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What Exactly is a Human Resource Management System and What Does It Do?

Last updated on March 27, 2023

The most important thing in your business is your employees. We can all agree on that. But managing employees comes with many responsibilities, from maintaining employee data and paying them accurately while remaining compliant to overseeing things like employee benefits and performance reviews. 

There are a lot of moving parts. So to say HRs are busy is an understatement — we're exhausted just thinking about it.

The increasing workload HR and payroll teams are juggling means that there’s even more demand for a solution that automates HR tasks and processes.

Enter human resources management systems.

So, what is a human resource management system (HRMS)?

An HRMS is a software that allows your human resources team to automate routine HR processes like onboarding new employees or organising performance reviews.

Equipped with a human resource management system, you’ve got all the tools you need to keep HR functioning at its most efficient while streamlining time-zapping tasks.

And what’s the difference between an HRMS and HRIS?

HRMS stands for human resource management system, and HRIS is short for human resource information system. An HRIS is a basic software providing only the essential tools for managing aspects of HR — think training, recruitment, and workflow management. 

But a human resource management system is much more than that. It’s a complete HR solution. So it usually includes all the features and modules of an HRIS solution but can also include payroll, automated tax calculations, better data management and reporting capabilities.

Helpful features of an HRMS

It’s important to note that not every human resource management system will provide the same features, but below is a selection of what you can broadly expect. (Psst. All are features that PayFit can deliver, just saying).

Before you even start to review the human resource management system options out there, it’s a good idea to sit down and take note of the benefits and features that are important to your organisation.

Employee management

Store employee data in one centralised location so all departments are accessing the same data; this means no duplicates. And if one employee leaves and you remove them from your system, that’s it — they’re gone. So there’s no chance of continuing to pay an old employee as everyone’s data is the same!

Payroll management

Payroll affects every member of staff. So if they’re paid incorrectly or late — you’re going to know about it. And it’s not just about paying correctly; without calculating taxes accurately, there’s a chance you’ll receive fines and penalties. And nobody wants that!

Automated payroll software automates lots of time-intensive payroll tasks, including calculating taxes, automating RTI and pension submissions, calculating statutory sick pay and maternity leave, and generating and distributing payslips. 

Employee benefits

You need to offer an attractive benefits package to help attract and retain top talent. From providing health insurance to gym memberships, processing these benefits comes with extra admin. Extra admin your busy HR team might not have time for. 

A human resource management system helps you manage all this by allowing you to apply several benefits and any deductions, such as mileage or childcare vouchers. Our all-in-one HR software will automatically deduct all employee contributions, allowing you to Payroll Benefits in Kind (PBIK) and automatically send P11Ds and P11D(b)s. 

What does all this mean? It means your HR teams have more time to focus on more important things like improving your employee experience or revamping the onboarding process. 

Employee performance management 

Automating one-to-ones and tracking performance helps achieve a happier, more productive workforce. Our one-to-one feature helps HRs track performance with customisable questions to help engage all employees. 

Building trust between employees and managers is crucial if you’re going to get the best out of all team members. That’s why you need software that helps you foster these relationships.

How an HRMS can help HR managers

Imagine a world where you can streamline HR processes, improve data management, and increase organisational efficiency. With an HRMS, you can easily do all that and more.

Streamline your HR processes

With an HRMS, you’re basically cutting out all the unnecessary admin and duplicate tasks (like manual data entry). Instead, you can shorten and automate all your HR and payroll processes — reducing errors, improving efficiency, and getting your time back.

Improve data management

A centralised hub means it’s easier to access and analyse your employee data — plus, everyone is accessing the exact same data, which means there’s no room for misinterpretation. Accurate data means you can make data-driven decisions.

With reliable data at your fingertips, you can improve employee retention, ensure you’re offering fair pay, increase diversity, improve productivity, and analyse workforce data to plan for the future. 

Increase organisational efficiency

An HRMS helps you streamline your HR processes — which means saying goodbye to needless and repetitive admin tasks. You’re not only making the lives of your HR and finance team much more palatable, but it helps improve your employee experience.

Employees can log into the software to access payslips, upload expense data, request time off, and fill in employee performance review surveys. All that in one place makes everything so simple and foolproof.

Empower managers to become more ‘hands-on’

You can give managers the tools to not only measure team performance but to help them streamline important processes — think expense management and annual leave requests. By assigning approval workflows, you’re making managing these tasks easier for all team leaders. 

You’re also giving them accountability, which can help them feel even more valued in your organisation. 

A bit about PayFit’s HR module 

The phrase “work smarter, not harder” is etched into our brains, but the reality is — legacy systems are not the way to work smarter. Systems that don’t add value to your business are a waste of time and money.

But investing in smart HR software can introduce your business to a modern way of operating. PayFit drags your business into the world of automation and efficiency.

Our software helps you connect all your data — so your employees no longer have to suffer a fragmented experience. Instead, they can log into their employee portal, armed with just one password and view payslips, view a breakdown of tax paid and annual leave taken (and request annual leave in the same portal).

Their portal also lets them submit expenses digitally and respond to employee review campaigns to help you keep track of their performance. It’s really that simple.

And HRs? Well, their lives just got a whole lot easier. No chasing for paper expense slips, no disjointed or duplicate employee data. They can enjoy compliant payroll, accurate and automated tax calculations, easy onboarding — the list goes on.

At PayFit, our goal is to make your job as simple as possible with access to the best software possible. Schedule a quick demo to see it in action.

Want to experience the future of payroll?
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