HR systems – a complete guide

HR systems are a crucial investment for any organisation with employees.

Read this guide for an overview of HR systems. We explore everything you need to know about HR management systems, including:

Once you’ve reached the end of this guide, you will have all the insight you need to go away and invest in an HR system that works for your entire organisation.

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    What is an HR system?

    An HR system is an application or suite of applications that’s used by organisations to automate and manage human resource (HR) processes. This can include Human Resource Information Systems (HRIS), Human Capital Management (HCM) and Human Resource Management Systems (HRMS).

    At a very high level, HR systems capture, store, provide and report information to their users. The breadth and depth of functionality available within a particular HR system, and the integrations it has with other applications, varies from provider to provider. Some low-cost solutions provide basic capabilities with little, if any, configuration options, and enable the storage of personal information about employees and help HR teams with basic admin and reporting functions. More comprehensive systems, such as Ciphr HR, provide functionality to help organisations and their people be as productive as possible across the entire employee lifecycle, sitting at the heart of all people processes, and support ongoing activities related to priorities such as performance management and improving the employee experience.

    At the same time, these HR management systems enable organisations to better understand their workforce on a real-time basis, predict future needs, make informed decisions, and comply with rapidly-evolving HR and payroll regulations.

    What is the role of HR systems?

    HR systems support and enhance an organisation’s HR activity. These activities can can include employee lifecycle management such as onboarding and performance management, as well as fundamental HR administration including policy acceptance and payslip management. HR systems allow HR teams, managers and employees to collect, store and report on relevant people data, including organisational policies and processes, location details, and entire workforce documentation. All this data is captured and stored safely and securely. HR systems are also able to automate some HR tasks, and streamline key people-related processes such as recruitment and employee onboarding.

    Thanks to technological advances, these systems are becoming increasingly sophisticated and can be adapted and flexed to meet different organisations’ requirements as they evolve and grow. Popular functionality within HR systems includes:

    • Employee record keeping
    • Recruitment
    • Onboarding
    • Absence management
    • Training and staff development
    • Expenses management
    • Document management
    • Time and attendance logging
    • Payroll administration
    • HR compliance
    • Employee surveys
    • Succession planning
    • Multiple languages
    • Configurable branding
    • Internal communications
    • Performance management
    • Health and safety records
    • Employee benefits
    • Safeguarding
    • Identity and background checks
    • Policy acceptance
    • HR case management
    • Learning and development (through learning management systems)

    The most effective HR systems integrate seamlessly with the software that organisations use outside the HR function and that rely on up-to-date, accurate data about the organisation’s people using. Integrating HR systems with these other platforms through an Application Programming Interfaces (APIs) enables organisations to eliminate duplicate data entry and streamline tasks across all business units.

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    What are the benefits of an HR system?

    There are numerous organisation-wide benefits to investing in an HR system, some of which we’ve already touched upon. Here’s a round-up of some of the main advantages:

    10 benefits of using an HR system

    1. Save time – it will automate routine, time-consuming and repetitive tasks
    2. Secure data storage – files will be stored in a secure digital environment that can only be accessed by authorised users
    3. Easy data access – information can be obtained, updated and shared at a glance. Online HR systems give employees access from a PC, mobile phone or tablet 24/7/365
    4. Self-service functionality – managers and employees are empowered to manage some of their HR processes and keep their data up to date
    5. Improved communication – between HR and the rest of the organisation, and between line managers and their employees
    6. Create an amazing employee experience – create, refine and automate processes related to the moments that matter most to employees, such as new starter onboarding
    7. Develop a high-performing workforce – talent management, succession planning and learning management systems ensure you have the right people with the right skills for your organisation
    8. Engaged employees – capturing employee sentiment data enables HR to proactively intervene with any emerging employee issues before they become a serious problem
    9. Legislative compliance – thanks to functionality such as document tracking, data anonymisation, and integration with digital right to work check providers
    10. Accurate data supports more informed decision-making – managers can make decisions based on up-to-the-minute data insights and analytics
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    Different types of HR management systems

    There are four main types of HR management systems:

