What is Human Resource Management System (HRMS)?

Apr 05, 2024

What unites and holds your business together and keeps it running? That is, people who work for you are technically called employees.

People management will be a one-man’s job if you are just building your team. But it needs comprehensive human resource management system and full-fledged HR processes for perfect resource management. 

What is an HRMS?

HRM system or Human Resource Management System signifies a set of applications used by the Human Resources to manage employees right from hiring.

This employee management system is used to automate the cumbersome HR processes and manage employees in HR platforms on a large scale.

HRs used to perform these HRMS functions manually and store employee records in paper files.

HRMS software efficiently replaces all the manual tasks associated with HR processes like onboarding, offboarding, payroll, employee benefits, taxes, and compliance and maintains employee records in electronic form.

HRMS solutions are not just useful to the HR professionals but to the management and employees too, as employee presence and performance can be tracked accurately using HRMS software.

What's the difference between HRIS and HRMS?

HRIS denotes Human Resources Information System.

HRIS can store and record employee data like personal details, presence, and absence, working hours, leave requests, T&D, and other basic HR processes. HRIS is a basic personnel management system software that an HR team can use to track processes and maintain records during the entire employee work cycle.

HRMS is a more encompassing employee management system that does more than workforce reporting.

HRMS software includes more advanced HRMS functions like payroll, onboarding, administration and management, analytics, and many more.

Though the two terms are often used interchangeably, HRIS is technically a part of HRMS.

Common concerns that businesses have while putting in place an HR system

Not everyone will be on board with the idea that will automate an important part of your organization. They can come up with the following reasons to not implement human resource management system.

Why do you need HRMS software when you have HR professionals?

Even if you have a huge crew, they cannot manage the demanding day-to-day operations of your team smoothly.

Manual or semi-automated HR processes can be less efficient and take more time and effort.

Your employees will be burned out and criticized when their work is not up to the mark.

You will be spending more

An extensive HRMS software will be more expensive than normal HR platforms due to the additional in-built features.

But this is inevitable when you think about improving your employees’ productivity and energy at work. Employers waste money on penalties when they pay incorrect payroll taxes. With HRMS solutions, you can avoid these additional expenses.

What if my employees find it hard to use than other HR platforms?

Modern HR management software is easy to set up and use and doesn’t require much training.

If your employees have already got their hands on different HR platforms, it won’t take long for them to adapt to this new employee management system.

What if my company has more number of employees in the future?

That’s exactly why you need HRMS software. Your HR team can easily handle the increased workload when your company steps up to the next level.

How well-managed HR processes strengthen a company’s culture

It will be an understatement to say that the work environment is becoming more challenging and complex day by day.

When your employees have smart, innovative applications and well-oiled processes, they will be more driven and focused on core tasks. 

After all, company culture is not what you define as statements or showcases on social media. Culture is something that you build over time by creating a healthy and breathable work environment for your employees. When the work environment is favorable, your employees' actions and motives get aligned with your company’s goals.

Organizations that care about their employees’ convenience and well-being always stand out, and even the outsiders can witness how strong their work culture is.

By implementing a technically strong employee management system, you are not just easing up your HRs’ lives but also getting your employees fair benefits. By making them access their HRMS solutions from unified HR platforms, you show how much you value their time.    

Benefits of using HRM systems for your organization

Here is how HRMS software can benefit your teams and bring efficiency to overall HR processes.

1. Quick onboarding and offboarding

Recruitments are a complex process for everyone involved. If your HR team is juggling paper files and different HR platforms to update or take off information, imagine the kind of impression that puts across.

Your new joiners will be discouraged before even their work starts. HR management software gets this done without straining the candidates and employees.

2. Transparent and open HRMS functions

HRMS software keeps common information open and visible to everyone. There are specific HRMS functions like leaves, overtime, training and development updates, etc., available on the platform upon request.

So, there is always room for feedback, clarifications, and error corrections, and no employee would be left out feeling puzzled about their metrics.

3. Accurate tracking

HR professionals use a variety of personnel management system software to track the presence, absence, working hours, and or any other KPIs related to employees' wage estimation.

Since accuracy is important in this, using an automated HRMS software would reduce the possibility of errors, double entries, or no entries. You can also track if employees achieve their respective goals on time.

4. Payroll

Payroll disbursement is one of the major expenses of a company. You don’t need a third-party payroll management company or system if you use HR platforms that support this.

Errors and inaccuracies lead to substantial loss or disputes between employees and the company.

