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Does your company use a human resources management system?

Does your company use a human resources management system?

Adam Gorley, Editor, HRinfodesk.com---Canadian Payroll and Employment Law News, August 2010

For all the time we spend talking about human resources and employment law compliance at HRinfodesk and First Reference, we've talked about human resources management systems (HRMS) only in passing. We've decided it's time to change that, so our last poll got straight to the point, asking: Does your company use a human resources management system?

Of the 150 respondents to the poll, 49 said yes they do use an HRMS (~33 percent); 82 said no they do not use an HRMS (~55 percent); and 19 said that they are considering implementing an HRMS (~13 percent).

To be clear, I'm not talking about that filing cabinet that holds all of your employee files or the spreadsheets that you continually update with info on salaries, vacations, attendance, discipline, injuries, and other useful bits of employee data. Sure, these are systems, but I'm talking about comprehensive software applications that are designed to collect, store, arrange and sort employee information, with the aim of making it easier for human resources departments to manage employees and understand their and their employers' needs. A strong HRMS should enhance the decision-making capabilities of HR departments and their companies, and also actively help employers comply with their many HR- and employment-related legal obligations.

Wikipedia says human resources management systems (also known as human resources information systems) exist “at the intersection between human resource management and information technology.” Usually, this means taking previously disparate HR information and automatically integrating it in such a way that users can gain a clearer picture of what is happening in the company-in a more efficient way than if HR had to gather all of the information from its various sources, and analyze it manually.

This diverse information includes payroll, work hours and overtime, benefits administration, recruiting and development, training and learning, performance records, and more. You've probably already automated one or more of these services, either internally or via an external service provider; companies commonly outsource payroll and benefits functions, for example. But even so, can you imagine what you could do if all of those functions were integrated and all of that information could be compared?

By incorporating all of these functions and information, one system can:

  • Collect and store information from applicable sources, such as:
    • Attendance, absence, vacations and leaves
    • Hours and overtime
    • Pay and wage history
    • Positions held and seniority
    • Performance development and training
    • Reviews and discipline
    • Personal employee information
    • Recruiting, applicants, interviews and selection
    • Probation start and end dates
  • Offer reminders on events related to any of the stored information
  • Analyze, calculate and report on stored information-quickly
  • Aid in decision-making by providing invaluable information and analysis for HR and other departments
  • Make information-such as pay stubs, remaining vacation days, and so on-available to employees as desired
  • Inform HR as to employers' compliance obligations, and warn when practices or information do not comply
  • Reduce errors in calculation and so on…

The Canada Payroll Association's Dialogue magazine recently reported on what's in store for the future of payroll, and their findings clearly show that functional integration and auto-analysis-among payroll, human resources, benefits, work and hours, and other areas-are on the horizon for efficient operations. Consider these factors:

  • Employees are becoming more mobile-spending more time away from the workplace-and more temporary. Correspondingly, recording their payroll, time, attendance and absence information is becoming increasingly complex.
  • Software will help businesses to keep up by integrating payroll, HR and time and attendance management functions. This will allow organizations to make better decisions on overtime, staffing, service levels and human resources in general.
  • Software can automate these functions, reducing errors and speeding up HR processes, all in a handsome user-friendly package.
  • With better software, payroll professionals will spend less time pushing pencils and gathering information, and more time thinking strategy and making decisions. "The payroll department will be seen as an important strategic resource to help the CFO and department managers make better decisions", said one such professional on the software side.
  • If that's not enough, by improving payroll, time, attendance, absence and HR management, and reducing errors, software will save businesses money and help improve their carbon footprint by limiting the use of paper and other resources.

Better analysis, reporting and efficiency, and reduced errors and manpower can all lead to a competitive advantage in your market. And as companies increasingly look to human resources for strategic input, HR will have to produce better results, and faster. And a good HRMS will also be expandable, allowing for the inclusion of additional functions as they become necessary or available. In other words, an organization can start small by integrating certain functions, and add others as they like, for example, as they decide they want to add more variables into their analyses, or as a certain manual function grows to an unmanageable size.

Some might worry about giving too much control to a software application, or about centralizing information, and surely, like any system, HRMS have limitations and might face security challenges. As with any business decision, employers will have to weigh the benefits of implementing an HRMS against the costs, both actual and potential. For example, with an HRMS, organizations will have to train staff on how to use the system and how to keep it secure. They might have to enhance existing security measures and take precautions against security breaches. And they'll have to update existing HR, payroll, benefits, security, privacy and other policies to reflect how the data are used, collected and stored.

Out of all the advantages, in my mind, the key feature of an HRMS is the ability to keep on top of compliance obligations. Organizations exist within a broad field of legislation and regulation, whose boundaries are sometimes strict and sometimes vague. Keeping track of legal obligations and complying with them take up significant manpower, time and money. A good human resources management system will remind you of your compliance obligations and warn you when you try-intentionally or otherwise-to collect or use information in ways that do not comply with the law (while still allowing you to do what you want or need to do). A good system will also keep you up to date on legislative or regulatory changes.

It's a lot to think about sure, and there's certainly more to human resources management systems that just what I've mentioned here. Maybe we'll get a clearer picture from our follow-up question: Does using an HRMS make your job easier, more difficult or the same as not using it?

We must be modest at First Reference, having talked so little about HRMS, since we have been developing our own HRTrack human resources management system for several years. And now it's available for purchase. Start a 60-day free trial today.

To comment on this story, send and email to editor@hrinfodesk.com.