Describing HR software — HCM vs. HRIS vs. HRMS — can feel like, “You say po-tay-to, I say po-tah-to.” Understanding the differences between these three vital HR software options can often feel like deciphering a complex code.
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As analysts, vendors, and marketers toss these terms around, it becomes challenging to distinguish their nuances. Thankfully, we’re here to help spot the differences and crack that complex code, digging into the nuance to break down the key differences in these critical systems.
Let’s jump right in!
Article Roadmap
- The Basics
- Are These Interchangeable Terms?
- Top Goals of HR Technology Solutions
- Comparing Key Capabilities of HCM vs. HRIS vs. HRMS
- Which Solution Is Right for You?
- Moving Forward
- The Wrap Up
The Basics
Navigating the intricacies of HR systems has become complex and invaluable in recent years. However, the proliferation of industry buzz phrases has turned understanding these systems into a veritable guessing game.
What do these terms really mean or represent? Does each system cater to a unique need in HR management, and if so, how do they differ? Even seasoned industry experts find it challenging to agree on a universal definition. Vendors often blur the lines, making it difficult to distinguish whether their solution falls under the category of HRIS or HRMS. The lack of clarity is undeniably confusing.
Choosing the right software is already a complicated task without wading through the HCM vs. HRIS vs. HRMS debate. This article aims to demystify these distinctions.
To select the most suitable solution, a crucial step is grasping the underlying meanings of HCM, HRIS, and HRMS and understanding what each system brings to the table. This knowledge forms the bedrock for simplifying the process of choosing the ideal solution tailored to your specific needs.
So far, the acronyms are flying around like Quidditch players before a match. Let’s take a moment to dig into them in a bit more detail. Let’s start by defining them:
- HRIS: Human Resource Information System
- HRMS: Human Resource Management System
- HCM: Human Capital Management
In the dynamic landscape of HR, the acronyms — HRIS , HRMS and HCM — are omnipresent.
No matter what you’re talking about, they all describe software incorporating cloud computing, databases and other elements to create an overarching solution for handling workforce management needs.
If you’ve followed the evolution of human resources software, you’ll quickly notice how these systems include elements which were standalone solutions of yesteryear. However, now they’re bundled together to produce a streamlined human resources software offering.
Are These Interchangeable Terms?
It depends. Let’s break it down.
In essence, HCM, HRMS and HRIS describe the same basic set of functions and practices. However, the nuances lie in their historical evolution and how vendors label their solutions. Picture them as three distinct restaurants — each serving similar foods but with slight menu variations.
Yet, as the industry evolved, companies sought integrated solutions, blurring the lines between HCM vs. HRMS vs. HRIS. These days, your chosen HR solution needs to be a jack of all trades system capable of handling anything and everything you throw at it.
So, where does that leave you and your company searching for the right software solution? Thankfully, there are still some key differences you’ll need to spot to get the right solution for you and your needs, but you’ll need to dig deeper to ensure you get exactly what you need. Thankfully, we’ve got your back on what to keep an eye out for!
Top Goals of HR Solutions
Regardless of the terminology used, HRMS, HRIS and HCM share a common objective: streamlining employee management to help better manage your employees. After all, engaged employees are more productive, stay at your company for longer and deal with less burnout. Some common goals of these systems include:
- Automating work progress reviews
- Monitoring employee hours worked
- Tracking pay histories, including overtime and bonuses
- Maintaining applicant, potential hires and current employees’ contact information
- Administering and tracking benefits
- Providing progress reports for career and employee goals
- Identifying workforce needs
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Comparing Key Capabilities of HCM vs. HRIS vs. HRMS
Now that we have some background out of the way, it’s time to get specific. Let’s look at these terms and what they usually include to ensure you’re as informed as possible about the available HR technology solutions.
As you read the lists, remember that we’re staying general. There’s not enough agreement across the industry to reliably pinpoint the differences between each product down to the last detail.
Using the pirate’s code from the “Pirates of the Caribbean” movies is a helpful example. Think of each of these descriptions as guidelines rather than hard-and-fast rules.
Core Features
HRIS
First, consider HRIS, the most “basic” option according to the consensus. Although it might seem bare-bones, reading the fine print before pulling the trigger is important.
At its core, HRIS is a software system built to store, manage and track important personal information, procedures and policies. When it comes to handling and managing employee-specific issues, HRIS should be your go-to option in the HCM vs. HRIS debate. It typically includes the following capabilities:
- Recruiting: Utilize applicant tracking systems (ATS) to post job descriptions, manage interviews, and store resumes.
- Absence Management: Manage unplanned absences due to sickness, injury, unauthorized leave and maternity leave.