As your HRMS solutions are already tracking employees’ metrics, it is straightforward to calculate salary and incentives.

5. Removes paperwork

Smart organizations dumped paper files and cabinets a long time ago and adapted to the power of digital solutions.

If maintaining paper records can be complicated and clunky, getting the required data out of them is another challenge no one prepared you for.

Replace this outdated method with HR management software where maintenance, tracking, and storage are hassle-free.

6. Real-time data and feedback

HRMS software provides you with instant employee data and insights, just like how you need them.

Apart from accessibility, it also lets your employees receive feedback on their tasks and vice versa. Increase your employee engagement and know how satisfied they are without much effort.

The rise of cloud-based HRM systems

HR platforms have been existing for decades. What’s all this fuss about HRMS software, and how different is this from the regular, on-premise employee management system?

The difference is their existence.

If on-premise HR management software is installed separately on every device, cloud-based HRMS solutions reside in the cloud and are accessed through API. You just need an internet connection to access them.

Cloud-based applications are welcomed in every sector and department due to their versatility, accessibility, and scalability.

HRMS software, in particular, has more defined features and HRMS functions to offer compared to the on-premise versions.

Cloud HR software will support you even when your company onboard abundant employees in one day without lowering its performance. And that’s the backing growing companies expect from their employee management systems.

Cloud HR software can integrate with other HR platforms you use too.

Another important feature that businesses look for is stable security. Cloud HRMS solutions guarantee that with strong security and encryption protocols, role-based accesses, and a two-factor authentication system.

The core HR functionalities of an ideal HRM system

Here are the HRMS functions or modules an ideal HRM system must possess.


HR professionals spend a great deal of time creating job descriptions and filling vacancies. They might find it chaotic when multiple vacancies are running at the same time.

An ideal HRMS software should be able to connect with job boards and find perfectly matching candidates.

It must also help around the time of selection rounds, background checks, communication with candidates, etc.


The first day of employees shouldn’t put them in a stressful situation. Onboarding happens after hiring when you record employees’ details into the personnel management system software.

This stage is also when you walk them through different stages of your organization and give them a glimpse of the job and team. Your HRMS software should help in organizing this better.

Timesheets and worktime trackers

Timesheets are like digital punch-in and punch-out options for employees to mark their presence.

If your HRMS software has a plug-in or mobile software, employees can log in and mark their entry.

They can also update their work timings and additional hours worked, which will be further reviewed by their manager.

Training and upskilling

One of the HR processes is to oversee if their employees are honing their technical, management, leadership, and other skills.

With your HRMS solutions, you can help employees take up courses, update progress, fill up questionnaires and assignments, or even earn badges.

You can integrate your HRMS software with online education platforms to deliver a full-fledged upskilling experience.

Employee records storage

Every HR management software should cater cloud storage facility to store employee data. The HR team should have instant access to this data and be able to make changes.

This feature is mandatory, and almost all HR platforms will have employee profile creation.

Employee benefits

Other than salary, perks and benefits are the way to attract the right talent. These benefits can be a health insurance plan, retirement plans, gym memberships, reimbursement for internet or phone bills, or anything your employee needs but won’t spend by themselves.

Connecting this with the HR platforms your company uses can effectively be used to track the status and solve employee queries. 

Requests and feedback

Requests denote leave or equipment requests from employees. They can raise this from a web portal or application of the employee management system.

Not only will the HRs receive this, but they will let employees know the status of their request too. Frequent communication is a must to solve opinion differences and clashes.

By including feedback forms in your HR management software, you let them be frank about HR processes and other assignments.

Performance analysis and appraisals

Whether there is a raise or not, performance tracking should be done to know where your employees stand and what they can do to improve. '

Since your HRMS software captures every metrics and presence, you can catch their performance over a selected period.


Depending on your locality, you need to stick to the regulations set by local and national authorities.

Be it payroll taxes or obtaining respective labor licenses, not doing them at the right time will impose penalties. You can manage these HRMS functions effortlessly with HR management software.

5 essential features to look for before investing in an HRM system

The above-listed features are ideal modules that an HRMS software might carry.

Following are some of the most resourceful and much-needed HRMS features list you should look out for before choosing one.

1. Self-service portal for employees

Unlike the HR platforms that the HR team use, self-service portals are designed for employees to update their own information.

They can add their profile details, modify details, take courses and assessments, request leave, and many more.

