Learn all about HRIS software and how it can help you streamline the recruiting, hiring, and employee management process by aggregating data in one convenient place at an affordable price.
A human resources information system (HRIS) centralizes employee-related information, helping businesses keep track of employee data, job data, and other employment and HR compliance records. It can include features such as applicant tracking, performance management, training, time and attendance, and more.
An HRIS can help businesses such as those requiring licensing or certifications, remain compliant by tracking vital employee information. And costs are generally reasonable at just a few dollars per employee per month.
Any software system that manages employee information, including applicant tracking systems, benefits administration systems, or payroll software is referred to as an HRIS system. To track benefits, payment, or applicant data, an HRIS, by default, must contain basic human resources (people) information like name, address, etc.
An HRIS works like any database software in that you manually enter (or upload) data into it, and it keeps track of that data for you. It works by storing data across the employee life cycle—from hire to termination or retirement. That makes it easy to find information and report on that data, such as how many full-time equivalents (FTEs) you have or how much you’re spending on benefits.
An HRIS is set up using an employee ID, Social Security number, or last name as the primary data field. However, many small business HR systems are set up so that employees themselves are the ones entering the data, saving you time.
This system typically provides software integrations with timekeeping and accounting systems so you can share your human resource information across multiple platforms. This allows you to sync your data without having to manage duplicate data entry, reducing common data entry or keying errors. In addition to tracking employee data from their first day until their retirement, some HRIS software provides safety reports, while others allow you to collaborate with employees by sending out a newsletter or sharing social feeds. All of these fall under the umbrella of an HRIS.
While an HRIS can benefit nearly all businesses, it may be best for:
- Businesses where licensing or certification is required: These employers may be required to prove that employees have the correct documentation.
- Businesses with compliance and other requirements based on number of employees:
- At more than 10 employees, employers are required to maintain an OSHA log, which is much easier if you have an HRIS system to track that data.
- At more than 50 employees (or FTEs), employers must offer employee benefits. Most HRIS systems have a way to do so, either directly in the system or through a benefits insurance interface.
- At more than 100 employees, additional labor law compliance issues, such as EEOC reporting, come into play; an HRIS makes compliance reporting easy.
- Businesses managing hourly employees: These employers often need to manage schedules as well as track a worker’s time; an HRIS system often provides the interface so that employee data is maintained in one place, and then shared with the time clock.
An HRIS becomes increasingly more important as your business grows. For example, a startup with one employee may not need an HRIS system as they can run payroll using free payroll software, keeping employee files in paper personnel folders.
However, once you have more than a handful of employees, keeping track of HR data as required by labor laws becomes a necessity. Having an HRIS manage that data ensures compliance and saves time.
Because it’s software, an HRIS allows you to import and export relevant people data such as the employee’s time and attendance information for use with payroll. Rippling offers a strong employee management system including hiring tools, software integrations, a payroll add-on, and benefits administration—all starting at $10 per employee, per month.
Some of the features you might find when searching for an HRIS include applicant tracking, performance management, and time and attendance. Notice that an all-inclusive HRIS may include some or all of these within one application, or it may provide only a subset of the features needed to manage an employee throughout their employment life cycle.
Features of an HRIS system may include:
- Recruiting – Keeps track of applicants in your hiring pipeline and posts to job boards to help you find employees.
- Applicant Tracking – Similar to recruiting, an ATS adds resume parsing and onboarding.
- Payroll – Processes salaried and hourly payroll, managing deductions and tax payments.
- Benefits Management – Manages health and retirement benefits, annual enrollment, claims, and fees.
- Performance Management – Schedules and keeps track of employee reviews such as one-on-ones and 360 degree feedback.
- Training and Development – Schedules and tracks employee training and compliance certification.
- Time and Attendance – Keeps track of employee schedules and time worked in order to ensure labor law compliance and provide payroll data.
- Scheduling – Allows you to schedule employees for jobs or shifts, and may allow you to bill clients.
- Workforce Management – Offers employee management features such as communication tools, workforce monitoring, and metrics.
In addition to the above features, an HRIS often includes tools for testing employee skills, managing background checks, creating org charts, and conducting employee satisfaction surveys. Even banking software that manages retirement accounts like 401(k)s or helps you set up alternative payment methods like pay cards can fall under the category of HRIS.
An HRIS is sometimes referred to as an HRMS or HCM system. While the terms are interchangeable, an HRMS and HCM typically go a step further in terms of features:
- HRMS (human resources management system): Offers additional features and tools beyond a basic HRIS, including advanced time and attendance and payroll processing.
- HCM (human capital management) system: More comprehensive than an HRMS, it offers onboarding, analytics, and employee performance management on a broader scale.
HRIS costs can vary from as low as a few dollars per month per employee to thousands of dollars a year for huge enterprise HRIS systems. Fortunately, newer cloud-based HR software fills the gap for small businesses by offering online HRIS systems that allow you to pay by employee or contractor (aka user) with no setup fee, in a price range from about $1 to $15 per month, per employee.
Costs to consider when choosing an HRIS:
- Software – Some small business HR software (costing between $1 and $15 per month, per employee) may include add-on monthly fees, while others provide only the basics.
