What are the Functions of an HRIS system?

From employee data management to payroll integration, discover how an HRIS enhances workforce productivity and facilitates informed decision-making for organizational success

Brett Ungashick
OutSail HRIS Advisor
July 4, 2023
user looking at an HRIS system

HRIS is an acronym meaning Human Resources Information System. The HRIS is the primary HR & Payroll solution that companies use to manage and pay their employees. In this article, you'll learn what features are included in an HRIS, the benefits of an HRIS and how to find the right one.

An HRIS (Human Resources Information System) is the most important tool for any HR department. An HRIS is a prerequisite system that allows companies to digitally keep track of their employees, collect employee data and process payroll. Because of the importance of an HRIS, it is crucial that everyone understands what an HRIS can provide to a business.

Features of an HRIS

Employee Tracking

The most essential function that an HRIS offers is the ability to track employee data. Common data points that HR departments want to track are employee demographic information (birthdate, gender, hire date, etc.) Other important items to collect and track include the completion of compliance-related documents, employee job title, pay rate and department. And, oftentimes, this module will provide org chart capabilities and e-signature capabilities

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Time Collection

Another key use case of an HRIS is providing employees with the ability to track their time worked. For hourly employees, this will mean giving them tools to clock-in/clock-out when their day is over. For salaried employees, an HRIS will give them the ability to view their time-off balances and request paid time off (PTO). More advanced systems will also have the ability to handle scheduling and workforce planning.

Benefits Enrollment

Many HRIS systems will also include a benefits administration module. This module allows employees to enrol in company-offered benefits plans such as medical, dental and vision insurance. Employees can make their plan selections in the HRIS and that data will automatically be converted into payroll deductions that are accurate from a tax standpoint

Payroll Processing

Some, but not all, HRIS systems can also process payroll. These systems will gather the employee's pay rate data from the employee tracking module, their time data and their benefits selections, before calculating the employee's gross pay. Additionally, this system will know the employee's location and factor in their tax liabilities too. Employees can also log in to this tool to view previous pay stubs and find year-end tax documents.

Recruiting & Onboarding

Many HRIS systems can also support the hiring process for companies. If the system includes an applicant tracking system (ATS), then the HRIS will be able to post jobs to 3rd party job boards, organize applicants and track their movement through the various interviewing stages. Once an employee is hired, an HRIS will often offer an onboarding module that can gather new hire data, such as their direct deposit information, and allow the employee to complete new-hire paperwork, such as an I-9 or W-4.

Other Features - Performance Reviews, Surveys, Learning

Most HRIS systems can solve for the core HR functions of hiring, tracking and paying employees. Some HRIS systems can also help develop employees. They can often manage the annual review process in a standardized manner that alerts managers and employees when it is time to complete their evaluations. Many modern HRIS systems are also capable of administering regular pulse surveys to check-in on employee morale. Some even have the ability to administer compliance trainings or learning courses to upskill employees.

Get the Full Picture: Want more details on the HRIS market? Dive deeper into features, pricing, and user reviews in our comprehensive HRIS Marketplace.

Benefits of an HRIS

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Compliance

One of the main reasons that businesses invest in an HRIS is to ensure that they maintain compliance with the state, local and national employment laws that they are subject to. Employment laws are ever-changing but consistently require that employers are tracking employee data to ensure fair hiring and pay practices are observed. The right HRIS system will compile this data for your business and make it easily reportable, so you can satisfy any agencies' request

Fewer Errors

Before HRIS systems became popular, businesses gathered and tracked their employee data manually using paper and file cabinets. This can be effective for data that isn't likely to change (like an employee's birthday), but for data that is very dynamic, such as hours worked this week, a manual process can open businesses up to costly errors. By letting technology do the tracking and calculating work, businesses can ensure that benefits and payroll are accurately paid each pay period.

Employee Experience

As younger generations move into the workforce, technology becomes an expectation. This generation is used to doing everything on their phones without having to interact with other people. This is the same expectation they'll have about onboarding at your company, requesting time off and viewing their pay. If an employee isn't able to complete these actions by themselves, their view of your company will be diminished

Time Savings

The main reason that businesses are investing in their HRIS is so they can free their stakeholders up to work on more strategic projects. Rather than asking the HR team to gather time cards and do manual data entry, a company with a robust, automated HRIS system can have their HR team work on strategic initiatives such as building out an inclusive culture.

How to Find the Right HRIS

Create a Project Plan

Buying a new HRIS is not something that typically happens overnight. Because multiple stakeholders are involved, it can be smart to come up with a project plan before diving into the process. This article will provide an overview of the stages in the buying process and how long each step should take.

Build Your Requirements

One of the first steps in the buying process is to determine what your needs are. We recommend first focusing on (a) which modules are required and (b) what high-level outcomes you want to realize. From there, it can be smart to build out your HRIS requirements checklist.

Shortlist the Right Vendors

Finding the right vendors to shortlist can be the most challenging and time-consuming part of the HRIS evaluation process. Thankfully, our team can provide the expert advice to help you select the best-fit options. .

Evaluate Effectively

Getting a shortlist of aligned vendors is important, but you still need to evaluate those finalists with a discerning eye to determine which will be best for your business.

Make the Business Case

Once you've identified the best HRIS vendor for your business, it is important that you are able to articulate that decision to your other stakeholders, so you can get buy-in for the purchase. Making the business case will involve showing the upside from the investment in a new HRIS, as well as showing how thoroughly you've vetted your recommended finalist.

FAQs
Why is an HRIS important for businesses?

An HRIS is essential for businesses to efficiently manage their workforce, ensure compliance with employment laws, reduce errors in HR processes, enhance the employee experience, and save time by automating manual tasks.

How can businesses choose the right HRIS?

To choose the right HRIS, businesses should create a project plan, identify their requirements, shortlist suitable vendors, evaluate them effectively, and make a compelling business case for the chosen solution.

What are the benefits of using an HRIS?

Benefits of using an HRIS include ensuring compliance with employment laws, reducing errors in HR processes, improving the employee experience, and saving time by automating manual tasks. Additionally, an HRIS can help businesses make informed decisions by providing access to valuable data and analytics.

Can an HRIS help with employee engagement and retention?

Yes, an HRIS can contribute to employee engagement and retention by providing tools for performance management, feedback collection, and learning and development. By fostering a positive employee experience and supporting career growth, an HRIS can help organizations retain top talent.

Is it necessary for businesses of all sizes to invest in an HRIS?

While the specific HRIS needs may vary depending on the size and complexity of the organization, investing in an HRIS can benefit businesses of all sizes by streamlining HR processes, ensuring compliance, and improving overall efficiency and effectiveness in managing the workforce.

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Meet the Author

Brett Ungashick
OutSail HRIS Advisor
Brett Ungashick, the friendly face behind OutSail, started his career at LinkedIn, selling HR software. This experience sparked an idea, leading him to create OutSail in 2018. Based in Denver, OutSail simplifies the HR software selection process, and Brett's hands-on approach has already helped over 1,000 companies, including SalesLoft, Hudl and DoorDash. He's a go-to guy for all things HR Tech, supporting companies in every industry and across 20+ countries. When he's not demystifying HR tech, you'll find Brett enjoying a round of golf or skiing down Colorado's slopes, always happy to chat about work or play.

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