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Human Resources Management System: Components, Pros and Cons

written by: SparkKD • edited by: Michele McDonough • updated: 3/24/2013

This article describes what constitutes an HRMS, the various types of HRMS packages that are available in the market and how this concept can be utilized to contribute toward more effective resource management in companies.

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    Managing HR Functions

    An HRMS (Human Resources Management System) or an HRIS (Human Resources Information System) or an HR Module refers to a software package that usually comes as either a stand-alone package or part of an ERP system and basically constitutes a software system to manage the various HR Functions in an organization.

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    Various Modules within a HRMS

    Various HR Functions can be implemented via an HRMS. Some of the common modules include: (untitled) 

    1. Employee Payroll
    2. Time Sheet
    3. Compensation & Benefits
    4. Management Information System
    5. Recruitment
    6. Training & Development
    7. Performance Appraisal System
    8. Leave Management System

    A pictorial representation of the various components of an HRMS is shown to the right. (Click image for a larger view.)

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    Types of HRMS Packages

    HRMS packages are available in various forms as other software.

    Paid HRMS Systems as part of ERP Packages

    • PeopleSoft is considered to be the world's best HRMS Package and has been acquired by Oracle.

    Open Source ERP Systems

    • Open ERP is a well known open-source ERP System with all ERP modules
    • Orange HRM is another open-source HRMS pacakge
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    An HRMS can:
    • Significantly improve the efficiency and effectiveness of the HR Function within an organization.
    • Merge HR functions as a discipline with the technological sophistication of ERP systems.
    • Provide good integration between various software systems in the organization for improved information flow.
    • Implement workflow to streamline and automate recurring activities.
    • Facilitate paperless transactions.
    • Reduce time and effort spent in administrative activities.
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    Although an HRMS is often touted as being the panacea for all HR-related problems, it is not completely error-free. There is a certain amount of risk associated with using HRMS packages, some of which are listed below.

    • Employees do not utilize the software the way it is meant to be used (e.g., managers do not perform approvals as and when required).
    • Employees may abuse the system (e.g., they may go on leave without raising suitable leave requests).
    • Data may be inaccurate and may result in faulty decision-making (The usefullness of the Management Information System in an HRMS package is wholly dependent on data integrity). Read this article on how data resource management should be employed in a company.
    • Paid software vendors may discontinue support for the HRMS packages and hence the total cost of ownership over the lifetime of the package can be significantly higher.
    • Paid software vendors may come up with newer releases of the HRMS package, and may force switching by stopping support for earlier releases.
    • Initially, employees may need training in order to be productive with the HRMS system.

    In conclusion, an HRMS can contribute significantly toward effective resource management in companies, but it is up to the employees and the organization to ensure that the HRMS is utilized effectively. It is to be viewed as a software tool to improve the resource management systems and employee productivity, not as a one-stop solution to solve every organization's HR problems.