The different types of HRIS systems: a guide

Managing HR processes manually can be difficult as your team expands. From tracking employee data to handling compliance, the administrative burden can be overwhelming. 

This is where a human resource information system (HRIS) comes to the rescue. Specifically, it helps you manage crucial HR functions. 

However, there are various HRIS options to consider, from cloud-based solutions to comprehensive suites. So, which one should you choose? This guide explores the different HRIS systems, how to choose the best system for your business, and the differences between an HRIS and other types of HR software.  

What is an HRIS? 

An HRIS is a software solution that simplifies and centralizes various HR processes like hiring, onboarding, payroll, benefits administration, training, and performance evaluation. 

Companies can choose to host HRIS platforms on their own servers or opt for a cloud-based solution. Cloud-based options are super convenient since you can access them from anywhere and scale them easily as your team grows.  

Without proper software, HR professionals are slowed down by manual processes like data entry and analysis. The best HRIS systems automate these repetitive chores, freeing up HR to focus on more strategic initiatives that drive business success.

The 5 different types of HRIS systems

There are five different types of HRIS software systems: 

1. Operational

2. Tactical

3. Strategic

4. Comprehensive

5. Limited-function

All of them offer employee self-service, applicant tracking systems (ATSs), automation, centralized data storage, and talent and recruiting management capabilities. 

When choosing the right HRIS, it’s important to find the type that’ll facilitate the most growth for your business.

The right system for your organization depends on your specific needs and priorities, such as your scale of operations, team size, projected revenue, phase of business growth, or work models.

Initially, you might pick a solution that offers an affordable pricing plan with the flexibility to grow as your business scales. For growth-focused companies, a platform with a variety of features, a simple interface, and the ability to add integrations is ideal.

Let’s look at each type in detail.

Operational 

An operational HRIS helps you manage core HR processes like payroll, employee time tracking, leave management, benefits administration, and other employee records. 

If you’re a small to medium-sized business with basic HR needs, this type of HRIS can work for you. It’s best for organizations with budget constraints or those that want to manage their routine HR tasks hassle-free. 

Operational HRIS reduces administrative tasks, minimizes errors, increases payroll efficiency, and provides real-time access to employee data.

Tactical 

A tactical HRIS helps businesses make informed decisions regarding the recruitment process, onboarding, compliance, benefits, and ongoing training. This software focuses on managing internal resources using enterprise resource planning (ERP) systems.

You can also use a tactical HRIS to determine appropriate compensation for specific roles in your company. This type of solution offers guidelines regarding salary based on industry standards, which you can meet or exceed depending on your current budget allowances. 

A company should choose a tactical HRIS if they are growing rapidly and want to prioritize resource allocation. 

Strategic 

Strategic HRIS helps your business in expansion efforts. Its focus is on filling specific roles within your company and ensuring strategic planning to maximize growth.

A strategic HRIS can help with the following tasks: 

• Creating plans to enter new markets

• Preparing for new projects 

• Organizing team members and their schedules in preparation for new roles or additional work 

Strategic HRIS systems also allow for proactive workforce planning and development. They help HR teams perform job analyses to determine the required skills for a role. HR leaders can also determine what responsibilities a candidate would need to fill that role, and an appropriate reporting structure and salary for that role. 

A company should choose a strategic HRIS if they want to prioritize intentional hiring practices and smooth expansion. 

Comprehensive 

A comprehensive HRIS combines the functionalities of operational, tactical, and strategic HRIS systems to offer a complete solution for your HR needs. 

This type of HRIS is a general system that can help with everything from reporting and data organization to employee data processing and resource allocation. It’s built on the principle that the functionalities of each HRIS system influence each other in multiple ways. 

But the extra functionality comes at a cost: comprehensive HRISs are typically the most expensive option. So for a smaller business, this system might exceed their budget.

An organization would choose a comprehensive solution if it was large enough to need all three functionalities.

Limited-function

A limited-function HRIS is, essentially, the opposite of a comprehensive HRIS. It is a specialized HRIS that combines employee data management with one other specific purpose, such as employee training or benefits management. 

New or small businesses have narrow HR needs. So for them, investing in a full-scale HRIS might be unrealistic and a waste of resources. Limited-function HRIS systems bridge the gap between having no employee management system and having a solution that’s too complex for your needs. 

A limited-function HRIS likely won’t work for you unless you have very specific gaps you’d like to fill. When using a limited-function HRIS, you have the option to upgrade to a better HRIS down the line. This option makes limited HRIS systems ideal for companies that have just started. 

A company should choose a limited HRIS if they have definite HR needs and a limited budget. 

How to identify which HRIS type is ideal for your business 

Identifying the ideal HRIS type for your business requires a careful assessment of your specific needs and requirements. Follow these steps to find the perfect fit:

1. Evaluate your HR processes and pain points. Are you struggling with data inaccuracies or inefficient recruitment? Clearly define the areas where you need enhancements. 

2. Consider your company's size and growth trajectory. A small startup may benefit from an operational HRIS, while a rapidly expanding enterprise might require a strategic solution with advanced analytics.

3. Think about your budget. Operational HRIS systems are cost-effective, while comprehensive platforms with extensive features come at a higher price tag. Determine what you can realistically invest.

4. Involve key stakeholders, like department heads. Understand their unique requirements and get their input on desired functionalities.

5. Research different HRIS vendors and compare their offerings. Read reviews, request demos, and ensure the system aligns with your industry's compliance needs. For instance, a manufacturing company might prioritize robust time and attendance tracking, while a professional services firm may want performance management tools.

6. Consider user-friendliness and employee self-service capabilities. An intuitive system is helpful for faster adoption and can even increase productivity. 

