees; and align payroll to accounting cost centers. It’s
here where personal information is recorded and maintained, and this function is the cornerstone
of efforts to offer employee self-service, maximize reporting and improve HR service delivery.

Optimization: Gleaning information from the HRMS to develop a vision for the future
workforce is a primary selling point. It’s also the least-utilized function of a typical HRMS. The
real value of this function usually comes to the fore with a merger or acquisition, sharp economic
swings in either direction or when executives exit. Companies that take a proactive approach to
optimizing the workforce are more resilient to change, have higher retention of top talent and
better employee engagement.

Payroll: This is also a primary function of the HRMS—calculating earnings from gross to net or
net to gross and withholding individual deductions and issuing payments can be made just as
routine as paying the rent. Payroll functions comprise benefit elections and both employee and
employer costs. Full-service payroll solutions also automate tax filing and deposits. Self-service
functions allow employees to make changes to elective deductions, direct deposit accounts and
tax withholdings and retrieve copies of earning statements without HR assistance.

Workforce management: This is where HR teams track employee development, manager

evaluations and disciplinary actions; record time and attendance; and ensure the company is
providing a healthy and safe work environment. This is also where compensation planning,
performance management, learning and incident recording functions reside. HR can develop
timesheet structures, overtime rules, time-off policies and approval chains in way that maximizes
automation, control and efficiency. The employee performance review process, complete with
goal management, is set up in this function as well.

Contingent workforce management: Related to primary workforce management and critical

for companies where not every employee is full-time. Contractors, consultants, interns and
temporary employees provide specialized skills, support local community initiatives or
university programs and handle spikes in demand for labor. The HRMS does not wholly manage
these relationships because these employees are not always on the payroll and are usually not
eligible for benefits; but the work they do contributes to company success, and it’s important to
track how many contingent employees are on board at any given time and the total costs.

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Once you have a clear understanding of which functions are most important, it’s time to dig into
specific features.

HRMS Features
As with broad functionality, HRMS feature sets can vary widely from provider to provider, and
cobbling together multiple products may limit the overall system. HR, IT, finance and other
stakeholders should carefully assess which of these HRMS features are must-haves for the
company.

Benefits administration: Helps HR professionals develop plans, configure eligibility rules and

make payments or deposits to benefits providers. Also offers self-service open enrollment and
integrates benefit costs with accounting.

Centralized employee records: Provides a single repository where all employee records are
stored, updated and maintained. Allows for better reporting and lowers the costs of compliance
and preparing for audits.

Learning management: These features are designed to help employees acquire or develop skills
through course administration, course and curriculum development, testing and certifications.
Also enables companies to roll out and track required compliance training.

Reporting and analytics: Delivers the ability to run operational reports to track HR information,
complete compliance reporting, develop key performance indicators (KPIs) to measure HR
process performance and embed HR metrics into financial dashboards for company-wide
analysis, planning and decision-making. Also look for the ability to create ad-hoc reports.

Rewards: Calculate salaries, hourly wages, and variable payments for bonuses, overtime, sales
commissions, shift differentials and merit increases while withholding regulatory and elective
deductions, resulting in accurate net payments to employees at regular intervals. Benefits, like
matching retirement fund contributions or mobile phone reimbursements, are sometimes
included in this feature set.

Talent acquisition: Recruiters are able to build career pages on the company website and
intranet, create job requisitions and descriptions, manage positions, integrate open positions with
job boards, manage resumes, track applicants through the recruiting process, extend job offers,

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perform background checks, administer pre-employment screenings and create job application
forms, before handing new hires off to a generalist or the hiring manager to begin onboarding.

Talent management: Enables HR professionals to develop and evaluate employees via

performance reviews, goal management, and competency and skills test administration.

Time and attendance: Delivers the ability to process time-off requests and manage time-off
balances, employee scheduling and absence management and enables timecards to be integrated
with payroll and projects.