The self-service portal will further reduce HRs workload and improve accuracy as employees add their data.

2. Attendance management

There are certain industries or businesses that pay employees based on their actual working hours. For them, tracking time accurately is needed to not waste money.

With an attendance management system in HR management software, accurate tracking of working hours, sick leaves, and overtime are feasible.

3. Recruitment support and tracking

A powerful HRMS software with an applicant tracking system can maintain resumes and candidate profiles and even auto-select or reject candidates based on preset criteria.

From managing multiple job vacancy announcements to handling responses to communicating with candidates, this can do it all.

When you have the right HRMS solutions, you can only pay attention to finding the right talent.

4. Employee retention management

More than an in-built feature, this must be seen as one of the HRMS functions that require external support.

With the combination of robust performance analysis and feedback and review delivery system, you can tackle this.

The HR team or management can tap into the data to find out which areas need attention, what affects employees the most, and what bottlenecks they feel to achieve their objectives.

5. Payroll and benefits

Monetary transactions between employees and employers could make you spend more money if you seek external solutions.

Since payroll systems are a little complicated and don’t go well with typo errors, choose an HRMS software with the payroll system.

Keys for evaluating the right HRMS for your company

Narrowing down the right HR management software that will reap maximized benefits is going to be a herculean task for your team.

Keep in mind the following pointers and follow this to pick the right HRMS solutions vendor for you.

Identify your goals and formulate buying strategy

What problems does your HR team currently face with the existing HRMS functions? What features do you need mandatorily in your HRMS software?

Ask your team these questions and come up with even deeper answers to determine your exact requirements.

Form a team and list down the features

Get one person from each team who is going to be involved in getting a collective opinion. Now, write down specifically what each team member needs the software to contain.

For instance, the list can go like this. ESS, Employee database, Timesheet and attendance tracker, and so on.

Go over each feature listed and ask particular questions to understand more about the requirements and whether it is necessary or not.

Also, check your compliance needs based on your location.

Find your vendor

Based on the list you made and the available budget, find out and list vendors. It’s okay to have 5 to 10 HRMS software shortlisted based on your needs.

Go through reviews, testimonials, explainer videos, and other resources to understand the product and its usability. Check case studies of the HRMS software of companies from similar industries to yours.

Now you would have understood more about them, narrow down your list further.

Attend demos

Send RTF to the selected vendors and request a free demo. Schedule demos with the shortlisted vendors and speak directly with the customer success managers.

Only when you see how it works can you decide if it’s suitable for your organization.

Get to know the available plans, scope, scalability, additional features, application support, and other specialties of the HR management software.

Select your HRMS solutions

You have collected enough data to make an informed decision. Consult with the inter-disciplinary team you have formed before and select the HRMS software and an affordable plan.

Questions to ask before choosing an HRM system?

You have attended demos and finalized the personnel management system software.

Before investing in the software to automate your HRMS functions, ask yourself the following questions. 

• Can I directly transfer a candidate from the recruitment pool to employee records if they get selected?

• Can I import our current database into the system in a few steps, or do I have to manually enter each one?

• What happens when I encounter any issues with the HR management software? What kind of support options will I be presented with? When there is an update or downtime, will I be informed?

• Where my employee data will get stored? Is it going to be safe and encrypted?

• Does the HRMS software support seamless integration with other HR platforms?

• Will my employees receive training to use the self-service portal, or is the usability self-explanatory?

• How is this automation going to change the current HR processes and work volume of HR professionals?

• Is the software scalable? If my team and company grow, will the HRMS software support it too?

Choose Volopay to manage your HR processes with smooth HRMS integrations

Cloud-based HR platforms are here to make your employee administration easy. Similarly, cloud-based expense management applications exist to take the pain out of making business transactions. Get these combined with Volopay, a spend control and management platform. 

We know how hard it is to manage remote teams and pay international employees. Volopay lets you take care of both local and international transactions.

Assign virtual cards to your employees to manage their work expenses.

Reimbursements are unpleasant for both employees and HR people. Meet a smooth reimbursement platform where your employees can submit requests anytime from a mobile app and get reimbursed right away once they are approved.

Apart from payments, Volopay allows seamless integrations with accounting and other applications you use.

One of the integrations that will be useful to manage HR processes is Talenox. You can take care of your payroll, leave management, and employee records maintenance with Talenox. Switch to Volopay now and composedly manage your payments and employee logs.

Manage remote teams, automate payroll and money transfers easily