HRIS vs HCM Systems: The 5-Point Guide You Need To Make The Best Choice

You know about HRIS and you've got an understanding of HCM—but do you know the difference between these two HR systems?

In this article, we’ll take a look at these five points you should know about HCM vs HRIS systems:

1. Definition And History Of HRIS 
2. What Is HCM?
3. How Are They Similar?
4. How Are HRIS And HCM Different?
5. How To Choose Which Software Is The Best Fit For Your Business?

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What Is An HRIS?

A Human Resources Information System (HRIS) is a type of hr software used to manage core HR functions like storing employee data. These systems provide easy-to-access, streamlined information. By storing all employee information in one place, it removes the stress of multiple spreadsheets, databases, and paperwork overload.

Depending on the sophistication, an HRIS system can help human resource teams with providing:

• Payroll
• Benefits administration
• Training records
• HR reports
• Time-keeping
• Remote schedule management.

The main benefit of HRIS software is that it allows your HR department to access employee data in one location. This removes the need to juggle competing systems to track various aspects of information your HR specialists need to make business decisions. 

Streamlining with an HRIS translates to more productivity, increased cohesiveness across your entire business, and a better employee experience.

HRIS systems utilize these seven key tools to take HR management to the next level:

1. Core HR
2. Payroll
3. Employee Benefits
4. Training
5. Performance Management
6. Time Tracking and Leave
7. Onboarding

HRIS Quick History

In the 1960s and 1970s, large businesses began managing their employee data with HR software. At the time, their main goal was to aid in records management and meet legal documentation requirements.

Early HR software focused mainly on payroll and was produced on mainframe computers that served as central data stores with little ability to process or interact with the system.

HRIS then became more popular in the 1980s when Enterprise Resource Planning (ERP) systems gained momentum in the business world. This began a shift from mainframe systems to client-server technology. 

Businesses were now able to visualize the big-picture of their company needs, and leaders began to understand that relationships with people– employees and customers – made a big difference in the level of their success. 

Today, HRIS is used interchangeably with human resources management system (HRMS).

What Is HCM Software?

Human Capital Management (HCM) utilizes the same processes of HRIS and includes talent and workforce management. An HCM solution puts an emphasis on a strategic approach to managing employees.

In addition to the benefits of an HRIS, HCM software provides data and analytics that can be used for planning long-term goals in your business. Some areas HCM software covers include:

• Talent acquisition
• ATS (applicant tracking system)
• Onboarding
• Talent management
• Culture-building
• Career pathing
• Competency mapping
• Succession planning

HCM Quick History

In the 1950s and 1960s, the term “Human Capital” emerged as business leaders began to understand the value of employees.

Employees across industries began to be seen by management as valuable team members with skills and abilities to help fuel the growth of their companies - rather than just bodies on a production line or employees who could be easily replaced. 

When use of the internet began to rise in the 1990s, so did the need for leaders to transform their practices. Everything from recruitment, talent management, engagement, and employee retention had to be re-evaluated and updated. 

Enter HCM systems to manage these HR needs in a streamlined way.

How Are HRIS and HCM Similar?

Both HRIS and HCM are Human Resource Management Systems and allow for many of the same cloud-based HR functions, such as: 

• Managing payroll
• Storing employee demographic information 
• Recording performance management information 
• Providing self-serve options
• Maintaining employee training records.

The Difference Between HRIS and HCM Software

While there are many similarities, the core capabilities of HRIS and HCM solutions do differ.

HRIS helps with all basic HR functions, while Human Capital Management solutions include HRIS features but are more complex and comprehensive than an HRIS. 

HCM software gives you the ability to engage fully on an employee-specific level in areas like employee performance, analytics, and onboarding while HRIS provides more basic-level employee data.

How Do You Choose Between HRIS and HCM Solutions?

The decision of which of these solutions to choose depends on your specific business needs. 

Ask yourself these questions to help determine which is best for you:

• What are your main HR function needs?
• What's the current status of your HR technology?
• Is employee engagement a valid need in your business?
• What areas of your business could be streamlined?
• How do you manage employee data?
• What does your onboarding process look like?
• Is talent management needed in your business?
• Is there a need for succession planning? 

It can be a relatively long process choosing what’s best for you, but putting in the time and research will ensure you make the right decision for your HR professionals.

If you think an HRIS might be best for you, check out our guide to 10 Best HRIS Systems Of 2023

If you think you might need a little more and could benefit from a HCM, check out our guide to the 10 Best HCM Software Vendors Of 2023.

And if you're looking to get certified to better handle decisions like this, here's A Comprehensive Guide To HRIS Certifications you might want to take a look at!

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