No matter what your job, role in a company, or size of the business you own or work for is, human resources management (HRM) is with you the entire time.
Human resources administration is the most consistent facet of small, medium, and large businesses in the USA. The human resource department is often a silent but constant companion from the time you were hired (or started a business) until you leave.
Below, we summarize HRM, Human Resource Management Systems (HRMS), and Human Capital Management (HCM), including a rundown of a well-managed HRM program’s goals, programs, systems, and processes.
What is Human Resource Management?
HRM oversees and guides all aspects of recruiting, hiring, disciplinary steps, training, and managing employees.
A company’s human resources department helps develop and set priorities, write work policies, manage the employee workforce and ensure that everyone follows company policies.
Employees have always been regarded as important business assets and a valuable part of the company. HR sometimes refers to employees, their training, and their skills as human capital.
Therefore, an effective Human Resource department has several purposes:
- Maximize the potential an employee possesses
- Ensure the employee’s morale is high
- Make sure the employee has the tools needed to succeed
- Maximize the return on investment
To those ends, HRM has taken on an entire array of responsibilities. Human Resource duties include, but are not limited to:
- Background checks
- Drug testing
- Employee compensation plan
- Outplacement of employees
- Payroll process
- Legal and tax compliance
- Training and professional development
- Benefits administration
- Personnel management
- Employee management and relations
- Termination and discipline
- Employee records keeping
An Evolving Concept
Over the decades, HRM has broadened its scope and responsibilities. An HR department is no longer just a benefits administrator or the people you go to if you have a paycheck problem. During the past few decades, HRM became a key player in an employee’s tenure that recognizes the human as a valuable asset to improve the business’s overall health.
Because of that, we refer to HRM as Human Capital Management.
HCM is relatively the same as HRM, however, it covers a broader scope of functions over and above those of HRM. These additional functions are mainly related to performance and analytics management. In businesses with a mature human resources department and program, HRM is almost a division under the umbrella of HCM.
Part of the expanded role for HCM includes all the responsibilities mentioned above, plus:
- Aiding in the company’s fulfillment of its core mission
- Governing, developing, and nurturing the corporate culture
- Targeting needed talent and talent management in and out of normal business processes
- Helping to develop and implement the strategic plan
- Serving as an informal mediator on salary and compensation issues
- Overseeing employee morale events
Human resources began as an employee management department during the British Industrial Revolution.
The economic expansion during that period created an immense demand for employees.
Gradually, managers noticed that happier employees were more productive employees and that overworked employees caused accidents in the workplace.
To address worker morale, which the manager knew would cause higher productivity, HRM introduced satisfaction programs. To avoid exhausted employees and create safer workplaces, governments passed new workplace safety laws and enforced existing regulations.
Early HRM departments were called Personnel Management Departments.
Not much changed until after World War II. The Personnel Management Department workforce noticed the effectiveness of Army training programs and emphasized training to raise productivity and safety levels.
In the 1970s, the term “Human Resources” was coined, and HRM began its evolution to what we know today.
Prior Personnel Management employees were concerned with employee morale and workplace safety. Those managers grew to recognize training as vital to morale and safety.
Today’s HRM personnel still address employee engagement and workplace safety issues. In addition, HRM departments have embraced a holistic employee and workplace management approach.
The average company has an HRM program. In small companies, the HRM program is often comprised of part-time employees, whereas in large companies the HRM program is its own department consisting of multiple employees that work across multiple divisions.
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What Is a Human Resource Management System (HRMS)?
Today’s HRM program has a lot of responsibilities that involve updating, managing, and storing a massive amount of information. That is born of a need for greater automation, massive information storage, and expanded cross-department and company-wide collaboration.
In addition, HRM departments now have broader responsibilities in:
- Personnel records management
- Employee complaints and negotiations
- Employee training requirements by state and federal governments
- Data analysis and program development
- Legal compliance
- Workplace safety
- Recruit and track applicants
The responsibilities above portray the expanded role HRM has played over the last 40 years.
Because of that vast scope of responsibilities, it is impossible to manage HRM records and programs via hard-copy primitive spreadsheets, or database programs.
That is where a Human Resource Management System (HRMS) comes in.
The most straightforward description for an HRMS is that it is the management tool that allows HR professionals and technologists to develop, implement, and manage HRM programs.
HRMS in Detail
An HRMS system is a software tool using internal and external databases for implementation and management. The following are components in an HRMS that a company might use:
- Recruiting and advertising
- Candidate screening and background checks
- Documentation for interviews, salary, and key benefits negotiation
- New employee training
- Benefits management and execution
- Employee investment programs
- Career training and development
- Payroll processes
- Tax compliance
- Timesheets, expense reports
- Program and department budget management
- Employee reviews, discipline, and retraining programs
- Employee complaints, investigation, and compliance training
- Discipline, suspension, and termination of employment
- Employee leave, replacement, and substitution program
In today’s modern business, all those systems work together with every employee on a programmatic, individual, and corporate level.
