What is a HRMS (human resources management system)?

HRMS, or human resource management system, is cloud-based software that consolidates, automates, and streamlines HR processes.

An HRMS usually comprises a suite of software or apps designed to support the HR department's efforts to onboard, pay, manage, schedule, review, and offboard workers.

These tools allow HR staff to quickly store, update, and share employee and work data while creating accurate, data-driven reports in real time.

They streamline all core HR functions throughout the employee lifecycle, including onboarding, employee performance, benefits management, applicant tracking, and payroll.

What are the functions of an HRMS?

When you choose the right HRMS and customize it to fit the needs of your organization, it has the potential to minimize or even eliminate HR paperwork.

One system can coordinate workflows within the HR department while keeping all levels of management and employees up to date on critical HR policies and data. Some functionalities HRMS tools provide include:

• Onboarding and offboarding
• Performance management
• Data management
• Benefits administration
• Job applicant tracking
• Time-off requests and schedule adjustments
• Succession planning

HRMS applications often tie into other systems. For instance, they may integrate with payroll to process pay and advance requests based on hours worked, length of employment, etc.

The best HRMS also allows employees to log in and complete a variety of HR tasks on their own. This self-service function lets workers:

• update their personal information
• submit requests for time off
• manage their schedules, and
• review their benefits

at their convenience without meeting with HR staff.

Read also: How to streamline onboarding and offboarding with Deel

What HRMS features does your business need?

Although every HRMS solution is different, the most standard platforms offer the following features:

Centralized records

This is a single portal or repository where you upload, update, and maintain all your employee records. It gives you a bird' s-eye view of all your employees and makes it easier to generate reports, prepare for audits, and track labor compliance across different teams.

Workforce planning

The most effective team is one that supports your company goals and ROI.

With the workforce planning feature, you can budget and plan for your workforce, identify skill gaps, strategize recruitment, plan for training, and create succession plans.

Recruitment

Also known as talent acquisition, recruitment is a key HR role crucial to your workforce’s quality and output. Most HRMS solutions have a recruitment portal from which you can create and streamline job offers, job descriptions, and open listings. You can also:

• Create job application forms
• Schedule job interviews
• Store interview materials and feedback
• Track applicants through the recruitment process
• Request background checks
• Collect application material like CVs and references
• Onboard and offboard workers

Talent management

Once you onboard talent, it is also your job to manage and develop it. Talent management tools help you perform employee reviews, conduct skills and competency tests, set KPIs and goals for your team, and develop new employees through shadowing, training, and mentorship.

See: A complete guide to training remote employees

Time and attendance

This feature lets you track work hours, which comes in handy when you need to:

• Evaluate time-off and advance pay requests
• Schedule employees for shifts
• Address absenteeism

Reporting and analytics

Linked to the centralized records feature, reporting, and analytics helps you make sense of HR data.

It generates reports that give you a clear view of your compliance status, KPIs, and employee performance across the entire organization.

Payroll and benefits administration

HRMS solutions also handle payroll. They calculate:

• Wages
• Salaries
• Bonuses and benefits
• Sales commissions
• Overtime
• Tax deductions, etc.

Your HRMS platform automates payroll to ensure your team is paid on time, your company is tax compliant, and your budget is up-to-date and ROI-balanced.

Global HRMS

Some HRMS systems offer multi-nation functionalities to support the HR needs of global teams. These include global HR, global recruitment, remote hiring, immigration and visa support, and remote work assignments.

A global HRMS tool is crucial to global mobility and expansion. If scalable, it grows with your company, providing a centralized portal from which you can manage all your teams, contractors, and employees.

How does an HRMS work?

HRMS systems automate HR functions like data collection, generate forms, templates, and reports, and offer workers self-service options.

Most HRMS systems are cloud-based with automated data syncing capabilities.

This format makes them accessible across different networks, so employees and different HR teams can collaborate on data collection and reporting.

See: 12+ benefits of HR automation to consider in 2025

See also: 5 benefits of cloud-based HR software

HRMS vs HRIS vs. HCM, what is the difference?

