HRIS, or human resources information system, is 

software designed to help

businesses meet core HR needs and improve the productivity of both
managers and employees.

A well developed HRIS offers the following advantages:

1. Reduction in the cost of stored data in human resource.

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2. Higher speed of retrieval and processing of data.

3. Reduction in duplication of efforts leading to reduction in cost.

4. Availability of accurate and timely data about human resources.

5. Better analysis leading to more effective decision making.

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6. More meaningful career planning and counselling at all levels.

7. Improved quality of reports.

8. Better ability to respond to environmental changes.

9. More transparency in the system.

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Alastair’ Evans has listed the following potential benefits that can be
derived from HRIS:

Cost Effectiveness:
1. The computerization of personnel records offers an option to be
considered when personnel functions are-facing conflicting
pressures to provide more information whilst at the same time cut
back on administrative overhead costs. As the costs of computer
hardware falls relative to the costs of employing clerical staff, so the
adoption of computerized systems is becoming increasingly cost
effective.

2. A reduction of one-third in time taken to process new employees.

3. Savings of between 55 and 90 per cent of the time taken to

provide routine information by manual methods.

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4. Clerical savings of over 600 hours per year in providing data to

patrol, over 800 hours per year in preparing weekly reports and
almost 500 hours per year in preparing monthly, quarterly and
annual reports.

5. Improved accuracy of data which is updated at regular intervals,

such as pay, personal records, etc.

Uses of HRIS:
The main purpose of maintaining HRIS system is to gather, classify,
process, record and disseminates the information required for
efficient and effective management of human resources in the
organisation.

The various uses of HRIS in an organisation can be listed

as follows:
Personnel Administration:
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It encompasses personal information of an employee. These may
include name, address, date of birth, marital status, and the date of
joining the organisation. It also contains the name and address of
next kin of the employee concern. These information describe the
employee.

Salary Administration:
One of the functions of HRIS is to provide a report containing
information like present salary, benefits, last pay increase and
proposed increase in future.

Leave/Absence Increase:
HRIS is also used to control leave/absence of employees. This is
done by maintaining a leave history of each employee. Every
employee can be issued an identity card writing every employee’s
token number coded on it. Employee’s entry and exit from the
organisation should be recorded on the identity card. This reduces
chances for malpractice or oversight in calculating wages for each
employee.

Skill Inventory:
Recording employee skills and monitoring a skill data base is yet
another use of the HRIS. Such a skill record helps identify
employees with the necessary skill for certain positions or jobs in an
organisation.

Medical History:
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The HRIS is also used to maintain occupational health data

required for industrial safety purposes, accident monitoring, and so
on.
Performance Appraisal:
In order to form a comprehensive overview about an employee,
HRIS maintains performance appraisal data such as the due date of
the appraisal, potential for promotion, scores of each performance
criteria and alike. The textual information can be combined with the
factual data obtained from the HRIS and the combination of
information can be used for imparting training and affecting
employee mobility in the form of transfer and promotion.

Manpower Planning:
HRIS is used for manpower planning also. It keeps information of
organisational requirements in terms of positions. HRIS connects
employees to the required positions in the organisation. It is also
used to identify vacancies and establish employees thereon. HRIS
can also help identify a logical progression path and the steps to be
taken for employee progress/ advancement.

Recruitment:
Recruitment forms the most essential function of HRM. HRIS helps
in the recruitment process in a big way by recording the details of
activities involved in employee recruitment. These may include cost
and method of recruitment and time taken to fill the positions level
wise, for example.

Career Planning:
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By providing necessary information such as which employees have

been earmarked for which positions, HRIS facilitates positional
advancement of employees. In other words, HRIS helps in planning
for succession.
Collective Bargaining:
HRIS through a computer terminal can provide up-to-date relevant
and required information, facts and figures and, thus, can facilitate
collective bargaining. It can he p collective bargaining as “what if
analysis” rather as feelings and fictions. In the same manner, HRIS
can also help maintain better human relations in the organisation.

Now, the various uses or applications of HRIS can be

juxtaposed as follows:

HRA
Meaning:
Human resource accounting (HRA) is similar in principle to the
financial accounting. That is, just as financial accounting reflects the
costs of assets such as building and machinery, human resource
accounting shows human resources as capital not as expenses.
Thus, HRA shows the investment the organisation makes in its
people and how their values change over a period of time.

Objectives:
According to Rensis Likert, the objectives of HRA are to:
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1. Provide cost value information about acquisition, development,

allocation and maintenance of human resources so as to achieve
organisational goals in an effective manner.

2. Enable management of the organisation to effectively monitor the

use of human resources.
3. Ascertain whether human assets are conserved, appreciated or
depreciated during a given period of time.

4. Assist in the development of effective management practices by

classifying the financial consequences of various practices followed
by the organisation.