An HRMS lets employees communicate, collaborate, and update personnel files, run programs, track training, recruit new employees, process employee complaints, and much more.
To get a sense of the data an HRMS manages, consider the data that is associated with one hourly, part-time, retail employee:
- Compensation management
- Time tracking and overtime
- Work skills training
- Work schedules and availability
- Attendance management
- Absence management
- Time management and Timesheets logs
- Leave and vacation time
- Legal compliance training
- Complaints and discipline
- Performance appraisal and management data
- Job Description and promotional potential
For a salaried, full-time employee, there is much more data that is more complex. It pertains to additional information about their position, career development, investments, training, etc.
Now, imagine those two employees multiplied across a company with thousands of employees.
What Is the Difference Between HRMS, HRIS, and HCM?
To understand the differences between HRMS, HRIS, and HCM, you must understand how each works in the context of its intended purpose.
Here is a breakdown:
HCM is the slate of programs and initiatives that strive to serve employees via creating administrative tasks and a workplace environment that promotes their best output.
HCM is interchangeable with HRM and replaces HRM, both in name and expanded duties.
HRMS is the management system that lets employees implement and manage HCM (or HRM) programs. HCM can use hard copies with rudimentary technology like spreadsheets. Alternatively, they can use full-scale information technology (IT) system solutions designed specifically for implementing HRM programs and providing the computer firepower necessary to track and manage employees.
An HRIS program is an IT program that stores and processes any employee data. Almost every company has some iteration of an HRIS program, mainly because managing employees has become so complex from a legal and compliance perspective.
If HRIS did not exist, it would be unlikely any business could manage today’s HCM programs and data.
Why Is HRMS Beneficial to a Company?
The HRIS aids in the management of information via computerized automation, but the backbone of HRM is the HRMS. An HRMS is an infrastructure set up to manage any complex internal HRM requirements and HR functions. HRMS includes both the management and information tools that the other HR platforms provide.
A company that lacks a robust HRMS is at an extreme and costly disadvantage.
Here are a few of the ways HRMS helps a company:
- Greater protections for personnel data, which for the most part is confidential
- More autonomy for employees regarding managing their time, benefits, training, schedules, and personal information
- Better communications regarding company policies, events, programs, and training
- Streamlined training tracking, scheduling, and planning
- Increased productivity and efficiency
- Ability to pinpoint areas employees need help or training
There are also the inherent benefits of having an automated IT system to help manage all the required records and paperwork.
When Should You Purchase an HRMS?
There are several indicators that a business needs a computerized HRMS or should consider upgrading the HRIS system.
Here are some examples:
- Tax processing problems
- Legal compliance failures
- Rapid expansion
- Merger or acquisition
- A failed audit
- Purchase of a new accounting system
- New regulatory reporting requirements
- Rapid growth and new, remote hiring processes
- The old system planning tools are no longer helpful
- A period of accelerated project management activity
- Shifting business or production processes that require significant training, machine learning, or process redevelopment
There are many HRMS tools on the market. You should have no problem finding a system that meets all your HRM needs. Here are four of the best.
- Sage HRMS
- Bamboo HR
Sage is tried and true and provides a lot of flexibility and the ability to customize modules to what you need to meet your company’s needs. A drawback to Sage is that it is modular and not a one-size-fits-all system.
The price starts low, but with every user or module a customer adds, the price increases significantly.
Flair is easy to use, highly automated and covers employees from recruiting onward. The base price is $8 per user experience, but that total increases as you add more functionality to it. It comes with a learning curve, but they excel in customer service. Some featured tools include the employee HUB and shift planner, among others.
BambooHR is easy to use, specializes in small to medium-sized businesses, and is affordable. Its pros are that it has a clean base code, making optimization easier. The cons are that the reports are almost impossible to modify.
Jobsoid is an applicant tracking system that streamlines the entire recruitment process from start to finish. Intuitive and easy-to-use, this applicant tracking system does everything from strategic sourcing to interview scheduling. It automates your entire sourcing funnel so that you can save time and focus on hiring the right fit
How to Find the Right HRMS for Your Company?
Picking the right HRMS software can be challenging. Here is a checklist of five things you should verify before making any purchases.
Define What You Need
Know and define all duties, reports, and primary function processes you require.
Check Out the Support Options
Find out if the maintenance contract covers system modifications. Ask to talk to the developers who will work on your system. Make sure their phone or online support is responsive.
Insist on ISO27001 Security
Make sure that your new system can keep your data safe.
Make Sure Reports are Customizable
Many HRMS systems advertise customizable reports when what they mean is that they can develop reports for you. The more user-friendly the report, the more likely you will not have to pay extra to see your data the way you need to see it.
Make Sure it is Scalable
You plan on growing, so make sure that your HRMS grows with you.
The HRM backbone you manage or implement in your company will create an environment where you and your employees can succeed. Define what you need and insist on a requirements implementation plan with milestones for a system that meets all your needs.