The Essential Guide to HR Systems in 2023
An HR system can revolutionise the way your entire business works. But, without the right system in place, you may be limiting your potential before you even begin.
In this article, we offer an in-depth guide to HR systems, how they work, how they benefit business and what you should expect from one today.Skip to the good part by booking a demo to see Personio’s solution in action.
What is an HR System?
An HR system is a tool that allows for the easy storage of employee information and the facilitation of core HR processes. They are often referred to as human resources management systems (HRMS) or human resources information systems (HRIS).
A truly effective HR system should cover each stage of the employee lifecycle: from attracting candidates and putting them through the recruitment process, to offers and onboarding, performance and development and through to offboarding.
Most of all, though, an HR system unlocks the benefit of time. Not only for employees, but for HR teams who can instead focus on high-impact projects like:
Are There Different Types of HR Systems?
It helps to think of an HR system across four distinct classes:
HRIS (Human Resource Information System)
Manages the most common HR processes, policies and procedures.
HCM System(Human Capital Management System)
A holistic combination of an HRIS and HCM (with added features).
HCM (Human Capital Management)
A holistic combination of an HRIS and HCM (with added features).
A top-performing HR software, like Personio, will fall into the third camp. It should help manage your day-to-day processes, while offering additional functionality that helps take your people-focused work to the next level.
The 7 Benefits of HR Systems
Let’s talk about the benefits. More specifically, how they can help your organisation save time while boosting your bottom line.
Here are the top seven reasons to implement a proper system today:
Gaining Back Time Through Efficiency – By their very nature, HR systems are designed to give your team time. That is done through managing and automating efficient processes across your organisation. You can spend less time ensuring your top candidate has received their contract, and more time onboarding them.
Self-Service & Engagement – The greatest HR systems are not simply reserved for HR teams. Instead, they actively loop in employees and make it easier for them to make updates (through employee self-service), ensure their information is correct and play an active role in shaping the accuracy and reliability of the system.
Integrated Tools & Tasks – Administrative work is rarely a joy for your employees. But, if you have an HR system that integrates with the tools they use (like Slack or Google Calendar), it can make processes easier for everyone involved.
Data Compliance – Your employee data needs to be under lock and key, at all times. Simply having it as part of a spreadsheet won’t cut it. A compliant HR system, with strict data protection policies, will ensure your employee data stays within your org.
Data-Driven Decisions – Accurate HR reports are table stakes for people teams who want to get in the good graces of management. If your HR system can produce reports in only a couple of clicks, your team can spend more time analysing them and taking them into discussions with key stakeholders.
Sustainable Scaling – The best hiring teams in the world truly make use of their systems. That’s because they know they can better host candidate information, collect feedback from interviewers and even turn candidates into employees in only a click or two. Your organisation can grow as quickly as you need it to.
Never Lose an Approval – The chain of command is crucial. When you use an HR system, you can ensure that managers, HR leaders and even the CEO are in charge and can offer documented approvals to information changes and other information. Everything is clear and nothing ever gets lost.
What Do HR Systems Look Like in Practice?
It depends on who you ask. For some companies, an HR system may look like a jumbled mess of spreadsheets, emails and cumbersome processes. For others, it may take the form of an HR software that offers an all-in-one solution to all their people-related needs.
For many SMEs and their HR teams, the former is more true than the latter. An HR system may not even feel like much of a system at all – rather, an ad hoc collection of documents, employee data and other details scattered across various channels.
Do Startups Often Need an HR System?
Startups often need HR systems the most. Especially when it comes to putting a strong HR foundation in place. If you’re a startup whose CEO moonlights as the Head of People, a fully-functioning HR system can be a huge benefit.
This is especially true as you grow. Startups often prize their culture above all else – and having an HR system for startups that ensures a consistent onboarding experience, for example, can ensure that your culture doesn’t fall through the cracks.
Or, let’s say you are focusing on scaling and increasing the quality of your leadership bench. An HR system that focuses on developing leaders, or even sourcing new ones, can ensure that you are maintaining a high degree of quality.
Common HR Processes for an HR System
There’s a whole host of HR processes that effective HR systems can cover. Here are some of the top ones that come to mind:
Applicant Sourcing – Finding top candidates across multiple channels.
Applicant Tracking – Ensuring a smooth recruiting process interview by interviews.
Onboarding – Designing and implementing a great start for every employee.
Data Management – Managing data in a clear and compliant fashion.
Attendance Tracking – Making the process of tracking attendance easy.
Absence Management – Documenting leave and communicating it across your org.
Performance & Training – Developing potential into top performance.
HR Reporting – Analysis and reports that are always accurate.
Which Processes Should an HR System Tackle First?
Your HR function needs to be able to walk before it can run. For that reason, it helps to first focus on the foundational processes. An HR system should help lay the foundation for great HR work to happen, so you can build out your function from there.
Should An HR System Offer Automation?
The right ones do! Enabling automation is a critical part of the greatest HR systems. That way, tasks almost go out on their own and projects that used to take hours of manual labour can fly out the door effortlessly.
For that to work, though, you need an all-in-one solution that not only can stand on its own, but offers integrations that pull together information across your organisation’s tools and helps introduce automation across the board.
For this reason, things like People Workflow Automation truly symbolise the next era and future of work for HR teams and businesses alike.
What Do HR Systems Typically Cost?
That depends on a few key criteria, most commonly:
The size of your company and how many employees you have
The kind of plan you want and which features matter most to you
If you need any add-ons to make your HR work even easier
It’s why our team at Personio developed three plans attuned to the needs of modern businesses: essential, professional and enterprise.
How Do You Choose an HR System?
Choosing an HR system is no easy task. First, you need to know what you want from your next great HR system. For that reason, putting together your own organisation's unique list of requirements is often a great place to start.
That said, we can offer some recommendations for what you may want to consider prioritising. Especially when it comes to laying a great foundation, these following HR processes can have a multiplier effect on your organisational effectiveness:
HR System Feature
Employee Self Service
Adoption of your HR system matters. Employee self-service means employees can add and change their own information without HR needing to do all the work.
No matter your growth plans, it always helps to know that your HR system can help scale your business.
Requesting, approving and tracking holiday is crucial for HR teams seeking out a new system. Bonus points if it integrates with your in-organisation messaging platforms.
Digital Employee Files
Digital document storage is crucial for any HR system. But, you also need one that is easy to manage, make changes and is 100% compliant with local laws and regulations.
There's little sense in measuring engagement if your employees aren't engaged from the beginning. Your HR system should leverage onboarding as an organisational strength, not a weakness.
These are only some beginning considerations to help you get started peeling back the layers on what your HR function truly needs. But, we consider them non-negotiable things that every truly great HR department has in their system.
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Personio is an all-in-one HR software designed for every stage of the employee life cycle.
Using Personio, you can manage all your most important HR processes from one place. Recruit, manage, develop and pay your employees from one centralised HRIS.
For HR professionals, you can unlock new levels of productivity and influence. Become the HR business partner that your business needs, by getting back time for what matters: your people.
For line managers, Personio seamlessly builds automated performance cycles, tracks vacation days and keeps employee information up-to-date (and in a compliant fashion).
For employees, no more fussing with cumbersome tools and processes. Employees can request days off, change their information and keep track of goals and more. All from one place.
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