    1. Human Resource Information System (HRIS) – used to automate entire HR processes, policies and procedures, providing a centralised database for all HR data
    2. Human Capital Management (HCM) – this is a more comprehensive people management platform that goes beyond the basics of an HRIS. These systems include a full suite of HCM solutions, spanning recruitment, onboarding, talent management, performance management, learning and development and payroll
    3. Human Resource Management Systems (HRMS) – are very similar to HRIS platforms. They
      include a comprehensive collection of essential HR tools that includes all of the following wider HR systems listed immediately below
    4. Enterprise Resource Planning (ERP) – while not strictly an HR system, ERPs often incorporate HR functionality alongside other solutions such related to procurement, finance, marketing and supply chains. ERPs are generally only used by large, complex enterprise organisations. Read our free guide to help you decide if an ERP or best-of-breed HR solution is right for you

    Other HR systems include:

    • Applicant Tracking Systems (ATS) – used to post job vacancies, track applications and manage and communicate with candidates through the entire recruiting and hiring process
    • Onboarding systems – help conduct new starter processes before a new employee’s first day, and ensure they’re on the right path during their first few days and weeks with a new employer (want to find out if new hire onboarding software is right for you? Click here)
    • Performance management systems – enable managers to set and record performance targets and monitor employee progress using a consistent and measured approach
    • Employee engagement systems – help employers improve staff morale and engagement by obtaining and tracking feedback from employees, while also recognising and rewarding their achievements
    • Employee benefits – make it quick and easy for employees to select the employee benefits that matter most to them, their needs and interests, and view the value of their benefits package
    • Expense management – streamline the management of staff expenses and ensure compliance with the organisation’s expense policies
    • Time and attendance and workforce planning – help organisations to keep track of what employees are working where and when, and ensure that the right mix of employees, with the right skills, are scheduled to work at any given time
    • Payroll management systems – this software (typically cloud-based) manages and automates the payroll process
    • Learning management systems (LMS) – help empower employee growth by identifying and filling knowledge gaps and providing individuals with personalised learning, development and training activity that enable them to up-skill, progress and feel valued

    Why are HR systems important?

    Most organisations, regardless of their size or sector, have some form of HR system to help them manage their people data.

    With the right HR system in place, organisations can effortlessly streamline time and resource-intensive processes, improving efficiency at all levels and generating valuable savings at the same time. Paper records are replaced by electronic data, paving the way for improved data security, accuracy and cost savings due to reduced admin and better data quality.

    Furthermore, HR systems can now be accessed by managers and employees from anywhere in the world. Cloud-based HR management systems eradicate the need for on-premise hosting, enabling HR teams from global organisations – as well as deskless workers – to log in via their computer, laptop or mobile device and access what they need 24/7. Meanwhile, most cloud-based solutions are automatically updated and the data is backed up by the software provider.

    It’s widely acknowledged that streamlined and timely HR processes help deliver a better employee onboarding process and create that all-important positive first impression. From a wider perspective, HR systems are also instrumental in improving overall recruitment processes. For instance, historic applicant data can be stored securely and revisited the moment a new vacancy becomes available.

    Finally, HR is now expected to provide strategic direction that supports an organisation’s goals. Accurate people data, supported by robust analytical tools, ensures that HR is able to get the necessary insights to make informed decisions and predictions about future needs.

    How much should an HR system cost?

    The cost of HR systems vary from system-to-system due to several key factors, including functionality, size of the organisation, number of employees, and contract length.

    HR systems costs can vary significantly, often ranging from £10 to £250 per employee per annum. Systems with simple functionality often cost more on a per employee basis but have no minimum spends and, because they offer basic, out-of-the-box (or ‘plug-and-play’) solutions, don’t require any setup fees. At the other end of the scale, enterprise HR systems can cost less on a per employee basis but will have substantial minimum spends. Because of the complexity and configurability of HR systems suitable for larger organisations, there are likely to be upfront costs for system setup and configuration which will cover consultancy, project management, training and implementation support. These upfront costs should only be a one-off, although some vendors will offer to spread the cost of the setup fees across multiple years. Unlike simple, out-of-the-box HR systems, HCM solutions for enterprise organisations will require multi-year contracts, but bear in mind that enterprise organisations will have mature procurement processes and expect to utilise their chosen business system for many years.

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    What is the best HR system?

