Human resources information system (HRIS) software is a centralized repository for employee data. It houses various types of information systems that are designed to help HR teams streamline and automate a variety of HR functions. These can range from basic HR tasks like payroll to more nuanced processes like performance management.
Each of the functions that fall under HR uses a specific type of data that is contained within an HRIS subsystem. In some cases, multiple subsystems work together to create a holistic view of an organization’s workforce. In other cases, a business might prefer to adopt a standalone tool that drills into one or two subsystems. In either instance, understanding the business’s HR goals makes it easier to determine which type of HRIS is best.
Also read: When to Hire an HRIS Consultant
The 5 Types of HRIS and Their Use Cases
All HR information systems fall into five main types based on scope or function. For example, an HRIS may be considered comprehensive or specialized based on the breadth of capabilities it offers, or it may be classified as operational, strategic, or tactical based on the type of data it houses.
Both limited-scope and comprehensive HRIS solutions may house different quantities and types of data that can fall across the three different qualitative types of information systems.
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Operational HRIS for effective talent management
The operational HRIS category includes tools that assist HR staff and people managers in decisions regarding hiring, promotions, lateral moves, or other internal talent management needs.
Internal job posting system
An internal job posting system supports job analysis and design in an operational sense by identifying all positions within an organization, the associated job title, and the current employee in that position. A people manager can then quickly find details about any unfilled position to determine whether a current employee would be a fit for the role. Internal job boards also allow employees to apply for these open positions proactively.
Managers can also use the data about each role’s responsibilities and necessary skills to create employee development plans. Not only does this help employees take strategic steps to advance their careers, but it also ensures they have the proper support to take on a new role when the time comes.
Applicant tracking system (ATS)
An applicant tracking system (ATS) is sometimes housed within the internal job posting system module, but it is more commonly adopted as a distinct solution. The primary purpose of the ATS is to assist HR staff and hiring managers in identifying qualified candidates for jobs and streamlining tasks throughout the hiring process.
Performance management system
A performance management system stores information regarding employees’ performance appraisals. It supports employee retention, promotion, transfer, job rotation, or contract termination needs. For instance, a performance management system informs decisions about whether an employee is under-challenged and should move up in the organization or whether they are in need of extra support in the form of mentoring or training.
Why a company uses operational HRIS
HR teams use operational HRIS functionalities to prioritize investing in and developing employees. Companies may lean more on these functions and their data sets in times of economic uncertainty when they need to implement hiring freezes and focus on employee retention.
Strategic HRIS for proactive workforce planning and development
Modules and functions within the strategic HRIS category help with analysis, decision-making, and goal-setting in relation to workforce planning.
Job analysis and design
Job analysis and design tasks involve identifying the necessary background and skills, scope of responsibilities, reporting structure, and salary for any given role. This functionality helps identify skills and role gaps in the current workforce, all of which have downstream implications for recruiting strategy as well as learning and development.
Recruiting information system
A recruiting information system stores specific skills that hiring managers analyze when evaluating candidates. It also gathers useful hiring metrics to help HR teams optimize hiring processes. These metrics include the number of current openings, how and where they’re advertised, time to fill vacancies, and time to onboard new hires.
Learning and development system
A learning management system (LMS) supports succession planning as operational decisions are made regarding job rotations or promotions. It tracks skillsets for employees across the company and identifies employees who are ready to pursue additional training or certifications based on recent changes to their roles or responsibilities.
Why a company uses strategic HRIS
These strategic parts of the HRIS are useful for growing organizations that want to be intentional about the employees they hire and develop. They help companies with specialized hiring needs find the right talent and reduce turnover.
Tactical HRIS for internal resource management
The tactical HRIS category targets efficiency and compliance. The tools and functionalities that fall in this category help HR leaders make big-picture decisions on how to best use existing resources for functions like compensation, recruiting, training, and benefits.
External data aggregation
Tactical HR modules aggregate external data related to competitors, the industry, and new federal regulations that inform job analysis and design. For example, a new regulation about employee data privacy might prompt HR to scrutinize its current software tools and security measures.
Compensation and benefits management
Compensation and benefits management modules affect employee recruiting and retention. From a leadership perspective, salary and benefits are two of the most expensive investments an organization makes in its employees. Therefore, company leaders have a vested interest in regularly reviewing the organization’s benefits package and compensation strategy. For example, HR and executives might reconsider continued investment in a benefit that draws low enrollment or underutilization.
Why a company uses tactical HRIS
Tactical HRIS functions support macro-level HR decisions about how to most effectively invest in and allocate resources. For example, companies operating on a tighter budget will want to focus on scaling up HR efficiency. Or, companies whose hiring outpaces the HR team’s capacity will need information systems that support tactical HR.
Comprehensive HRIS for broad HR needs
As the name implies, a comprehensive HR information system functions as a one-stop shop for storing any information needed to perform nearly all HR functions.
It serves as a central repository for a wider range of data that supports operational, strategic, and tactical HR functions combined. These three functions do not operate in a vacuum; rather, they influence each other in different ways. For example, data about a role’s design in terms of where it fits into the reporting structure and how it contributes to a company’s goals serve both operational and strategic angles of job analysis and design.
It makes sense for larger businesses to use a comprehensive HRIS since it integrates data across all three types of functional systems. This information provides valuable insight so HR and business leaders can make informed decisions quickly.
Smaller businesses, however, may want a simpler HRIS solution that fulfills core HR needs. In this case, comprehensive HRIS may be overwhelming to implement and maintain. Plus, the price point of a comprehensive HRIS puts it out of reach for many smaller businesses’ budgets.
Limited-function or specialized HRIS for narrow HR needs
In contrast to a comprehensive HRIS, a limited-function HRIS focuses on one or a few core information systems to support a narrow list of HR functions, such as payroll and benefits administration.
No matter the function(s) a company focuses on with a limited-function HRIS, an employee information system exists at its core. This is necessary to collect, archive, and track personal and professional records of all employees, including name, address, minority status, citizenship, education, past professional experiences, and much more.
They’re a less expensive option compared to comprehensive HRIS solutions, and even HR teams of one can manage this kind of software alone. A limited-function HRIS is, therefore, generally suited for smaller companies with lean HR teams.
Also read: Best HR Software for Small Businesses
How to Choose the Right Type of HRIS
There are many HRIS solutions available that fit a wide range of needs, so the quest to find the best fit comes down to two questions: What kind of HR functions does the business need, and how will it use the data it collects from those processes?
Companies that only need one or two core HR functions should look into a limited-function or specialized HRIS. These functions only require basic employee data, such as name, address, and Social Security Number, and demographic information. Because these systems are relatively lean, they can often be managed by a small HR team or even a sole HR employee.
As a company and its data grow in terms of both quantity and type, however, it will require a more comprehensive HRIS to handle that information effectively and appropriately. Comprehensive HRIS solutions are typically a bigger financial investment, but the efficiency and strategic insight businesses gain by adopting a robust system usually make the cost worth it.
Aside from function, businesses must consider their HR priorities when evaluating HRIS platforms. Operational HRIS modules focus on developing a company’s current workforce. Strategic modules support a company’s growth and succession planning efforts. Tactical modules house data to help HR make informed decisions about how to best use its existing resources.
Ultimately, the right type of HRIS depends on the unique needs your company faces now and in the future. Keep these needs top of mind as you explore our comprehensive list of solutions in our HR Software Guide.
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