- Setup fees – Setup fees are paid at the time of configuring the software for your business. They range from $0 to thousands per year, depending on the vendor.
- Consulting fees – Consulting fees vary (free if included with your software subscription). If not included, it can cost around $150 per hour if you use an outside HR consultant.
- Support fees – Some HRIS software companies charge additional software support fees that may run a few hundred dollars a year.
We recommend small businesses choose a cloud-based HRIS that is simple and doesn’t require a consultant to set up, eliminating setup or support fees. These HRIS vendors may still provide add-on HR consulting services for a fee.
Pros & Cons of an HRIS
Every HR system, including an HRIS, has its pros and cons. Weighing these to determine the best system for data accuracy, legal compliance, and the ability to sync with outside vendors at an affordable price is recommended.
|One-stop-shop – Provides all relevant employee personal and job information in one place for key departments to access. Allows you to set up a workflow to ensure that no steps are missed in key processes, like hiring (signed W-4s) or termination (sick leave payout).||Costs money – HRIS systems run from as low as $1 per month, per employee, to thousands of dollars a year. If you’re an accountant with an HR background or have just a few employees, you may want to track employee data on a spreadsheet instead.|
|Provides data accuracy – Data entry mistakes are common, so the fewer systems you have to key information into, the more likely the data you have will be correct. Additionally, employee data is searchable, reportable, and exportable.||User error – Must be installed and set up correctly for features and interfaces to work properly. If you input the wrong pay rate or choose the wrong benefits option, you’ll need to spend time fixing those errors. Therefore, whoever inputs your data must be attentive to detail.|
|Improves compliance – Once you reach 10, 50, or 100 employees, you’ll find compliance reporting much simpler with all relevant employee data in one system.||May not sync with systems – ed to connect with an API or do some programming and testing to make sure the data (Before you select your HRIS, make sure it integrates smoothly with other business apps you use. If not, you’ll nelike hours worked or pay rates) move from one system to the next easily.|
|Provides data analytics – As your business grows, metrics like labor costs and time to hire become more important. Most HRIS systems provide these analytics to help you keep track of these important employee metrics.||Rogue comments – Some HR systems allow users to upload documents or add comments. If, for example, a manager wrote a scathing employee review full of discriminatory comments, that document could hurt as evidence in a lawsuit if it were found stored in your HRIS.|
HRIS software is available to assist your business with its people management needs. Our list of best HRIS software is based on affordability, features and options, and their ease of use. We’ve highlighted our top four below:
$8/per employee, per month
$99–$199 per month
$10–$27/per employee, per month
Alternatives to an HRIS
Some smaller employers keep employee data in paper files or secure online folders. You may also find that software designed for other purposes provides enough HR data to keep your office running smoothly. And there may be options below you hadn’t considered.
Here are alternatives to an HRIS we recommend for employers:
Even free time and attendance software like Homebase, as well as scheduling software like When I Work, often contain basic HR data, such as employee name, contact information, job title, photo, department, and managers’ names. Most also let you set up leave tracking so employees can request PTO through the system. If you haven’t yet reached 50 FTE and those are the only HR functions you need, then time and attendance software may suffice until your organization grows larger.
For more information and comparisons, check out our time and attendance software buyers guide.
Payroll software is a subcategory of HR software that often doesn’t get recognized for its robust HR features. Many payroll software providers have recognized that small businesses need more than just payroll processing and provide add-on features such as document storage, onboarding, and even org charts. The benefit is that your HR and payroll data are maintained in one system. You can often set up role-based security to limit who can see which kind of data.
Payroll software typically includes HR and onboarding. It can also set up and manage employee benefits. We recommend choosing payroll software that performs multiple HR functions in one system. It ends up saving you time by having all your HR, benefits, and payroll data in one system.
Check out our payroll software buyers guide for comparisons and more information.
An alternative to purchasing an HRIS is working with a professional employer organization (PEO). A PEO hires your employees on behalf of your business and then leases them back to you at a monthly rate. You not only get an HRIS system but no longer have to worry about most of the back office HR paperwork. In addition, a PEO can save you on workers’ compensation costs and benefits insurance rates as it pools your employees with those of other companies.
To learn more about PEOs, read our buyer’s guide.
Some small businesses manage HR using paper files. If you choose to manage HR using paper documents, make sure you have a secure filing system set up, know which documents to collect and retain, and keep up on your filing.
Read our article on personnel files for more information.
Electronic files stored in secure online systems are another option that can work for smaller employers. In that case, you’ll want to audit your files regularly so you don’t miss anything and don’t keep documents longer than needed. Online HR files are typically stored by employee name and will include all the relevant HR information. However, managing your employee data this way takes significant upkeep as your business grows or if you have a lot of turnover.
Any employee documents you retain—from offer letters to your employee handbook, performance reviews, and disciplinary notes—are all subject to discovery. Therefore, it’s a best practice to monitor the data you store in your system and remove documents after their destroy-by-date is passed.
HRIS is an HR software that makes your life as an employer easier. You can sign up for or purchase an HRIS with the exact feature set you want, and most will interface with the other business tools you use. Using an HRIS will save you time, allow you to answer employee questions faster, and may even (if self-service is offered) take the pain out of HR by letting employees find and update their information online.