    The best HR system is the one that meets the needs of your organisation, as well as each of your stakeholders – including HR teams, line managers, HODs, and employees. Your HR system requirements may include extensive integration capabilities, while others may focus more on customisation and branding functionality; each organisation will differ.

    Where possible, take the time to explore the HR system marketplace and see them for yourself. Many leading HR systems providers will only be too happy to provide you with a demo and answer any queries you may have. When it comes to testing out the software, make sure as many end-users as possible are involved in the HR system selection process. It’ll help guarantee you ultimately invest in something that works for everybody.

    Selecting the ‘best’ solution very much depends on your organisational needs, which should be the main starting point for carrying out any HR system-related research.

    How to choose the best HR system?

    As is the case with any investment, it’s essential you identify the best option for your organisation based on your current and future needs. In doing so, it will save you significant time, money and anguish in the long run.

    Start by taking a step back and assessing the HR system landscape while also factoring in any budgetary, technology and time constraints you may have. Define your HR challenges and how you want the system to tackle them, and identify both your technological and business requirements. Your should also seek input from across your organisation, and find out what other systems and processes other departments use that rely on up-to-date, accurate data about their people.

    Once you are clear on your objectives and requirements, create a shortlist of suitable HR system providers and obtain all the information you need in order to make an informed decision. Take advantage of demo opportunities and review customer feedback such as case studies and reviews. For more guidance on making sure you select the right solution, read our Top 10 HR system selection mistakes – and how to avoid them. 

    How long does it take to implement an HR system?

    How long it will take to implement a new HR system depends on how straightforward or complex your requirements are.

    Basic HR systems can be purchased with a credit card and set up almost immediately. However, if you require something more complex that’s tailored to your specific needs, it can take several months to roll out the first phase of such a system, and for global, enterprise organisations, the implementation process can run into years. Before signing up with a vendor your should understand what the implementation process will be, the expected timescales, any costs and your responsibilities at each stage. Your HR system provider should be seen as a partner you can turn to, to get everything setup and aligned to your needs.

    At Ciphr, we believe that a huge factor in the success of an technology project is its implementation. That’s why we’ve created The Ciphr Way, a logical series of steps that take our customers from an initial welcome and project kick-off, through to implementation, approval and handover to our customer success team. The Ciphr Way helps keep everyone on track to achieve their objectives and ensure our customers get as much value out of Ciphr’s solutions as possible.

    Examples of an HR system

    We’ve spoken a lot about HR systems; now we want to delve a bit deeper into what they look like in reality. Ciphr’s SaaS people management platform includes HR, payroll, recruitment, onboarding and learning solutions, enabling organisations to attract, engage manage and retain their workforce more effectively. And because our HR software is cloud-based, it enables entire organisations to stay connected and work efficiently.

    We also provide seamless integration with an ecosystem of specialist, third-party tools using our API technology. Our aim is to help organisations unlock the value of their people.

    Our HR software solutions are widely recognised for being highly intuitive and providing excellent reporting which, in turn, can help reduce the costs associated with recruitment and HR by up to 70%.

    Use them to:

    • Manage the entire employee lifecycle
    • Reduce HR admin
    • Improve data accuracy and security
    • Process payroll
    • Manage all aspects of recruitment
    • Support staff learning and development
    • Integrate with specialist third party solutions

    They are:

    • Are accessible at any time from any location
    • Are ISO 27001 accredited and GDPR-compliant

    Download our brochure to find out more about our people management solutions →

    Summary

    The power of HR systems aren’t to be underestimated. Regardless of the size of your organisation or the sector in which you operate, these solutions can facilitate significant, organisational-wide improvements.

    Increased efficiency, reduced costs, an empowered workforce and successful recruitment and onboarding process are among the many benefits. Furthermore, these solutions are capable of delivering these benefits year-on-year, with the latest technological advances fuelling these results even further by continuously improving functionality.

    If you already have an HR system, ask yourself, is it working as hard as it should be or have our needs as an organisation changed? And if you don’t yet have one, don’t delay, it’s an investment that will pay off in multiple ways from the moment you install it.

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    In the meantime, to see some of the benefits of HR system software for yourself, request a demo.

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    To discuss how Ciphr could help your organisation, call us now 01628 814242.
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