What is HRMS?
An HRMS (Human Resource Management System) is a type of HR software that allows the management of multiple HR functions using information technology.
An HRMS automates repetitive and manual tasks to increase productivity and efficiency. This also allows the HR team to save time. This additional bandwidth can address strategic and business-critical tasks within the human resource management function.
An HRMS usually covers all elements of an HRIS and includes the capabilities of a human capital management system. Two of the most common HRMS characteristics are Time & Labor Management and Payroll.
What are the Common Functions of HRMS Systems?
Human Resource Management (or HR) is a function every organization has. It is intended to improve employee performance and align with the employer’s strategic goals. Policies and systems drive it. An HRMS covers the following sub-functions of HR. It automates and streamlines them.
- Manpower Planning
The main focus of human resource planning is the estimation and allocation of resources required to achieve desired business results. You can make HR plans that are short-term/immediate or long-term/strategic. These plans can be executed quickly and efficiently by the HR team with the help of a good HRMS.
Finding the right combination of skills and competencies in employees at the right time is crucial. This includes filling vacant positions via promotions, job postings internally and employee referrals.
An applicant accepted to join an organization would report to work on a specific day. This day is known as the Joining Date. On the employee’s first day, there are certain activities. These activities are known as Employee onboarding. The entire process can be made easier with complete HRMS software.
Normally, an employee is placed on probation for 1-6 months after he joins. During this time, the organization and employees meet to discuss their intentions and decide whether they would like to continue the relationship. The employee would usually go through a confirmation procedure at the end of the Probation period.
- Employee Information Management
The HR department must maintain accurate information about employees.
- Name, Gender and Date of Birth. Joining Date. Contact Information. Telephone numbers. Email-ids.
- Previous employment information.
- Information about the current company’s Department, Location, Grade and Reporting Manager.
- Payment and Statutory Information like PF or ESI number, Income tax PAN, etc.
HR maintains information about Passport, Visas, Nominations and Company Assets. The most important job of the HR department involves maintaining accurate and current information about employees. This data is used to inform many organizational decisions managers and management make. Many Indian states also have portals that allow them to manage the information of their employees.
- Transaction Management and Leave Policy
The Leave Policy is one of the responsibilities of the HR Department. The HR Department creates the HR Policy. However, it also has to maintain all transactions. This can be simplified with an HRMS. It is a legal requirement that employees be granted leave.
- Tracking Attendance and Time
Organizations and HR departments are now paying more attention to the daily tracking of employee time, such as the time he arrives, leaves, and the time he returns. This information can be used for Payroll processing. Organizations will also need to create various statutory reports using the Attendance data.
- Salary Calculations and Salary Adjustments
In consultation with Business Heads, the HR Departments assist in fixing or revising employees’ salaries. A Salary Revision Letter is usually attached to a salary revision. The Payroll team will also receive this information and include it in their next Payroll. Employees can also view these changes in their HRMS software.
- Payroll Processing and Salary Disbursement
Payroll Processing is a critical activity for the employee and the employer. This is directly connected to the reason individual works for an organization, apart from statutory compliance. The payroll processing includes calculating all statutory contributions (employees and employer) and generating the required reports. Employees must be informed about their salaries, tax deduction calculations, and reimbursement balances. All this can be done automatically by HRMS software. These activities also fall under Payroll processing.
- Separation Process
It is usually a resignation when an employee resigns or quits their job. It would involve conducting an exit interview, ensuring that clearance certificates are issued, handovers are done, and passing on all information to Payroll. The Payroll team would do the final settlement, and the final payment would be issued to the employee. The final settlement would be completed. A Recruitment request would then be initiated, depending on the organization’s needs.
- Communication and Basic Employee Services
An HR Department’s function is to ensure that employees and managers communicate regularly. It is important that employees are aware of the policies such as the Attendance Policy and Travel Policy, Dress Code, and Leave Policy. There may be other rules and regulations that an employee must follow within the company. This information will usually be available in the company’s HRMS software. All policy changes, significant events or other information that could affect employees should be communicated. All of these must be communicated to the HR Department.
- Employee Engagement
HR departments are undergoing steady change. They no longer function as a transaction-oriented function but have become more strategic. Employees aligned with the company’s goals and requirements are key to an organization’s success. This alignment is built by HR departments.