Advantages:
HRA is useful to organisations in more than one respect. It is clear
from the following advantages that it offers to organisations:

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1. HRA provides useful information about the human capital in the

organisation. Such information enables the manager to take right
decision, e.g. choice between new recruitment and promotions,
transfer and retention, and retrenchment and retention.

2. It throws light on the strengths and weaknesses of the employees

working in the organisation. It facilitates management in
recruitment planning, i.e., whether to hire/recruit people or not.

3. HRA also facilitates management to evaluate the effectiveness of

HR policies and practices. For example, high costs in training may
warrant to look at the returns over a period of time, expenses
incurred in the additional recruitment in respect of a particular
category of employees may indicate the need for a better
compensation plan for them. Besides, HRA also provides feedback
to a manager even on his/her own performance.

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4. It also provides valuable information for present as well as
potential investors to judge a company better on the
value/strengths of the human resources/assets utilized therein. If
two companies are offering the same rate of return on capital
employed, for example, HRA by providing information on their
human resources can help the potential investors decide which one
company be picked up to make investment. This is because HRA is
considered as more accurate accounting method of ascertaining true
and fair return on the total resources employed in a firm.

5. Finally, the information provided by HRA enables management

to control various types of human resource costs and, in turn, help
improve profitability of the organisation.

Limitations:
However, HRA is not an unmixed blessing. It also suffers
from certain limitations as listed below:
1. So far, there are no clear-cut guidelines how to differentiate the
‘cost’ and ‘value’ of human resources. Added to it is the uncertainty
about human life itself Like physical assets, human assets cannot be
owned, retained and utilized at the sweet will and pleasure of an
organisation. Not only that, the so-called ‘asset’ after getting
enriched within an organisation may simply disappear attracted by
green pastures and, thus, causing loss and inconvenience to the
organisation almost suddenly. Given such conditions, it is not easy
to value human assets in an organisation.

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2. HRA also suffers from measurement problems. There is no
consensus as yet among the accountants and finance professionals
regarding in what form and manner the human assets are to be
valued and then shown in Balance Sheet. This problem gets
compounded by the question of recovery /amortising rate.

Whether the HR costs should be amortised at decreasing, constant

or increasing rate? Whether the amortisation rate should remain
same or different for different categories of human capital, i.e.,
employees?

3. There is also a fear that the employees and trade unions may not
accept the idea. The reasons are not difficult to seek. Valuing
employees at different levels may lead to division

among them, on the one hand, and may discourage those valued at
lower levels, on the other Trade unions may dislike the idea mainly
because they will have to seek rewards/compensation for employees
as per their levels of valuation in the organisation.

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4. However, there is no sufficient empirical evidence available so far

to support the contention that HRA as a managerial tool facilitates
managers in better and effective management of human resources
in an organisation.
HR AUDIT

The term audit is normally associated with financial accounting and

refers to the official examination and verification of a company’s
financial and accounting records. HR audit is a similar concept in
the field of Human Resource Management.

HR audit involves examining and reviewing the organization’s

existing policies, procedures and practices regarding recruitment
and selection, orientation and placement, training and
development, job analysis and design, job evaluation,
compensation, morale and motivation, employee health and safety,
social welfare, industrial relations, etc.

Normally, in an organization, not all HR policies are formal and

written; there are many informal policies, not officially
documented. The HR audit involves the review of all the HR
policies, procedures and practices currently adopted by the
organization, irrespective of whether they are formal or informal.

The HR audit shall include evaluating:

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1. Job Analysis
2. Recruitment
3. Selection
4. Performance Management
5. Performance Appraisals
6. Performance Feedbacks
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7. Competency Mapping
8. Training Process
9. Compensation
10. Rewards Management
11. Benefits Management
12. Employee Relations
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13. Workplace Safety

14. Best Practices
15. Managerial performance
16. Supervisory Performance
17. Leadership at various levels
18. HR Business Partner Role
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19. HR Strategic Initiatives

20. Legal HR issues.

The major objectives of HR audit are as follows:

1. To conduct an independent, objective, systematic and critical

examination of HR functions of an organization.
2. To assess the general environment and performance efficiency in
HR department.
3. To check for any deviations from standards and devise
appropriate strategies and corrective actions in HR related areas.
4. To check for alignment of HR functions and organization’s overall
practices and procedures.
5. To measure statutory compliances of HR activities as per law and
other relevant agencies.
6. To explore the areas for saving personnel costs and expenses.
7. To provide feedback on better areas of performance and areas
that needs improvement.
8. To identify HR areas that requires research and development
inputs.
9. To recognize better performance of HR personnel through
rewards.
Human Resource Management Audit – Scope
Organizational practices regarding the subject matters of HRM
audit may vary.
However, a comprehensive scope of HRM audit includes
all aspects of HRM which are as follows:
1. HR strategies and policies,
2. HRM functions,
3. HR compliance, and
4. HR climate.
1. HR Strategies and Policies:
The starting point of HRM audit should be an evaluation of HR
strategies and policies and the way these are in tune with those of
the organization. For formulating HR strategies and policies, it is
essential that the objectives of HRM functions are clearly defined.
The audit may evaluate the extent to which various HR strategies
and policies have been formulated and what their qualities are.
Various HR strategies and policies may be audited by
evaluating their:
i. Consistency with the organizational objectives, strategies, and
policies;
ii. Consistency with the environment;
iii. Appropriateness in the light of organizational resources;
iv. Appropriateness in the light of time horizon; and
v. Workability.
2. HRM Functions:
The major thrust of HRM audit is on evaluation and review of
various HRM functions relating to acquiring and employing human
resources, developing human resources, compensation
management, integration and maintenance of human resources,
and industrial relations.
The audit should measure and evaluate these functions in
the following context:
i. The type of HRM functions performed;
ii. The degree to which these functions are related to HRM
objectives; and
iii. The degree to which these functions are performed effectively.
3. HR Compliance:
HR compliance refers to the adherence to various HR strategies and
policies by line managers and adherence to legal requirements.
In this context, evaluation revolves around the following:
i. The extent to which line personnel adhere to various HR policies
in dealing with personnel working under them; and
ii. The extent to which there is compliance with the legal
requirements as provided under various legal Acts relevant for
management of human resources.
4. HR Climate:
Quality of HR climate has important impact on motivation, job
satisfaction, morale, and performance of human resources.
HR climate can be evaluated by various outcomes which
are as follows:
i. Degree of employee turnover,
ii. Degree of employee absenteeism,
iii. Degree of accidents,
iv. Status of grievances and disciplinary actions, and
v. Findings of attitude and morale surveys.

Human Resource Audit – Process

1. Determining the Scope and Type of Audit:
Since HR is a very wide field, the company may either choose to
conduct a comprehensive review of all HR functions or it may
decide to review a few specific areas as it deems necessary. For
example, a company may choose to review only the policies and
procedures related to recruitment, selection and orientation
policies.
2. Determining the Audit Method:
HR audits are usually conducted by using a questionnaire that
elicits information about the relevant HR areas. The audit may also
be conducted by interviewing managers and employees of the HR
department to analyze how well they have understood the
company’s policies and how efficiently these policies are being
implemented. When using a questionnaire, care should be taken to
design it in such a way that it elicits all necessary information
regarding the areas to be audited.
3. Data Collection:
This step includes the actual process of collecting data about the
organization and its HR practices. Information is collected by using
the questionnaire and by interviewing relevant HR personnel about
the HR procedures and policies being used in the company.
4. Setting the Standards:
To assess the efficiency of HR functions, the information collected
has to be compared with some pre-determined standards. These
standards have to be pre-set and any acceptable level of
discrepancies should be specified clearly. Comparing the actual
results with the standards will give an idea about the efficiency with
which the HR functions are being performed.
5. Feedback about the Results:
After collecting information and comparing the results, the audit
team summarises the findings and provides feedback to the
company’s HR personnel and senior management in the form of an
audit report.
The results of the audit should be discussed with the employees of
the HR department so that they are made aware of the present
condition of the HR functions in the company. Discussion with
employees will also throw up new ideas for improving the policies
and procedures in future.
6. Develop Action Plans:
Once the results of the audit are out, this information should be
used for improving the working of the HR department. The findings
of the audit should be categorised according to order of importance:
high, medium and low. The organization should examine the areas
of weaknesses as revealed by the audit and find ways to overcome
them. Conducting HR audit would serve no practical purpose if no
actions are taken.

Human Resource Audit – Advantages

(i) HR audit helps the company to identify the areas where
improvement is required.
(ii) It helps to ascertain the proper contribution of the HR
department towards the organization.
(iii) HR audit facilitates the development of HR plans for the future
based on the current performance of the HR department.
(iv) It helps to motivate the employees to perform better and boosts
their morale.
(v) HR audit keeps a check on whether the company is complying
with the required legal rules and regulations.
(vi) The weaknesses of the HR department can be pinpointed by
way of HR audit so that remedial measures may be taken.
(vii) It enables the HR manager to evaluate the job positions and the
employees in order to formulate promotion and transfer policies.

