Brief Overview Of HRIS
What is a HRIS System?
A HRIS system should be looked as tool that adds value to the HR function and ultimately to the entire business. Most HRIS are relational databases that have three core functions:
- Paying people,
- Storing individuals personal details and
- Providing information for management decision making.
Where does the HRIS System come in?
In most organisations there are three functions in HR: Advice, Processes and Systems. Traditionally the “Advice” area, possibly because it is the most visible, has had the most traction within the organisation. However, without a robust processes and system to support and underpin these functions most reasonable sized organisations would find it difficult to operate.
In short a systems major function is to perform repeated operations consistently. It is the HRIS’s business rules that allow this and these rules should mimic the organsiations response to the 35 pieces of payroll and HR related legislation such as, ERA, tax, Holidays, H&S, and KiwiSaver that all New Zealand organisations operate under. Click here for diagram.
To explain this, think Holidays Act, and the definition around average rate and how it should be applied. An HRIS’s will make this complex time consuming calculation consistently every time, as long as the business rules are set up accurately.
This will manifest itself in a reduction of the operational labour input required.
HRIS systems can be very complex, (an average HRIS could contain up to 1200 linked tables) and as a basic rule the more functionality used with in the system the more complex the business rules will need to be and thus the more support the system will need.
To give an example of the complexity involved in updating the HRIS with a simple contractual change, an increase in the leave entitlement.
The affect of this could be immense, depending on how the system is set up. Some of the questions that the systems person might ask in an endeavour to understand the negotiated change are:
Does it apply to all contracts?
Does it apply to all types of leave or just annual?
Is there any effect on parental leave?
How do average rates get calculated?
Do the Leave formulas require changing?
Is there an effect on how salaries are calculated?
Are any other leave elements affected?
How to should the record be stored? For how long?
What is to be reported?
Are any of the tables e.g. leave balance, region, holiday leave or grandfather start dates affected?
Should this information be displayed via a portal?
How does it affect redundancy calculations?
System security is important too. HRIS systems ensure that the information collected, stored and disseminated based on the privacy act.
For HRIS’s security of information is paramount. Indeed the system is based on management reporting lines which allows managers to only access information about staff who report to them (either directly or indirectly).
Reports too are developed for a specific purpose, each report contains only the information requested and goes to only those who are entitled to view the information.
Reports are one of an HRIS’s outputs. Typically, these extracted reports will be for: payroll, finance, or management information.
When used for management information HRIS outputs can be analysed to discern HR metrics e.g. Turnover, staff numbers (FTE or Headcount), Sick leave taken, Annual Leave balances, Annual leave liability … these measures contributes to the overall view of the health of the organsiations (or ill health).
Why have HRIS systems?
The simple answer to this is that, HRIS’s in their crudest form can repeat the same calculation consistently.
Any size of organisation can have an HRIS. HRIS systems can help with the recruitment and induction process, paying leave, performance management, hr admin, exit interviews, H&S, T&D, Discipline and Grievances, the calculation of leave, absenteeism, job histories etc.
It stores salaries, payslips, personal details for age, eeo, nationality, gender, NOK, start dates, costings, tax, deductions, gender, organisation structures etc. But with any information there must be economies of scale. A small organisation could not support a big system or use the staff composition information – as the Managing Drirector will probably know all the people in the organisation anyway. In large disparate organisations the CEO may not know the cleaner in Hicks Bay – hence they will need to know (and report to external agencies) their vital statistics.
Small organisations might use a bureau based internet payroll solution, this lets the small business owner focus on their core business limiting the need to address payroll compliance issues. By contrast larger organisations might adopt an “in house” model allowing flexibility, responsibility and accountability to remain with an internal manager.
The size of the business might dictate the type of HRIS system an organsitaion has. Organisations of under 100 staff could have a small system which might cost up to a fixed value or it might be based on a internet cost per payslip. Examples of this type of system are ACE payroll, ipayroll or IMS.
Medium sized businesses of 100-5000 might have an integrated system which could cost upward of $1 million. Example of this type of product might be PSe, Chrispay, Leader, ERM Live or Payglobal.
Larger businesses >5000 might opted for a fully integrated ERP (Enterprise Resource Planning) systems, which could costs millions to install. The advantage of this type of tool is that it covers multiple organisational systems, e.g. finance, rating, property, supply chain, student management and not just the HRIS. Examples of this type of tool are SAP or People Soft.
The Future of HRIS - Where to from here?
Of course there will be the usual legislation changes that will occur e.g. cashing up of one weeks annual leave, tax, kiwisaver etc, these are the business as usual form HRIS’s. However, as technology becomes more powerful and cheaper HRIS’s reach will be extended.
Currently, we are experiencing the 3rd generation of HRIS systems. Most organisations use less than 20% of the capacity of an HRIS. What would happen if they used 50% or even 75%, how much better would the organisation be?
Over time HRIS’s are becoming more automated, using more interactive tools and the objective must be to make these systems more intuitive. Clearly, this will have the effect of reducing the operational staff component but of course this will require a corresponding increase in the technical maintenance of these 4th generation of systems.
It is possible with Microsoft’s dominance of the market place that more payroll systems will start to line up with CRM (Microsoft’s Customer Relationship Management software).
CRM facilitates relational databases workflows (this means that the HRIS can use CRM to link seamlessly with Outlook, work flow leave requests to managers and possibly allow links to other databases. CRM will allow connectivity between systems which should see the growth in electronic portals and focus business time on information output rather than data inputs.
It is only then that HRIS systems can be seen as adding value to the business allowing informed business decisions. After all information is power and HRIS hold that information but the real question is do we know how to extract and use the information we have in our monolithic monsters?
This article was written by for HRINZ publication by Garry Little, MHRINZ.