The terms human capital management (HCM) and human resource information system (HRIS) are often used interchangeably. Often enough, the phrase human resource management system (HRMS) is thrown into the alphabet soup as well. This is a classic case of oversimplification leading to complications. These are not exactly the same things, though they deal with the cornerstone of every organization – people. HRIS and HCM are both systematic approaches to manage people better and to leverage the human potential of every organization. That said, their internal systems and processes have certain cardinal differences that cannot be overlooked.
Table of Contents
What Is an HRIS?
Human resource information system (HRIS) can be defined as a software or online solution that is used for data entry, data tracking, and the data management of all human resources operations of an organization. An HRIS thus deals with all things data and helps translate that to on-demand information and insights.
The six key HRIS systems and working components that most solutions offer are as follows:
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- Database management
- Time and labor management
- Payroll functions
- Benefits management
- Employee interface
- Talent acquisition and retention
Learn More:Â What Is HRIS? System, Model, and Application
What Is HCM?
Human capital management (HCM) is defined as a set of practices for human resource management with the goal of achieving organizational competency by focusing on workforce acquisition, management, and optimization.
Today, there are multiple HCM point and suite solutions available in a rather crowded market. For example, multi-feature suite offerings by Workday, SAP, Oracle, PeopleSoft, BambooHR, Zoho People and many other players offer a wide variety of solutions.
The three pillars of human capital management are:
1. Talent acquisition
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- Recruitment / eRecruitment
- ATS (application tracking system)
- Onboarding
2. Talent management
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- Time and attendance
- Payroll
- Performance management
- Culture-building
3. Talent optimization
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- Career pathing
- Competency mapping
- Succession planning
- Learning and development
Learn More:Â What is Human Capital Management (HCM)? Definition, Process and Strategy
HRIS vs. HCM: What’s the Difference?
The primary difference between and HRIS and HCM suite solutions is that the HCM suite usually includes all the HRIS processes and systems under its umbrella.
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Figure 1. Comparing HRIS, HCM, and HRMS
Does HCM have a wider scope?
As the figure below depicts, an HCM suite not only takes care of all HRIS sub-processes but also manages onboarding functions, performance management, position mapping, and succession planning, salary/compensation benchmarking, global connectivity, compliance (for geographically spread out organizations), and HR analytics.
To provide you with a holistic picture, we’ve also included a depiction of where HRMS fits into the picture, or rather how HCM and HRIS both fit under the broader umbrella of HRMS.
Most HCM suites today are trying to incorporate payroll and labor management within their functionality and thus expanding their span of control to include HRMS offerings.
What needs to be kept in mind while navigating this HR solutions market, especially in an age of digital and data dependency, is that there are quite a few talent management (TM) point solution vendors who often dub themselves HCM vendors to elevate their brand and to expand their clientele.
Whether you choose an HRIS or an HCM suite depends on the talent management capabilities you require and the extra functionalities that your people functions will benefit from. Moreover, time- and labor-centric point solutions often market their offerings as workforce management, but that is not the same as talent management.
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Core features and capabilities
The core capabilities of HRIS and HCM solutions differ significantly. While an HRIS helps with recruiting, leave management, workflows, training, and development, benefits administration, self-service portals, compensation management, and personnel tracking, there are often organizational needs that go beyond the acquisition and management of data.
Core HCM offerings, on the other hand, include all HRIS features along with tracking employee performance, onboarding processes, analytics (from all HRIS data) and workforce planning with regard to mapping the talent path ahead.
Learn More:Â What is People Management? Complete Process with Best Practices
A Matter of Choice
Thus, while it might often be confusing to choose the right solution, knowing the difference between HRIS and HCM is a good start. That, followed by analyzing your unique organizational needs, takes you closer to making the right choice. While choosing any HR software solution, keeping the following questions in mind always help:
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- What is my current and projected employee strength?
- What are the issues we face with our present HR processes or HR software?
- Where are the process gaps?
- How well are my employees equipped to adapt to a new or upgraded system?
- What are the limitations with regard to hosting all our existing data on the new system?
- How flexible is it and how easily can we upgrade or migrate to something different in the future?
- What are the potential challenges that we could face?
- What are the must-have, good-to-have, and great-to-have features based on our needs?
Learn More:Â Talent Acquisition Specialist: 10 Key Skill Requirements for 2020
Choosing the right HR software is an important decision since every piece of data helps you solve the larger people puzzle. Whether you go ahead with an HRIS or an HCM, your decision should be based on careful scrutiny of the present scenario and your growth plans.
Do you use an HRIS or an HCM suite? What features do you think need to be upgraded for the near future? Tell us all about it on FacebookOpens a new window , LinkedInOpens a new window , or TwitterOpens a new window . We’re always listening.