Buying Strategies

What is an HRIS?

February 8, 2023
Brett Ungashick

Not sure what an HRIS is? This article covers all the basics you need to know, including: when businesses invest in an HRIS, what functionality you can expect, and how to find the right one for your needs.

An HRIS system is the fundamental piece of software that organizes HR activities. An effective HRIS will enable HR teams to enter and track employee data related to human resources, benefits, payroll, time and accounting.

What does HRIS stand for?

HRIS stands for Human Resource Information System

What does HRIS refer to?

HRIS can have two meanings depending on the context. In most cases, the term 'HRIS' is used to refer to a comprehensive set of software tools that allow HR teams to manage their employees. This broad usage of HRIS can encompass everything from the moment an employee is hired (recruiting and onboarding), throughout their employment (time, payroll, benefits, performance and compensation) and until they retire (offboarding).

However, some people will also use HRIS to refer to a more narrow set of functionality. In the narrow sense, the HRIS is the database that organizes and tracks all people-related data, including:

  • Employee demographic information like birth date, gender and contact information
  • Employee job information like role, direct reports, department, pay rates, and more
  • Benefits selections and dates of coverage
  • Time-off balances and requests

Blog: The 8 Best Modern HRIS Systems for Small Businesses

Why do companies invest in an HRIS?

Some of the key reasons to buy an HRIS include:

Getting Organized: A company cannot function if it does not know who their employees are and how much they are paying them. Traditionally, this employee information has been stored in filing cabinets or on spreadsheets, but an HRIS enables companies to organize all of that information in a digital manner.

Saving Time: Employee data is never static. Employees will have life events that impact their benefits, will accrue and use PTO or make changes to their tax deductions. Without an HRIS, many of these changes require manual work from the HR team to update the official file. With an HRIS, many of these calculations are done automatically and employees can even make the changes themselves.

Staying Compliant: It can be very challenging for employers to stay on top of the latest compliance regulations. A strong HRIS can make this process easier by notifying HR teams when certain fields, forms or certifications need to be updated.

Employee Experience: A good HRIS can make employee's lives easier and more convenient. By giving employees real-time access to their benefits, pay stubs, time-off requests and more, an HRIS can help that employee feel more empowered and catered to by their employer.

Reporting: Due to the fact that all employee data is stored in one place, the HRIS can help HR teams create more insightful and accurate reports. Creating turnover, headcount or absenteeism reports instantaneously can help HR teams become true stakeholders in executive conversations.

Blog: The 10 Best HRIS Systems for Mid-Sized Companies

When do companies buy an HRIS?

If a company has employees, it should also have an HRIS. For very small companies, its possible to get an HRIS module included with your payroll tool. This HRIS may not be the most robust, but it will allow for basic data tracking.

As companies get more complex, they typically need an HRIS that can offer more functionality beyond just tracking employees and paying them. At this point, some companies will look for an HRIS that has onboarding or recruiting capabilities; other companies will look for an HRIS that has more advanced timekeeping or benefits administration capabilities.

When companies have over 100-150 employees, it is almost a mandate that they have some HR software covering all of these key functional areas:

  • Recruiting (ATS)
  • Onboarding
  • Time & Attendance / PTO
  • Payroll
  • HRIS / Employee File Storage
  • Benefits Administration

Blog: What are the Functions of an HRIS System?

Can one tool meet all my HRIS needs, or will I need multiple?

Companies often need to decide if they want to have all of their HR-related software provided by the same vendor, or if they'd like to a hybrid approach.

There are many HRIS vendors who can provide functionality to support the entire employee lifecycle from hire-to-retire. However, most of these vendors can not excel in every area, so there are some aspects of the HRIS that are very strong and easy-to-use and other aspects that can be very manual and tedious.

The other approach is to use an HRIS for the majority of your software needs, but supplementing certain areas with a separate tool. Companies may decide to buy a standalone Applicant Tracking System (ATS), if their hiring needs are very demanding and their HRIS is not proficient in that area. The downside to this approach is that data is no longer housed in the same system, which can cause manual processes for HR teams to port data from one system to the other.

What features are included in HRIS Software?

The features offered will vary depending on the software provider, but here are some key functional areas you can expect from most HRIS's:

  • Employee database
  • Onboarding
  • Benefits administration
  • Payroll
  • Scheduling / Time & Attendance
  • PTO / Time-off tracking
  • Reporting and analytics
  • Mobile App / Employee Self Service

Some HRIS platforms will have a more robust end-to-end offering, including:

  • Applicant Tracking System (ATS)
  • Performance management
  • Compensation management
  • Learning Management System (LMS)
  • Engagement surveys

How do I find the right HRIS system?

There are dozens of HRIS platforms in the marketplace, and many of them are built for very specific organizations (i.e., small businesses, companies with large hourly workforces, international employers, etc.)

OutSail's free services have helped over 100 organizations find their ideal HRIS partner. A few of the things that we focus on in our consulting work is:

1.) Start High-Level

It's really easy to get bogged down in specifics and functionality, but save the details for the later part of your evaluation.

In the early stages, it's important to zoom out. Take some time to imagine what a better operational experience would look like.

Here are some of the questions you'll want to think about: "Where is the business heading?", "What processes are holding us back?" "What are our buying priorities: user interface? automations? customer support? integrations?"

If you want to see some of the high-level questions that we ask during a buying process, you might like this article: 8 Questions To Ask During Your Evaluations

2.) Build Out Your Requirements

Once you have a sense of your high-level priorities, it's time to translate those priorities into actual functionality.

The first step of the process is to think about which modules you want included. Here are the broad categories we consider: Payroll, HRIS, Onboarding, Benefits Admin, Time & Attendance, Performance, Succession, ATS and Learning

Once you have your high-level categories established, it's time to start building out your required functionality. Our team has developed a simple HRIS Requirements Building tool that can help teams do this in 3-5 minutes.

3.) Curate A Shortlist

Now that you have a sense of what your winning solution looks like, it's time to head into the marketplace and see who stacks up.

You won't be able to pick winners just by their websites, but you can start to eliminate vendors based on a few things:

  1. Missing functionality. Go to a vendor's website and see if they make all of the modules you need.
  2. Size match. Ask about a vendor's target market and look at their showcase customers. Do they work with companies your size and in your industry?
  3. Reviews. Online reviews can be as misleading as they are helpful. But make sure your finalists have at least a few dozen reviews with some positive takeaways.

OutSail creates free vendor shortlist reports for our clients that cover all of these details including pricing

4.) Start With A Few Finalists

Don't overwhelm yourself at the start. Begin with three to four vendors that look to have the highest probability of success. If you don't like one, you can always add more later.

Also, make sure your standardizing the review process and asking questions that are important to you. You don't want a vendor to go on and on about a shiny new feature that distracts from your real needs.

We've found that HR team who come into evaluations with scorecards can increase their chances of finding a winning solution. A good scorecard, like the one we offer our clients, can help keep track of functionality, make sure you ask the right questions and automatically weigh certain priorities more than others.

5.) Check Reviews and References.

Once you're moving close to a decision, it's always a good idea to ask your vendor of choice for references. Specify that you want to speak with customers who are of a similar size and industry and have been live on the system for over a year.

In addition to getting references through your vendor, you'll also want to do some research on your own too. Look to online review sites, such as G2Crowd or Capterra, where you can narrow reviews down by industry and size.

Also, be sure to dig around in your network and social circles to see what peers have to say!

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Brett Ungashick
Brett is the founder of OutSail. He spent the early part of his career selling HR software before switching sides and going to work for the people buying the software.

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