- Workflows: Enhance productivity through streamlined processes.
- Training and Development: Provide opportunities for ongoing skill development.
- Benefits Administration: Simplifies and eases employee health insurance enrollment, general benefits management and information tracking.
- Self-Service Portal: Empower employees and managers to manage their information better.
- Compensation Management: Handle forms of compensation like salary, paid time off (PTO), overtime pay, a bonus program, company-funded activities and more.
- Personnel Tracking: Maintain a record of employee details like contact info, position and personal info.
This HRIS displays employee benefits in a user-friendly way.
HCM
Next on our list is HCM, which generally refers to a sweeping set of tools and practices used to manage, attract, develop, train, recruit and retain your workforce. This is where things get murky.
While they often overlap due to the broad nature of their functions and the issues they handle, HCM typically focuses on human capital management. In contrast, HRIS primarily focuses on streamlining a business’s administrative tasks. This is probably the most core, central difference in the HCM vs. HRIS comparison. Some consider HCM the most comprehensive solution, while others reserve that distinction for HRMS (we’ll get to that in a minute).
Either way, HCM is more comprehensive than HRIS. It includes all the features HRIS offers and adds talent management capabilities.
Some of the most common functions offered by an HCM system include:
- All HRIS capabilities and features
- Employee Performance: Track performance, productivity and more.
- Onboarding: Streamline the onboarding process for new hires.
- Analytics: Gain in-depth insights into key metrics.
- Position Control: Ensure proper assignment of responsibilities.
- HR Services: Provide access to a comprehensive knowledge base, policies, procedures and documentation.
- Global Capabilities: Support international needs with multi-currency and multilingual features.
HCM software typically includes analytics for summarizing critical data.
You may have noticed the overlap with the HRIS functions in the last section. It’s a tricky subject. While an HRIS may have some talent management features, HCM software usually goes deeper.
HRMS
Finally, we have HRMS. Often considered the most comprehensive and involved of the three HR software, HRMS software helps organizations better manage sensitive and vital employee info and handle human resource functions like attendance tracking, benefits enrollment and data entry automation. It usually includes all the features offered in HRIS and HCM systems, along with added functionality like:
- Payroll Processing: Automatically calculate pay, deduct taxes, send direct deposits and more.
- Time and Labor Management (TLM): Control employee schedules, track project times, and increase productivity and profitability.
Perhaps the closest to a one-size-fits-all software solution of the three when it comes to the HCM vs. HRIS vs. HRMS debate, HRMS is a solid option for businesses of all shapes and sizes looking for general help across the board, without getting too in-depth into core HCM or HRIS-specific functionality.
For a more in-depth breakdown of the specific ins and outs of a top-notch HRMS software, check out our HRMS Software Features and Requirements Checklist!
Payroll capabilities are a common feature in HRMS software.
Which Solution Is Right for You?
The distinctions between HCM vs. HRIS vs. HRMS are blurred, making a definitive choice challenging. The key lies in conducting thorough research to ensure alignment with your specific needs. There’s no one-size-fits-all answer, and understanding vendor terminology is paramount.
No matter your business type, you’ll benefit from quality HCM, HRMS and HRIS software. However, the lynchpin in ending up with the best platform rests in your hands — research.
Rigorous upfront research prevents misunderstandings as you delve deeper into your software search. If your company only needs the basics and you’ve decided an HRIS is your best choice, don’t assume the vendor will be on the same page. Their definition of the main HRIS features may differ from yours.
To illustrate, a quick search of the top HR vendors on our Leaderboard shows that most companies describe their HR software as HCM software.
Read product descriptions carefully to find a solution that addresses all your requirements. Ask questions and conduct due diligence upfront to avoid confusion as you drill deeper into your search.
Moving Forward
As the HR technology landscape continues to evolve, conducting extensive research before investing in a new system is crucial. Utilize resources like our free HR comparison report to evaluate top vendors based on ratings, reviews and prices. From there, refine your requirements clearly to streamline your search process.
Our free HR requirements template simplifies and speeds up the process, freeing you up to spend more time looking at solutions and less time debating your software criteria.
Our free HR requirements template simplifies and speeds up the process so you can spend more time looking at solutions and less time debating your software criteria.
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The Wrap Up
Hopefully, we’ve helped clear the muddied waters a bit and illuminate the complexities surrounding these vital and remarkably similar HR systems. Armed with a better understanding of these systems and their typical components, you should now find it easier to pinpoint viable options to help you figure out your personal winner in the HCM vs. HRIS vs. HRMS debate.
What do you think are the main differences between HCM, HRIS and HRMS? Feel free to share your insights in the comments below!