These terms are often used interchangeably, but there are some key differences.

• HRIS stands for Human Resource Information System. It is designed to save employee information on the computer rather than storing all information on paper. However, it is often limited to basic HR functionalities, such as documentation management, employee data storage, attendance tracking, org charts, and compensation management.
• HRMS is the modern advancement of the HRIS. The best human resource management systems make it faster and easier to complete HR tasks, so they go far beyond basic information storage and organization. They incorporate all HRIS functions, like applicant tracking, learning, and development functionalities.
• HCM stands for Human Capital Management and refers to tasks required for efficient employee management, beginning with screening applicants to ensure the right talent is secured for each position in the company. It extends to effectively monitoring and tracking each employee, from compensation and benefits to scheduling, performance, and more.

Employee resource departments can use all of these systems to improve efficiency, enhance departmental productivity, and keep employees happy.

Today, HRIS and HCM are effectively included in comprehensive HRMS systems.

What are the benefits of HRMS for small business teams?

Replacing spreadsheets and manual HR processes with an HRMS software system has multiple benefits. These include:

1. Higher accuracy and speed of payroll management, benefits administration, attendance tracking, performance management, and more, thanks to a centralized data storage
2. Faster and more cost-efficient recruitment process thanks to accurate applicant tracking, a resume database, and candidate screening
3. Better employee engagement and retention due to the reduced number of payment errors, onboarding optimization, and self-service options
4. Improved headcount planning thanks to a more streamlined overview of your entire organization and a more accessible way to keep and update employee records
5. A holistic view of employee data, contributing to better talent management and succession planning, with on-demand reporting options for improved decision-making

When do you need HRMS?

It’s time to embrace technology and transition to HRMS when any of the following apply:

• Accurate financial data reporting becomes too time-consuming because of duplicate and manual work
• HR workers are spending too much time helping employees with tasks they could easily complete on their own if given access to the system.
• Labor costs are escalating, and greater insight is needed to increase profitability
• Insight into employee data could help HR management and stakeholders make critical decisions
• Your HR team could benefit from greater organization and transparency as your team scales and becomes more complex
• A more streamlined onboarding process could help retain top talent and organize the talent management process
• Inaccuracies in employee management and information reporting have cost the company money

HRMS allows new hires to fill out initial onboarding paperwork from anywhere in the world. It enables employee self-service and improves time management for HR staff members. The system may help managers by offering templates and guidance for more effective performance reviews. When any of these essential HR tasks become too time-consuming, inaccurate, or inconvenient, it’s time to consider a move to an HRMS.

Who in a company uses HRMS?

HRMS functionalities are useful in any part of your organization, not just HR. But while anyone in your company can use your HRMS platform to streamline their work, the most common HRMS users are:

• HR managers to automate routine tasks, organize employee data, track performance, maintain compliance, and generate reports
• Line managers to set and track KPIs, monitor employee performance, approve off-day requests, and set, confirm, and track work hours and schedules
• Employees to manage and update their employee data, request sick leave and vacation days, participate in work surveys, and access periodic KPIs
• Recruiters to generate open listings, create and collect job application forms, contact applicants, schedule interviews, and track the recruitment process
• Job candidates to search for open listings, fill out job applications, monitor application statuses, schedule interviews, and accept job offers

Does HRMS impact payroll?

Yes. Using HRMS payroll integrations, you can sync employee attendance and performance to your payroll system to ensure workers receive fair and timely compensation for their work.

This automation of payroll and performance tracking reduces the risk of pay errors, such as missed benefits, unpaid overtime, and tax oversights that could weaken your compliance status. It also creates a more seamless flow between your HR and finance departments.

Additionally, when employees get paid fairly and on time, they feel more motivated to be productive and engaged at work, which boosts workplace productivity rates.

How does HRMS impact employee retention?

Employee retention relies directly on how supported and satisfied workers feel in their day-to-day work at your company and in their future career plans.