Human Resource Audit – Disadvantages

(i) HR valuation methods assume that employees would remain
with their organizations for a specified period of time. But this
assumption is wrong because in reality employees do not remain
with one company for long and often change jobs.
(ii) It is very difficult to establish standards for HRA as in case of
other fields of accounting such as financial accounting or
management accounting. Every organization uses its own
standards, and thus the HRA data of no two organizations can be
compared.
(iii) HRA dehumanises the employees by evaluating them in
monetary terms. Human beings cannot be owned or used like
machines.
(iv) There is no model of HRA valuation that can be said to be ideal.
Each model has many practical drawbacks.
(v) The life of a human being is uncertain. The lifespan of an
employee can never be predicted accurately, and therefore values
can never be assigned to any employee with surety.
What are HR shared services?
HR Shared Services is a centralized hub of HR administrative and operational

duties that are characterized by employee self-service and automation through

leveraging technology, and multi-tiered levels of service and service

responses. This allows organizations to provide standard HR services in the most

efficient way.  The different tiers in an HR Shared Services provide common

services such as:

1. Payroll

2. Employee data management

3. Benefit and leave administration

4. Relocation services (international and domestic)

5. HRIS

6. Recruiting operations

7. Learning services

8. Reporting and analytics

9. and the HR service center.

HR shared services is a part of a multi-tiered HR service delivery model. It

enables the other parts of the HR department to focus on strategic initiatives.

Benefits of HR shared services
Implementing HR shared services has multiple benefits for your organization,

including:

1. HR becomes more strategic. The division of responsibilities frees up the

more experienced HR professionals to focus on strategy. This provides more

opportunities to measure HR’s performance through Human Capital metrics

that align its success to the organization achieving its strategic objectives. This

is critical for HR to be a true business partner by contributing to the

development of the business strategy.  It ensures organizational business

strategy has a strong focus on people management and a positive employee

experience.

2. Consistency and compliance. HR matters are always handled in the same,

consistent way, which helps ensure that you’re compliant with rules and

regulations. This leads to a better employee experience and to mitigation of

risks within the organization.

3. Operational excellence. By assigning clear responsibilities for administrative

processes, organizations can reach operational excellence. This happens

through streamlined processes and optimized workflows. On top of providing

a better HR service, operational excellence also results in an improved

employee experience and efficiency.

4. Improved employee experience. Employees get their issues resolved and

find relevant information quickly and conveniently. This has a positive impact

on their digital, as well as their overall employee experience. Employees have

 grown to expect all systems to be engaging, to be easy to navigate, and to

satisfy their needs and expectations. This includes systems they interact with

at their jobs. If there is a gap between expectation and experience, this leads

to employee frustration.

5. Cost reduction. HR shared services can help organizations cut costs in

several ways. For example, you need less experienced HR professionals to

handle transactional HR services, which results in lower labor costs. What’s

more, the efficiency achieved through streamlining and simplifying services

also helps reduce costs.

Challenges of HR shared services

While HR shared services can help human resources achieve operational

excellence and enable the department to become more strategic, putting it into

action is not always straightforward. There are several challenges organizations

face.

1. A lack of a digital roadmap for the majority of organizations. An increase

in automation requires a clear digital agenda and roadmap for Human

Resources to implement technology that will create efficiencies and drive a

better employee experience. Example technologies include simple tools such

as live chat, virtual agents such as ServiceNow, and live chat, but also more

advanced applications such as Robotic Process Automation (RPA) and HR

analytics and reporting tools. However, many organizations implement digital

tools on an ad hoc basis, rather than with a coherent HR digital

transformation plan in place.
2. Creating urgency for investments in shared services and/ or HR

technology. It is difficult to clarify the business impact of HR shared services.

That’s why organizational leaders might not immediately understand its

benefits and why they should prioritize it. With this in mind, you need to work

on clearly defining the value shared services add to the business.

3. One size doesn’t fit all. HR shared services unfortunately may not be the

right solution for every business unit. There are instances where HR shared

services will benefit and complement a business unit, yet for another unit, it

may be a hindrance. It is, therefore, critical to conduct a cost-benefit analysis

to determine the value it brings to which business units, the overall

organization, and the cost. An example would be working together with a

designated global upskilling partner that is very effective in building skills for

the common areas of business but may lack upskilling capabilities in highly

specialized areas of the business.

4. Knowledge transition. When transitioning to an HR shared services model, it

is necessary to ensure proper documentation of processes and activities from

SMEs to new employees working in the HR shared services center. This is a

project. There is the need to manage the time it would take to document and

transfer the knowledge as well as apply the knowledge so the HR shared

service achieves a satisfactory level of efficiency.

5. Collaborating within the HR team and across the organization can

suffer. There might be a disconnect between the different parts of the HR

team, namely between the shared services and other, more strategic, or

specialized parts of the team. That’s why managers have to put conscious
effort into strengthening the team mentality. Likewise, having an HR shared

service center does not negate the need to continually interact and engage

with employees. Therefore, it is important to continually build relationships

and engage with key stakeholders in the business unit. Good systems support

successful businesses, but it is through strong relationships, systems become

efficient to meet the needs of internal customers.