- Statutory Compliance
The HR Department also has a critical role in ensuring compliance (adherence) to all laws and regulations of the region (State/Country). They must ensure they are familiar with these laws and engage in all necessary activities to ensure compliance.
- MIS Reports
Multiple reports must be submitted by HR to stakeholders. These reports can be presented to the stakeholders weekly, bi-monthly or monthly. They will be presented in a predefined format in their HRMS software. This is an important activity from a stakeholder standpoint, as they will use it in their organization’s reporting and planning processes.
- Training and Development
This function is focused on improving the skills and knowledge of employees. The product and process of the Organization are taught to new employees. The soft skills that employees learn include team building and leadership skills. And behavioural skills such as time management, etiquette etc. Training modules are developed and delivered according to the gaps in skills and set of skills that employees have.
- Promotions and Performance Appraisal
An organization can use performance evaluation to help determine if employees are delivering business results. The Performance Management system (PMS), which HR specialists create and implement, is maintained by the records. This function is responsible for setting goals and assessing performance.
- Succession Planning
Succession planning is how an organization determines who can be promoted to higher positions and continuously trains them to achieve them. HR departments must identify these candidates and provide the necessary inputs. They also need to track their progress and monitor it.
- Human Resource Development
The Human relations program is designed to increase employee motivation and workplace morale by improving three-way communication and employee participation in decision-making. Human resources focus on the employee aspect of work and not technical or economic aspects.
What Can HRMS Software do for An Organization?
Data Analytics is a key reason that HR departments are shifting toward automation. Everything is possible with the right information at just the right moment, AI being the new buzzword.
Not only are these problems for large corporations, but startups and growing businesses also face them.
- Data Management
HR data is among the most sensitive data in an organization. This data used to be stored and managed on paper. This required significant investment and time. The era of spreadsheets followed. This method was time-consuming and error-prone. All of these problems were solved by HRMS. It is paperless, so it eliminates the possibility of misplaced or incomplete data.
HRMS software allows you to track real-time data across different HR functions, such as Payroll, attendance, leave, and leave. This is crucial in an age when employees are increasingly seen as customers.
- Self-Service for Employees
Employee Self Service is an information package that employees have access to from one central hub. Modern HRMSs have an employee Self Service portal that gives employees access to their data. This comprehensive view of important data, such as Payroll, leave and attendance, not only builds trust but also proves to be a practical benefit to employees. Employees can now download and view their payslips, see leave updates, and view their tax liabilities for the current month and year without having to contact HR. This allows the HR team to spend time on strategic tasks, improving efficiency.
- Reporting is Easy
An HRMS can generate various predefined statutory, and MIS reports instantly without the need to be set up. The statutory reports, such as CLRA Report and Shops and Establishment Act Report, can all be accessed instantly in the specified formats. Powerful filters enable you to create any report about the workforce based upon various parameters, often at the request of senior managers. The HRMS software also offers HR dashboards that quickly overview important information on one screen.
- Cost-Effectiveness and Efficiency
Cloud HRMS are highly affordable. They are well worth the small investment required to purchase them. When compliance is achieved, payroll management costs are significantly reduced, and there is no risk of getting slapped with fines or penalties. The department can also avoid duplicate information, saving time and improving efficiency. Leave management is simplified and can now be handled between employees and their reporting manager instead of being managed by HR. Similar results can be seen with attendance management.
- Increased Employee Engagement
Engaged employees are productive employees. This is why it’s easy to see how employee Self-Service, accurate and timely payroll management, better leave and attendance management and other features can help the organization achieve its goals. They keep employees engaged and ensure a more productive workforce. HR functions that were otherwise chaotic and slow-moving are now simplified and can lead to employee satisfaction and higher engagement.
- 100% Compliance with the Statute
Any company’s operation’s hygiene aspect is greatly impacted by compliance with central and state laws. It can have severe cost implications if it is not dealt with properly, such as fines or penalties that must be paid to government agencies. Modern cloud HRMS provide compliance by regularly updating the backend software with statutory changes. You don’t have to hunt for details in an ever-changing legal landscape like India.
- Use the Best Processes in the Industry
You can be at the top of your game despite the limitations of your working environment by using best practices. Best practices increase efficiency and reduce errors. An HRMS is designed to incorporate the best practices in the industry. This includes predefined formats for letters and requests, checklists, and other examples.