Is HRMS the ultimate employee management system?

Many companies use an HRMS as their employee management system. There are also many non-HRMS options to manage your employee data: from paper files to local spreadsheets and databases, plus other options such as using the payroll system. Is an HRMS better as an employee management system than other tools?

Pro: An HRMS provides full employee lifecycle coverage

HRMS systems currently on the market come with different features and functionality. However, with all HRMS you can manage all data relating to your employee in one place; they function as a one-stop shop for anything employee-related. Having one HRMS minimizes your training efforts and facilitates reporting efforts as all of the data is located in one source. Various modules are often included and while you may not use them upon implementation, they can make further rollouts of functionality easier as the data, pages and processes are all existing and ready for use.

Pro: An HRMS incorporates legal requirements

A well-designed HRMS will take into account country-specific data legislation so that you are not exposed to compliance risk due to the incorrect or illegal storage of certain data elements. For example, a candidate will not be asked for ethnicity as a part of a job application or this question will be asked in a separate piece for government reporting and kept independent from the job application.

Your HRMS can also provide pre-built government reporting to facilitate the creation and submission of federal and state reports, saving you time and energy as these templates will have the correct data and format to meet government requirements.

Recommended Reading: HRMS Selection Survival Guide - Select an HRMS that could be your employee management system

Con: There can be competing or shadow system issues

When you have a full payroll system and particularly where you do not have a payroll interface, an HRMS can seem like a secondary system, especially when your payroll system is a robust application and your HRMS is outdated or not configured to meet your needs. When your HRMS is not suited for its purpose and another system meets the HR needs, the other system is acting as the de facto employee management system.

Con: An HRMS is not homegrown

Often when a company starts small, there is a freedom to create databases internally to suit any need and to customize these systems at will. An HRMS will often not have an open-source code base, so you are required to work within the vendor’s designs for the application, pages, processes, etc. When a company has unique and highly important requirements that are not found in a mainstream HRMS, then a custom employee management system may be the only solution.

With the pros and cons of an HRMS as an employee management system coming in with equal weighting, the decision will rest on what is best for your business. A thorough requirements gathering process should highlight whether your existing tools can accommodate your employee management system, or whether a new HRMS is the way to go.