User interface: Because an HRMS can be opened to the entire workforce, a user-friendly

interface is critical. Today’s systems feature employee and manager self-service, mobile apps,
localization, personalized dashboards, workflow automation, role-based access controls and
notifications to keep employees engaged and inquiries into the HR or IT departments to a
minimum.

Workforce planning: Provides the ability to plan and budget for workforce costs and measure
against actual outlays for both current and future scenarios. May also be used to identify skill
gaps, create succession plans and prioritize recruitment efforts.

Additional features may be found in specialized HRMSs, and not every company needs a fully
loaded system. If you decide to use multiple providers to form the HRMS, ensure all the products
include an open architecture to allow for bi-directional data exchange, needed integrations and
file uploads across the system. Using a single provider for an HRMS reduces the need for one-
off integrations, which can be expensive, complex and difficult to secure and update.

So far, we’ve talked features and functionality. But those who need to persuade leadership that
an HRMS is a smart buy need to prepare for a higher-level business ROI discussion

Benefits of an HRMS
Having HRMS software handle HR activities is a common denominator among successful
companies. Mobile accessibility has transformed modern HR departments, putting information
and task management at the fingertips of employees and managers. HRMS has helped to
effectively break down bureaucracy and “flatten” many organizations.

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 A HRMS can help large organizations and small startups increase their rate of growth and
productivity. Below are some examples of additional benefits that an organization can see using
a HRMS platform.

 Employees can handle certain clerical tasks pertaining to the input of their personal
information, which puts time back in the hands of HR professionals

 A HRMS comes with built-in security, including authentication measures that restrict
access to authorized users and protect company data

 Most HRMS platforms allow users to customize their workflow to the needs of their
organization and get the best user experience

 Organizational heads can schedule automated reminders and emails through a HRMS,
which will facilitate acknowledgment of the message to save managers time tracking down
responses.

The fundamental payoff of an HRMS is having all your workforce information in a central
repository. That lowers compliance risks, provides a rich data set to inform decision-making,
helps keep employees engaged and makes HR professionals more productive and their processes
more efficient.

Let’s dig into the top five business benefits of an HRMS.

Better, deeper insights: Without an HRMS, employees and managers create data in various
places, from spreadsheets to expense apps to paper records, making it impossible to gain a
comprehensive view of workforce costs. With an HRMS, all data is in a single bucket, with
higher integrity. That enables better, faster decision-making. It’s also pivotal to a workforce
planning and analytics initiative, where a company assesses its current workforce and compares
that reality with future needs as determined by business objectives. Some key benefits here are
the ability to identify and address skills gaps before they hurt productivity, codify succession
plans and keep a handle on labor costs by analyzing how overtime or double time payments
affect financial performance.

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With an HRMS, HR teams can also spot early indicators of problems. For example, if high-
performing employees in one department leave at a higher-than-normal rate, that might signal a
toxic manager. An HRMS can connect dots and help identify at-risk employees.

Improved employee engagement: An HRMS is invaluable in developing and retaining talent—

something HR leaders are passionate about. Within an HRMS, HR can create training
curriculums, personalize learning plans and career paths and set up mentorships.

In fact, Harvard Business Review suggests that skills development is of prime importance to

younger employees and specifically suggests a mentoring program focused on sharing expertise.
Gen Z and Millennial workers also expect to be asked, on a regular basis, about their
experiences. An HRMS can both match senior people in one department or geography with those
who can benefit from a mentoring relationship, conducted virtually, and deliver and tabulate
employee satisfaction and engagement surveys.

All these development activities are then tracked in the HRMS to recognize development
milestones. That helps keep employees on track and loyal to the company.

Process efficiency & a culture of self-service: Responding to inquiries or administering large

programs, like benefits enrollment or performance reviews, can take up to 40% of an HR
professional’s time each week—and in many cases, individuals would be more than happy to do
that work themselves. Within an HRMS, HR can set up a knowledge repository so people can
find answers to frequently asked questions, and employees and managers can securely access
their own records, enabling HR to focus on more value-added services.

