What is a Human Resource Management System? Criteria for choosing an effective HRMS

Human resources are always one of the leading resources that contribute to a company’s development. Therefore, it is necessary to have a tool to help managers control and administer this resource. In this article, let’s learn about the Human Resource Management System – one of the most popular tools in use today.

1. What is a Human Resource Management System (HRMS)?

1.1. Definition

A Human Resource Management System (HRMS) is a suite of software used to support the management of human resources and related processes throughout an employee’s lifecycle.

Users: The board of directors and managers in a business are the primary users of this software because they are responsible for overseeing the daily work of employees.

1.2. Differentiating between HRIS and HRMS

Managers often confuse the two terms: HRIS (Human Resource Information System) and HRMS (Human Resource Management System).

As you can see, HRIS software allows you to manage information about human resources within the organization online. Some issues that human resources need to address include:

• Tracking, selecting, and evaluating candidates
• The employee training process within the company
• Managing employee salary and bonus issues based on actual working hours, OT hours, etc.
• Providing reports to management upon request
• Planning human resources according to the organization’s short-term and long-term goals.

1.3. Why is HRMS important for modern businesses?

Business working models are constantly changing, and employee work arrangements are becoming more diverse, including remote work, frequently changing work locations, and more. Meanwhile, as HR metrics shift with the work-from-home model, companies still need to accurately calculate labor costs to maintain the revenue KPI per employee.

According to research from international markets, the base salary combined with employment taxes and benefits often totals 1.25 to 1.4 times the annual salary. Therefore, an employee earning $50,000 per year can actually cost the company between $62,500 and $70,000, not including real estate and equipment, such as PCs and phones.

Therefore, let’s start learning about HRMS software and choose a human resource management system for your business right away to avoid wasting resources and improve the efficiency of the human resource management process.

2. Benefits of Applying HRM Software in Human Resource Management

2.1. Optimizing Human Resource Management Processes

Administrative tasks and paperwork take up too much of HR’s time. This prevents them from addressing other strategic issues, building usage plans, and planning human resources to bring more value to the company.

Therefore, using Human Resource Management System software will allow the team to speed up and automate manual paperwork. It will directly improve productivity and save up to 80% of the time spent on paperwork.

2.2. Easily Track Employee Work Progress

KPIs are important metrics for evaluating a company’s progress and employee performance. They allow you to measure productivity, efficiency, quality of work performed, customer service, and more.

Choosing criteria to evaluate KPIs, creating a dashboard, and tracking them is very important. HRM software will make this simpler for your business as it will automatically collect data from sales systems, revenue figures, and other essential metrics a company needs, especially for the HR department.

For example:

• Talent management.
• Time off.
• Time to achieve goals.
• Time in position.

2.3. More Effective HR Department Management

All personnel evaluation criteria are automatically updated on the system, so the reporting process can also be handled automatically depending on the human resource management system your business chooses. Some tasks your business can optimize are:

• Managing specific employee working hours
• Payroll management
• Performance appraisal
• The recruitment processes

2.4. Providing a Self-Service Platform for Employees

An HRMS system combines employee portals and policies to minimize the time spent answering employee inquiries, making them more independent and allowing them to manage many of their own processes:

• Requesting days off
• Checking how many vacation days they have left
• Tracking actual working hours

HR management software provides employees with a tool to resolve queries and perform many tasks without having to ask the HR department directly.

2.5. Protecting Employee and Company Personal Data

HRMS software protects information from cyberattacks, and encryption also prevents unauthorized users from accessing it. For example: Employees can access their payslips with a private password and can only view their personal information.

Another advantage of an HRMS human resource management information system is that it allows HR to control access to specific features within the software, thereby making personal information more secure.

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3. Key Functions of HR Management Software

In this section, we will explore the 8 key features that HR management software must have:

3.1. Payroll Management

Payroll-related aspects such as: salary increases, sick leave, etc., are among the tasks HR is most concerned with. This series of paperwork tasks will be performed automatically on the system if your business applies a Human Resource Management System. This way, the HR team no longer has to record things by hand and risk losing them or making mistakes.

Custom software allows you to:

• Detect and receive notifications about any changes to payslips.
• Track leave rates.
• Separate different types of payslips (permanent and temporary employees).
• Store medical reports.
• Send information to the accounting or payroll department.