7. Think about your scalability and integration options. As your business evolves, your HRIS should integrate with your existing software or accommodate new modules.

Remember, the perfect HRIS strikes a balance between addressing current challenges and supporting future growth aspirations.

How can HRIS benefit HR professionals?

An HRIS can support companies as they tackle particularly pressing HR challenges, including data analytics, employee recruitment, and retention. 

The key benefits of an HRIS for your business are:

• Improved employee management. An HRIS handles employee information from the moment a candidate applies for a position. Most HRIS systems allow for electronic signatures, self-paced employee onboarding, and self-service updates to the employee database, making employee organization a breeze.

• Centralized data storage. An HRIS holds all employee information in one place. This makes it easy to find what you’re looking for without wading through years’ worth of paperwork or disorganized spreadsheets.

• Streamlined HR responsibilities. An HRIS automates and provides self-service opportunities for employees. It also simplifies HR activities like payroll, recruitment, training, performance analysis, and time off.

• Increased HR productivity. An HRIS gives HR professionals more time to focus on high-level responsibilities. That’s because it cuts out paperwork, automates repetitive tasks, and allows employees to input and manage their data.

HRIS vs. HRMS vs. HCM: What's the difference?

HRIS, HRMS, and HCM refer to human resources information systems, human resources management system, and human capital management, respectively. While many people use these acronyms interchangeably, each system has unique features that make it better suited for different companies and setups than the others. 

All three of these software systems incorporate databases and cloud computing to manage workforce needs.

So, how are they different? 

Each one prioritizes certain aspects of business and HR management. 

For example, some companies prefer a data-management-focused approach to their human resources management, so they make use of HRIS systems.

Others prefer an employee-focused approach and use an HRMS system to meet their organizational goals. And, some look to make more data-driven decisions and use HCM to access advanced reporting and analytics functionalities. 

Finding the right solution for your company is important for preventing frustration and wasted time. 

HRIS

An HRIS is the most general type of HR software. It offers the following functionality to help with daily human resources-related activities:

• Employee data management 

• Recruitment 

• Time and attendance management 

• Workflows and standard processes 

• Employee benefits 

• Payroll 

Most HRIS systems have a self-service portal, so employees can access and update their information as needed. Some also include training and employee upskilling functionalities. 

However, dealing with HRIS software does come with challenges. You have to be careful with data security and regulatory compliance. Also, be wary of disruptions to company productivity when updating regular HR processes. 

HRMS

An HRMS has all the capabilities of an HRIS, but dives deeper into employee analysis through talent management and analytics. This system works well for modernized workplaces looking to reduce their turnover rates and nurture talent. 

Talent management and optimization functionalities include the following:

• Career trajectory 

• Competency tracking and employee experience measurement

• Employee training, development, and upskilling 

• Budgeting and compensation management

• Additional employee satisfaction features

With an HRMS, you can reward high performers or check in with employees who aren’t meeting their deadlines. Regular performance feedback maintains transparency and accountability throughout your organization, allowing for improved employee performance and productivity. 

The most common challenges when working with an HRMS are project and workforce management, global payroll, and compliance.

HCM

HCM focuses on providing businesses with valuable insights they can use to shape their strategies and guide their planning. 

In addition to the employee management capabilities of an HRIS and the talent management capabilities of an HRMS, an HCM includes the following advanced features:

• Succession planning 

• Business intelligence 

• Access to industry data 

• In-depth reporting and analytics 

An HCM is ideal for businesses looking to get strategic about their growth. Companies can use industry data and benchmarks as metrics to see how they compare to competitors and make data-driven changes where necessary for growth. 

The most common challenges when working with an HCM are high turnover rates and global compliance. 

Where do these systems fall short?

With all their capabilities, these systems still often fall short when managing global employment. 

Generally, HRIS, HCM, and HRMS systems are not purpose-built for international hiring and global expansion. If your company has employees in multiple countries, then you need to find an employee management system that caters to your unique needs. For example, you’ll need a solution that can manage global compliance and payroll processing.

This is where a global HR platform can help you. 

What is a global human resources platform?

A global HR platform is a software solution that facilitates global expansion by helping businesses manage multi-currency payroll, global compliance, remote onboarding, and more. 

Many global employment solutions integrate with HRIS platforms to fill gaps in functionality and help companies manage global teams. 

Remote is the market leader in multi-country payroll and placed in six categories in G2’s Best Software Awards for 2023. It’s a simple-to-use, purpose-built platform that makes global employment easy. 

Remote HR Management handles onboarding, benefits, payroll, terminations, leave, expenses, and equity for a global team — with compliance assured at every step of the journey. Our software integrates with other HR tools, too, like Greenhouse, Bamboo, and Bob, to give global companies a powerful, custom HR stack.

Remote: your global employment solution

An HRIS can make managing your team easier than ever before. If you’re looking for software to streamline your HR team’s responsibilities, boost your workplace productivity, and maintain transparency, an HRIS is a worthwhile investment. 

And if you’re looking to expand your global team, a global HR solution is the software for you. 

Remote is a global HR management platform built to make global growth quick, easy, and inexpensive. It offers the ideal alternative to an HRIS for a startup or small- to medium-sized business that doesn’t require a full-service HRIS and wants the flexibility to hire anywhere.

Remote also offers simple integration with leading ATS and HRIS platforms, keeping your tech stack lean while giving you the power to manage large global teams with ease. 

Ready to take your business global? Get started with Remote today! 

Global HR —

30 min

The ultimate HRIS guide for companies going global

Explore HRIS technology in detail, learn the variations in common terminology, and understand how to select the best global HR platforms for your company’s specific needs.