The human resources (HR) department is one of the essential departments of any business, regardless of its size and type. HR manages all your other business departments while executing different tasks to ensure seamless operations.
With a lot on their plate, HR teams will need a unique system to help them execute HR resources and activities. A human resource management system can help simplify and revolutionize manual and tedious tasks.
This article will cover the basics of a human resources management system, its benefits, and must-have modules when choosing the most effective software for your business.
Human Resource Management Systems: The What And Why
A human resource management system (HRMS) is a suite of software applications that streamlines human resources management, improves HR decision-making, and helps HR teams support all employees and managers in your business. An effective HRMS also connects seamlessly with other existing software, such as enterprise resource planning or ERP systems for employee management.
An HRMS helps manage and simplify all related processes throughout an employee’s lifecycle.
In addition, a human resource management system also helps automate time-consuming and repetitive HR tasks to reduce their time-intensive nature and make the HR department more efficient. By doing these, your business can enjoy numerous benefits, including:
- Reduce employee stress
- Eliminate process bottlenecks and errors
- Lower operational costs
- Improve internal communication
- Minimize manual work and reduce the time lag in activities and tasks
- Remove spreadsheet dependency
- Quickly implement policy changes and processes
10 Important Modules Of An Effective Human Resource Management System
Now that the HR system market is consistently reinventing itself, you need to know more about key modules that an HRMS must have to provide your business with the desired efficiency and insight.
Below, we’re sharing the most critical modules you should look for in an effective human resource management system. Note that some of the modules might overlap in terms of category or processes.
1- HR Database
An HR database stores your employee records and is the foundation for the rest of the module. It can be basic and only contain names, addresses, contact numbers, and job roles. However, it can also be as detailed as having a complete work record that includes training and performance management assessments.
The HR database is considered the most straightforward module of your HR system. However, it’s also the most critical component since it stores personal information, potentially even bank details, for payroll. Thus, data security for your HR database should be carefully vetted and checked.
Recruitment is an essentially continuous process that impacts the growth of your business. First, your HR department must find and identify the right talent for the right job to ensure that your business achieves its goals and objectives.
Handling countless resumes and applications and managing the recruitment journey can be rather tedious. Therefore, any effective HRMS should have a comprehensive recruitment model that allows you to simplify the recruitment process.
In general, an HRMS recruitment module may feature:
- Automatic approval process
- Resume screening
- Talent pool building
- Candidate assessments and shortlisting
- Online tests
- In-built talent requisition forms
- Automated job postings on portals
- Social media integration, particularly with LinkedIn
- Interview scheduling and updates
- Comprehensive feedback analysis
- Generation of appointment letters
Onboarding new employees can be a challenging task for businesses. However, you can’t ignore the importance of this process. You need a fast and efficient onboarding process to impact your new hires positively.
With an onboarding module, HRMS can significantly reduce the burden on your HR team. It allows new hires to easily fill and sign various forms and documents and upload required paperwork. It also lets you introduce your new employees to your business processes and the people involved in their daily tasks.
Other standard features of an onboarding module may include:
- Access to mandatory documents
- Gamified learning
- Goal-setting and key performance indicators (KPIs)
- Compliance with legislative obligations
- Company culture modules
4- Performance Management
The performance management system is considered one of the most critical modules of any HR system. It allows HR teams to monitor and evaluate the performance and efficiency of each employee, ensuring that business goals are achieved and helping increase business productivity.
A performance management module allows you to monitor employees’ progress against their objectives and targets and guides them accordingly. The best HR system uses artificial intelligence (AI) to evaluate employee performance and provide an overview of your workforce’s real-time progress.
In addition, this module also helps HR teams to:
- Set KPIs
- Schedule feedback and appraisal meetings
- Make constructive feedback
- Provide recognition and awards
5- Workforce Management
Workforce management is a scheduling function that is closely similar but not to be confused with the previous module. This module links closely or sometimes combined with other sub-set modules such as time and attendance management and absence and leave management.
In addition, the real-time functionality of this module may also involve integration with other business intelligence systems, such as customer relationship management (CRM) and ERP, to match your workforce deployment to the daily changing needs.
Workforce management can help you schedule and shift tasks to employees, monitor workflows, and provide a management dashboard with real-time metrics and data.
As businesses grow and advance rapidly, the talent market is experiencing a scarcity of skilled personnel. Because of this, it’s crucial to empower and invest in your existing workforce with the proper training to enhance their skill and familiarize them with the latest industry trends and best practices.
Thus, when choosing an HR system, you must look for a comprehensive training module. This module often uses the outcomes of the performance management module as a starting point. Doing so allows you to produce individual employee training plans, find and book training courses, and manage the feedback and follow-on evaluation process. It may also help in tracking training expenses against your budget allocations.
Other valuable features of a training module may include:
- Automated employee alerts and reminders for pending training
- Training recommendations according to career aspirations, skillset, and role
- Setting and managing goals
- Individual employee learning plans
- Training analytics
Payroll is considered the most excellent motivator for employees to do their best at work. Therefore, having a streamlined payroll process can help increase employee satisfaction and productivity. Therefore, having an efficient payroll module on your HR system is necessary.
Traditionally, businesses use separate, dedicated payroll software to handle the process. However, seeing payroll functionality in your HR system has become more common since it helps simplify the whole process.
The basic payroll module should be able to calculate and pay employee salaries, subtract the necessary taxes and deductions, and organize direct payment deposits to employee bank accounts or print and deliver paychecks.
Other HRMS-based payroll features include compliance management, data security and accuracy (especially for stored financial data like bank accounts), and an employee access portal that allows them to track their salary.
8- Benefits Administration
Benefits administration can be a stand-alone module or combined with payroll management. This module is about delivering timely information and assisting employees in deciding their benefits, pension, healthcare and welfare packages, and other financial implications.
An employee benefits administration module may include features like:
- Legislative compliance
- Plan comparison tool for employee decision-making.
- Online open enrollment
- Automated alerts and communication of enrolment information
9- HR Analytics
In general, most HRMS incorporate analytics within other modules. However, a dedicated HR analytics module can provide you with an overall picture of all things related to your business workforce.
Effective HR analytics allows seamless integration with other modules to prevent data silos and effectively process and evaluate the large volume of employee data. In addition, it provides reporting capabilities and assists your HR team in spotting trends, patterns, and potential bottlenecks in your current processes.
With these data, you can make more strategic, data-driven decisions and changes in your process to increase workforce efficiency and productivity.
Like onboarding, when it’s time to let go of an employee, the offboarding process should be smooth and seamless. Without an efficient offboarding process, employees leaving will have a negative experience, damaging your reputation with future potential talents.
An offboarding module may sometimes be combined with an onboarding module. This module covers aspects that affect your business’s ability to settle or re-claim with the employee. It also helps manage requisites such as signatures from various departments or no dues certificates.
An HR system is critical for businesses–big and small–to streamline most human resource operations. But with numerous software offered on the market today, finding the right HRMS for your business can be challenging.
By knowing exactly what features you need, or what you want it to do, you can easily make the right investment decision. The above modules are some of the essential components you need to look for in a good HR system, maximizing the efficiency of your HR department.
For HR professionals seeking to deepen their expertise in these areas, you can learn more about studying for a Master of Human Resource Management online with UNSW, which offers advanced insights into modern HR practices.