Larger companies typically integrate their separate HR systems into integrated human resource information systems (HRIS). HRIS may be defined as interrelated components working together to collect, process, store, and disseminate information to support decision making, coordination, control analysis and visualization of an organizationâ€™s human resource management activities.
There are at least three reasons for installing such a system. First is competitiveness; and HRIS can significantly improve the efficiency of the HR operation and therefore companyâ€™s bottom line. For example, W H Brady Company, a Milwaukee-based manufacturer of identification products such as labels reportedly cut several hundred thousand dollars a year from its HR budget through the use of HRIS. Software producer People-soft reportedly has a ratio of one HR staffer to each 110 employees, a savings of millions of dollars a year when compared with the traditional ratio of one HR staffer per 50-100 employees, and it credits that to its HRIS. The company expects the HR to employee ratio to shrink to 1:500
The HRIS can also bump the firm up to a new plateau in terms of the number and variety of HR related reports it can produce. Citibank for instance (now part of Citigroup) has a global database of information on all employees including their compensation, a skills inventory bank of more than 10,000 of its managers, and a compensation and benefits practices database for each of the 98 countries in which the company has employees.
Finally, the HRIS can also help shift HRâ€™s attention from transactions processing to strategic HR. As the HRIS takes over tasks such as updating employee information and electronically reviewing resumes the types of HR staff needed and their jobs tend to change. There is less need for entry-level HR data processors, for instance, and more for analysts capable of reviewing HR activities in relation to the companyâ€™s plans and engaging in activities such as management development.
HRIS in Action: How exactly can an HRIS achieve these kinds of performance improvements? At some point the employer will outgrow the separate (manual or computerized) component approach to managing HR. Some estimate that firms with fewer than 150 employees can efficiently use computerized component systems, each separately handling tasks such as attendance, and benefits and payroll management. However, beyond that point larger firms should turn to either off-the-shelf or customizable HRIS packages. The advantages of moving from component systems to integrated human resource information systems arise from the following.
Improved Transaction Processing: Itâ€™s been said that â€œthe bread and butter of HRIS is still basic transaction processing. One study conducted at a pharmaceuticals company just before it implemented an HRIS found that 71% of HR employeesâ€™ time was devoted to transactional and administrative tasks In other words, an enormous amount of time was devoted to tasks like checking leave balances, maintaining address records and monitoring employee benefits distributions. HRIS packages are intended to be comprehensive They therefore generally provide relatively powerful computerized processing of a wider range of the firmâ€™s HR transactions than would be possible if individual systems for each HR task had to be used.
Improved Reporting Capability: Because the HRIS is comprehensive with respect to the number of HR tasks it handles, installation of such a system significantly improves HRâ€™s reporting capabilities.
For most of these systems, the number and variety of reports possible is limited only by the managerâ€™s imagination. For a start, reports might be available (companywide and by department) for health care cost per employee, pay and benefits as a percent of operating expenses, cost per hire, report on training, volunteer turnover rates, turnover costs, time to fill jobs, and return on human capital invested (in terms of training and education fees, for instance). Similarly you might want to calculate and review: human resource cost information by business unit; personal and performance information on candidates for global assignments; demographic of the candidate pool to meet diversity reporting requirements; benefit plan funding requirements and controls; union membership information; information required for HR if a merger acquisition, or divestiture is expected; and data on your global executive level population for development, promotion and transfer purposes.
HR System Integration: Because its software components (record keeping, payroll, appraisal and so forth) are integrated, a true HRIS enables an employer to dramatically reengineer its entire HR function by having the information system itself take over and integrate many of the tasks formerly carried out by HR employees.