What’s the Difference Between HRIS and HCM Technology?

Alongside the advancements in HR technologies over the last decade has come a new cluster of terms:

• HRIS: Human Resource Information Systems
• HCM: Human Capital Management (Have also heard this term used synonymously with Human Resources Management Systems, or HRMS)

While at face value they seem to be describing the same thing, there are definitely some differences. In this short blog, we’ve highlighted some of the essential differences between HRIS and HCM technology.

What is an HRIS Technology?

HRIS technology is the means of achieving paperless employee administration (or as close as possible), with the primary function of electronically manage people, policies, and procedures. HRIS will typically include:

• Basic personnel demographic information
• Electronic forms and HR document management
• Organizational charts and job descriptions
• Standard Federal compliance reports
• Asset management
• Employee benefits administration
• Time-off and accruals management (automated with Time and Attendance integration)

Of course, the functionality of an HRIS solution is going to change from solution to solution, but the overall purpose remains fairly constant. HRIS systems focus on reducing the manual and paper-based steps that come with regular employee administration, and offer convenient ways of displaying data for improved compliance reporting.

What is a Human Capital Management Technology?

HCM tech is going to offer a more robust end-to-end management of the employee lifecycle from recruitment to separation.

To understand the difference between HRIS and HCM technology, it’s best to start with understanding the discipline of Human Capital Management. Author Mark Salsbury (Human Capital Management: Leveraging Your Workforce for a Competitive Advantage), defines HCM as “an organizational practice by which the human capital assets of an organization are collectively leveraged for the purpose of gaining a competitive advantage.” A HCM technology is a solution that consolidates human capital data for ease of access, similar to an HRIS, but also for driving business decisions, i.e. product pricing, hiring, overtime management, etc..

HCM solutions are typically focused on consolidating employee data as it pertains to time and labor, talent development, and performance management. Employers use data housed in HCM technology to answer the questions, “Where is my organization lacking in competency or performance, how can I create programs to address those shortfalls, and how can I measure those impacts in terms of reduced labor, compliance, and opportunity costs?”

HCM solutions will typically deliver functionality found in HRIS systems, but also manage business processes connected with human capital management, to include:

• Payroll processing
• Time and Attendance tracking
• Employee scheduling
• Performance evaluation
• Training and certification tracking
• Automating HR processes and approval workflows
• Talent acquisition and onboarding management
• Historical salary and position management
• Customizable and exportable labor and compliance reports
• Skills tracking and position control management
• Job costing

HCM solutions collect human capital data and deliver it in a digestible form that enables business leaders to make better data-driven decisions.

Where Do I Fit?

Whether or not an HRIS or HCM technology is a fit for you will depend a lot on your needs and goals. While an HRIS is more likely to satisfy the needs of a small business looking to go paperless, an employer with 30 employees often needs the actionable labor analytics of a HCM system just as much as the group of 500. It’s prudent to explore both avenues when looking to improve HR processes and administration through a technology investment.