In addition, HR processes that require multiple levels of approval, like processing timecards, job
requisitions and time-off requests, can be major time sucks. An HRMS provides approval
workflows for automating these and other processes so approvers are notified when it’s their turn
to approve (or reject). That can reduce processing time by more than 50% and improve accuracy.

Lower back-end overhead: From an IT and capital-spending POV, the centralized nature of an

HRMS—especially one sold in a fully cloud-based, software-as-a-service model—requires less
hardware, data center space and IT and development staff resources for maintenance, support
and training. This rationalizes IT expenditures for HR technology, requires fewer help desk staff
and generally improves the satisfaction of full-time users of an HRMS, the HR team itself.

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Faster recruiting: Attracting top talent and building your company’s reputation as “the place
everyone wants to work” is another area HR pros are passionate about. The candidate
experience, however, has been largely ignored because it’s difficult to gain insight into the job
search process when postings happen outside of the company. An HRMS solves this problem by
connecting recruiters and candidates electronically through job boards and mobile applications,
making the process more enjoyable and efficient.

HR can even access candidate-pooling technology that accelerates passive recruiting when new

positions open up.

Common Functions of HRMS Systems

The function of the human resources department involves tracking employee histories, skills,
abilities, salaries, and accomplishments. Replacing certain processes with various levels of
HRMS systems can distribute information management responsibilities so that the bulk of
information gathering is not delegated strictly to HR. By allowing employees to update personal
information and perform other tasks, information is kept more accurate and HR professionals are
not bogged down.

Each module performs a separate function within the HRMS that helps with information
gathering or tracking. For example, hiring would be carried out through the recruitment and
onboarding module, employee performance is carried out through the performance evaluation
and management module, and so on.

HRMS Security
Security is of great concern when it comes to choosing a human resources management system.
The information stored in a HRMS is highly sensitive, including proprietary company data and
volumes of personal information about employees. It is essential for companies to choose a
solution that utilizes a method of secure transmission such as SSL which encrypts the data as it
transmits over the internet.

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Internal security is also critical; information should be guarded by passwords that have varying
levels of access in relation to what is needed for the job position. While most companies now
allow employees to access portions of HRMS solutions, employees must understand the
importance of maintaining the integrity of the system and protecting the security of the
information it contains (i.e. no password sharing). Safeguards should also be in place to quickly
bar terminated employees’ access to systems.

Personal employee information requires a high level of protection to not only uphold privacy
rights and meet compliance mandates, but to keep a positive culture. No other single piece of
information can sow discord like an employee learning what colleagues earn in similar roles,
except possibly details of personnel actions becoming public.

Therefore, security features to protect access to sensitive employee information must be at the
top of your list of HRMS requirements.

While some industries, like health care or finance, and multi-national firms may have specialized
security requirements, all HRMS buyers should insist on:

Role-based access: HR staff require different rights than the rest of the workforce, for good
reason. Managers should be able to perform some tasks, individual employees, others that relate
to their own data. The HRMS should allow for all the roles you need to manage constituencies.

System segmentation: The HRMS must be set up in such a way that certain data is accessible
only by certain people or roles. Even within the HR department, some companies have deployed
security protocols to provide HR professionals with access to only the segments of the workforce
they serve. Often, executive payrolls are completely separated into unique accounting entities to
protect that information.

Two-factor authentication: The widespread adoption of mobile phones makes it much easier to

enable two-factor authentication technology for an added level of security.

Data encryption: All personnel data should be encrypted while at rest in the HRMS and in
transit to the end user.

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Password strength and reset policies: IT should be able to require certain password lengths and
complexity and specify reset periods, as often as every 30 days, to help prevent unauthorized
access to HRMS information.

