Selecting an HRMS
The HRMS market is very fragmented and can be overwhelming — some of the most popular software review websites include over 750 vendors that offer human resource management systems. Evaluating all of them at the rate of two each day would take about a year.
As a result, the first step is to categorise possible suppliers into three groups:
ERP (Enterprise Resource Planning) service providers
They have connectors built into their other business tools, such as accounting, CRM, and procurement, so you can reap the benefits of centralised management, such as only having to enter an employee record once. Because of cheaper integration costs, the ERP model may deliver a more uniform user experience and a single security model, which is why 95% of organisations report process improvements after installing an ERP.
The disadvantage of the ERP category is that you won’t always find the depth of functionality that an HRMS specialist provides, so you may have to do some jobs yourself, such as payroll. User interfaces can also be less friendly, resembling an accounting interface rather than a consumer-grade social networking experience.
Best-in-class providers
Specialise in one to three (often more) aspects of an HRMS They provide increased feature depth with simpler user interfaces. The disadvantage of best-of-breed suppliers is that they typically cannot supply a comprehensive end-to-end HRMS solution, and there are additional fees if you require connection with other systems, such as accounting. Ask about scalability because the system may not expand with your organisation.
Providers of services
They provide a fully outsourced solution in which a firm pays a provider to operate payroll, file taxes, administer benefits, keep the HR department compliant, and transfer data into accounting to include HR-related expenses in financial reports. The service provider operates as your HR department, requiring your organisation to hire fewer HR specialists.
Such services are more expensive on a monthly basis, are more difficult to exit, provide you less control over your HR data and operations, and incur larger integration costs.
When Should You Buy an HRMS?
When it comes to when to start an HRMS project, there is no one-size-fits-all solution. Hiring a new HR leader, corporate expansion into other states or countries, a failed audit, the purchase of a new accounting system, or a merger or acquisition are all common factors that prompt organisations to purchase or upgrade. Other driving factors are increasing regulatory reporting requirements, fast development, and the need to effectively plan for the future workforce.
The HRMS selection committee should include HR, finance, and IT leaders. Once the options have been narrowed down, bring in a cross-section of employees who will actually use the system to provide feedback on the interface and functionality. Once the technology is implemented, these employees can serve as champions for it.
Success Factors for HRMS
Finally, here are our five tips for getting the most out of an HRMS purchase:
- If your IT philosophy is forward-thinking, look into solutions that can employ machine learning and predictive analytics now and have a path to AI. The sooner you begin providing data into the system, the better it will be able to advise on future labour needs and match people to vacancies.
- Various HRMSs thrive in different areas. Do you have a high turnover rate? Then, closely examine the candidate’s managerial qualities. Do you have a multi-state or multi-national workforce? Check that the system can handle complicated payroll circumstances. Do you hire a lot of temps but wonder if it would be better to hire instead? Analysis might be aided by a contingent labour management function.
- Talking about amazing features will not sell an HRMS to budget holders. Insights into how the system can help retain talent, free up HR workers for value-added projects, and reduce audit findings are what get a project funded.
- Bring in your security team or a consultant early in the process, especially if you work in a highly regulated field such as finance or health care.
- If you choose best-of-breed, seek for open APIs that make integration, if not simple, at least viable without a large, costly programming project.