3.2. Timekeeping

Thanks to using an HRMS, managing employee shifts has never been easier. The end-of-month shift summary will be performed automatically on the system. In addition, there are a host of other features such as:

• Automatic payroll
• Shifts and actual working hours are displayed on the system, helping employees track them online at any time
• Automatic leave request approval

3.3. Automate the payroll process

All-in-one payroll solutions also automate tax filing. Automated payroll also helps businesses optimize accounting costs, reduce errors in the work process, and ensure accurate employee compensation. Self-service functions allow employees to make changes to elective deductions, direct deposit accounts, and tax withholdings, and retrieve copies of income statements without HR assistance.

3.4. Employee Portal

Your office will no longer need to store vast amounts of physical documents for employee records; instead, all that data will be updated on the Human Resource Management System. Therefore, employees will be notified of any updates through the software.

This gives employees more independence and reduces the workload of the HR department.

3.5. Standardize workflows

Standardizing workflows allows you to automate tasks and save management time. They will immediately notify an employee’s account when a leave request is approved or inform potential candidates about the status of their application.

3.6. Performance Evaluation

By using HRMS software, all results of employees’ required tasks will be automatically updated on the system. Additionally, the creation of performance evaluation reports is also automated, depending on the specific platform. Therefore, the task of performance evaluation becomes extremely simple, saving time for managers.

3.7. Support the recruitment process

The recruitment process will be more effective when your business has a specific, standardized procedure. The human resource management system will be built with several features to support the recruitment process by: Posting job listings on multiple platforms simultaneously, filtering CVs, standardizing communication, and also providing useful statistics about your recruitment campaign.

This relates to job offers for candidates, how you promote your brand to the outside world, and how current employees might want to apply for internal jobs or make referrals.

3.8. Reporting and Analytics

The strategic influence of HR within a company is growing, and the need for decisions based on real, objective data is increasing. Reporting and analytics tools will help you analyze information in real-time and make better decisions.

>>> See more: How to build a detailed and standard recruitment plan for 2022

4. Criteria for choosing the best human resource management system for your business

Criterion 1: Identify and evaluate the organization’s available resources

Identify the organization’s biggest workforce challenges, needs, and goals.

Criterion 2: Clearly identify the system’s users

Include representatives from HR, IT, and finance, as well as department managers and employees who will use the software.

Criterion 3: Determine the business’s needs

List what is important for the organization in an HR software system. The criteria should include technological requirements and business issues, such as the need for international compliance.

Criterion 4: Identify vendors that match the organization’s requirements

Use various research methods—from reports to discussions with other companies—to create a list of suitable vendors. Then, narrow it down to 5 to 10 vendors to approach for more information.

Refer to the compiled information on

>> Latest Human Resource Management Software Price List 2022 – Best HRM Software Prices

Criterion 5: Watch product demos

This is the best way to evaluate the capabilities of a product module or feature. Each vendor will have a specific product demo that most clearly demonstrates all the product’s features, so the business can determine if the product is suitable for the organization’s requirements.

Get a demo and free trial of 1Office software

5. The latest trends in modern Human Resource Management Systems

The pandemic has caused a massive wave of personnel changes and job shifts. It has had a major impact on HR processes and software, in parallel with emerging technologies that are beginning to penetrate business processes:

5.1. Intelligent HR management with AI technology

Automating processes with AI can make them more accurate and efficient. Most companies providing Human Resource Management System software are actively adding AI capabilities, but there are major concerns about customer information security, so this remains a tough problem that enterprise management software providers need to solve.

5.2. Blockchain

A database technology aimed at distributing records across a chain of computers, blockchain makes data essentially permanent and immune to hacking. Bitcoin is the most well-known blockchain application, but companies have recognized the potential for sharing employee records and HR information by applying this technology to human resource information management systems. Initial applications for blockchain technology include: securely managing payroll documents, candidate information, and employment contracts.

5.3. Remote work

As COVID restrictions began to lift, companies explored a new hybrid model combining home and office work. The physical dispersion of the workforce drove the demand for video conferencing software, team collaboration tools, and other technologies that support remote work.

As a result, HR software vendors launched a host of new features for remote personnel management, employee engagement, health monitoring and care, as well as for managing COVID-19 safety protocols.

5.4. Automating Management Processes

By mimicking human actions, BPA can perform common HR processes, such as benefits selection, expense reimbursement, and record reorganization, faster and more accurately. Most vendors have included BPA in their HR products in recent years.

6. 1Office’s Professional Human Resource Management Software

As a comprehensive business management software, 1Office is known as one of the best human resource management tools on the market today. 1Office’s human resource management software is an ideal solution suitable for every Vietnamese business.