A multi-pronged approach to HRMS security is something a potential investor or

purchaser or cybersecurity insurance underwriter will certainly look for, so build it in from the
start.

Choosing an HRMS
The HRMS Software category is basically at the top of the HR hierarchy, with 67 subcategories
underneath it, more or less. And as said, each subcategory can exist of 100+ different software
systems whereby each of them has different functionalities.

Therefore, making a choice between the different HRMS Software applications can be an
overwhelming project, but the one you choose can have a significant impact on your overall
Human Resources process. What makes things extra complex is that all the HRMS Software
Systems come with their own set of features.

The HRMS market is highly fragmented and can be overwhelming—some leading software
review websites list over 700 companies that provide human resources management systems.
Evaluating all of them at a rate of two per day would take almost an entire year.

So, the first step is to separate potential providers into three groups:

ERP, or Enterprise Resource Planning, providers have integrations built into their other
business applications, like accounting, CRM and procurement, so you get the benefits of
centralization, like having to input an employee record only once. With lower integration costs,
the ERP model can provide a more consistent user experience, and you get a single security
model—which is why 95% of businesses report process improvements after implementing an
ERP.

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The downside to the ERP category is that you won’t always find the depth of features an HRMS
specialist offers, so you may need to do some tasks, like running payroll, yourself. User
interfaces can also be less user-friendly—more an accounting interface than a consumer-grade
social media experience.

Best of breed providers specialize in one to three areas (sometimes more) of an HRMS. They
offer more feature depth with less-complex user interfaces. The downside to best of breed
providers is they usually can’t provide an entire end-to-end HRMS system, and there are add-on
costs if you need integration with other systems, like accounting. The system may not grow with
your company, so ask about scalability.

Service providers offer a fully outsourced solution, where a company pays a provider to run
payroll, file taxes, administer benefits, keep the HR department compliant and send data into
accounting so HR-related expenses can be included in financial reports. The service provider acts
as your HR department, requiring fewer HR specialists to be employed by your company.

Such services come at a higher monthly cost, can be difficult to leave, give you less control over
your HR data and processes and bring higher integration costs.

Type of HRS software

BambooHR 

BambooHR software collects and organizes all the information users gather throughout the
employee life cycle, then helps them use it to achieve great things. Whether they are hiring,
onboarding, preparing compensation, or building culture, BambooHR gives the time and insights
to focus on your most important asset—the people.

UltiPro 

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UltiPro provides HR, payroll, talent, and time and labor management, as well as HR service
delivery solutions. It unites all aspects of HR, payroll, and talent management in one
comprehensive cloud solution that delivers serious business benefits for organizations and the
most human capital management functionality available for the greatest value.

 Paylocity 

Paylocity is a leading provider of cloud-based payroll and human capital management (HCM)
software solutions. Paylocity’s comprehensive product suite delivers a unified platform for
professionals to make strategic decisions in the areas of benefits, core HR, payroll, talent, and
workforce management while cultivating a modern workplace and improving employee
engagement.

Gusto HR 

Gusto is a modern, online people platform that helps small businesses take care of their teams.
On top of full-service payroll, Gusto offers health insurance, 401(k) s, expert HR, and team
management tools. Today, Gusto offices in Denver, San Francisco, and New York serve more
than 100,000 businesses.

 Workday 
Workday is a leading provider of enterprise cloud applications for finance, HR, and planning.
Founded in 2005, Workday delivers financial management, human capital management, and
analytics applications designed for the world’s largest companies, educational institutions, and
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government agencies. Organizations ranging from medium-sized businesses to Fortune 50
enterprises have selected Workday.

 CakeHR 

CakeHR is accessible, affordable, and refreshingly easy to use HR management software for
small to medium businesses. CakeHR is built with ease of use in mind. This software is the ideal
choice for small-to-medium businesses that don’t want to get bogged down in using spreadsheets
or paper to manage their employees.

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