With a reliable HRMS system, your HR team can:

• Conduct regular performance reviews – Tracking employee goals and KPIs in real-time allows you to offer actionable feedback and help your employees achieve their highest potential
• Track career paths and offer development programs – By monitoring employee development, HRMS platforms allow you to play a more active role in your workers’ development and training
• Offer personalized career pathing resources – Employee performance tracking also gives you a view of workers who are headed towards a promotion, allowing you to support their progress through training, mentorships, and shadow programs
• Recognize exceptional employees – HRMS systems let you identify exceptional employees whom you can award and recognize to encourage and incentivize good performance

These services keep workers satisfied and feeling valued and supported by your company, increasing their chances of staying with you long-term.

Can an HRMS help with global compliance?

Yes. By consolidating all your HR processes, HRMS solutions allow you to better track your employee contracts, work schedules, pay policies, and tax obligations for compliance. You can update your policies automatically as regulations change.

Through training and talent development features, you can also schedule compliance training to update your HR team on the latest developments in analytics and tracking.

Data-wise, HRMS systems organize and safely store your company’s employee and financial data. Most HRMS platforms have:

• Data encryption software
• Two-factor authentication protocols and
• Role-based access

to limit who can access and manipulate sensitive company data. This helps you maintain compliance with regard to data protection and cybersecurity.

How do I choose an HRMS provider?

Consider why you need an HRMS solution and how big your team is. Do you need payroll services, or will you handle payroll in-house? Once you establish your needs, compare different providers, looking for:

• Key functionalities like reporting, analytics, automation, and self-service
• Scalability or the platform’s ability to grow with your team
• Security and Compliance
• Pricing and ROI
• Provider support
• User experience

Why should companies use an HRMS?

There are multiple benefits of replacing spreadsheets and manual HR processes with an HRMS software system.

1. Higher accuracy and speed of payroll management, benefits administration, attendance tracking, performance management, and more thanks to a centralized data storage
2. Faster and more cost-efficient recruitment process thanks to accurate applicant tracking, a resume database, and candidate screening
3. Better employee engagement and retention due to the reduced number of payment errors, onboarding optimization, self-service options
4. Improved headcount planning thanks to a more streamlined overview of your entire organization and a more accessible way to keep and update employee records
5. A holistic view of employee data, contributing to better talent management and succession planning, with on-demand reporting options for improved decision making

When do you need to implement an HRMS?

It’s time to embrace technology and transition to HRMS when any of the following apply:

• Accurate financial data reporting becomes too time-consuming because of duplicate and manual work
• HR workers are spending too much time helping employees with tasks they could easily complete on their own if given access to the system  
• Labor costs are escalating, and greater insight is needed to increase profitability  
• Insight into employee data could help HR management and stakeholders make critical decisions
• Your HR team could benefit from greater organization and transparency as your team scales and becomes more complex
• A more streamlined onboarding process could help retain top talent and organize the talent management process
• Inaccuracies in employee management and information reporting have cost the company money

HRMS can allow new hires to fill out initial onboarding paperwork from anywhere in the world. It enables employee self-service and improves time management for HR staff members. The system may even help managers by offering templates and guidance for more effective performance reviews. When any of these essential HR tasks become too time-consuming, inaccurate, or inconvenient, it’s time to consider a move to an HRMS.

How can organizations get started with an HRMS?

The first step is to review the HRMS systems available today and select the one with features that best match your needs. Many providers offer customization, allowing you to create a system that works for your needs.

Streamline your HR processes with Deel’s HRMS

An HRMS platform consolidates and streamlines your HR processes, giving you more control over your employees’ performance, pay, and development.

When integrating an HRMS into your operations, the first step is to review the available systems and select the one with the features that best match your needs.

Many providers allow you to customize services to create a system that works for you.

For comprehensive support from seasoned HR, immigration, and payroll experts, look to Deel’s all-in-one HRMS solution, which offers:

• Payroll and benefits
• Contract management
• Employee relocation and recruitment
• Global payroll
• Compliance monitoring, and more

Contact a team member today or request a demo to see the Deel HRMS in action.