Human Resources Information Systems (HRIS): HR Software for Small Businesses
Everything you need to know about human resource information systems, why you need an HRIS, and what to look for when evaluating different platforms to move your HR administration online.
According to Deloitte, the nature of the global workforce is changing. Largely due to the retirement of the baby boomer population and the movement of millennials into the workforce, this change is marked by people-centric management styles that focus on employee engagement as a way to increase productivity.
With this shift, less emphasis is placed on traditional workplace norms such as the 9-to-5 workday and the corporate hierarchy. Instead, businesses place more emphasis on the unique conditions that maximize productivity for each individual. This means more collaboration, flexible work hours, and a larger remote workforce.
The change in workforce dynamics has also changed the needs of those in the workforce. Employees need tools that increase connectivity between individuals, enhance communication, and streamline administrative functions. Essentially, employees need a better way to stay engaged and administrators need a better way to manage them. In response to these needs, the tech industry created the human resources information system (HRIS). But what is an HRIS?
What is an HRIS?
What is an HRIS? A human resource information system is a software that combines many different systems and processes to ensure the ease of HR management. With the right HR software for small businesses, you can efficiently and effectively centralize, organize, and improve your day-to-day processes.
Most HRIS systems should comprise these components:
- Applicant Tracking System
- Online Benefits Administration
- PTO Tracking
- Time & Attendance
- Performance Management
- 1095-C Reporting
- Payroll Integrations
- COBRA Administration
Exceptional HRIS systems would also include billing options and robust reporting capabilities:
Let’s go more in-depth with each component:
Applicant Tracking System
What is an applicant tracking system?:
An applicant tracking system (ATS) is an HR software feature that streamlines the recruiting process. Typical applicant tracking systems allow you to post jobs, communicate with candidates, collaborate internally, and offer and onboard. This hiring system will increase efficiencies within your recruitment process.
Benefits of an applicant tracking system:
Because of these efficiencies, administrators are able to attract more quality candidates in a shorter period of time. With more quality applicants collected in a shorter period of time, employers can fill vacant positions with top talent. Another advantage of ATS is that current employees do not need to adopt the system, which means that implementation resistance will be greatly reduced.
What is onboarding software?:
Onboarding software provides new hires self-service access to onboarding before their first day. Through this software, an employee should be able to complete federal forms such as W-4 and I-9, as well as other company-specific documents like employee handbooks.
Benefits of onboarding software:
The goal for onboarding software is to get your new hire fully up to speed and compliant so that their first day is dedicated to learning the business rather than filling out redundant documents. This remote process decreases time to full productivity and reduces paperwork at the same time. With less time to full productivity for each of its employees, employers can more efficiently manage their organization’s bottom line.
Online Benefits Enrollment
What is an online benefits administration platform?:
A benefits administration platform is a software system for managing workplace benefits. A benefits administration platform should allow employees to enroll in employee benefits remotely while providing HR the ability to manage benefits from one location. This system should be the core of your HRIS system.
Benefits of an online benefits administration platform:
Benefits are complex—period. That’s why you need a benefits administration platform to simplify all essential benefits functions. Save time and reduce error by eliminating paperwork and automating employees’ benefits eligibility, elections, and enrollment.
What is PTO Tracking?
An HRIS system should include a paid time off (PTO) tracking feature that is accessible for both the employer and employee. Your PTO Tracking system should permit the employee to request time off, track accrual balance and monitor PTO usage. Employees with a self-service PTO tracking platform are able to self-manage PTO, which encourages PTO participation.
How can PTO tracking help me?
Paid time off tracking helps administrators and employees by decluttering time off management. A quality PTO tracking system will remove the need for spreadsheets, increase efficiency, reduce error, and increase employee participation. Why is PTO participation such a big deal? Unused vacation impacts your bottom line by creating financial liability, reducing productivity, and decreasing morale.
Time & Attendance
What is time & attendance software?:
Time & attendance is a simple, yet powerful human resources tool that allows administrators to precisely track employee hours without the paperwork. These systems should allow employees to clock in and out, request time edits, and review attendance history.
Benefits of time & attendance software:
Time & attendance software is especially valuable for employers with a large amount of hourly workers because it allows managers to see employee hours from an individual and holistic perspective. The ability to manage singular employee timesheets and review cumulative staff hours allows managers to better trends and streamline inefficiencies. Finally, time and attendance software can help you reduce time theft within your company.
What is compliance?:
Your HRIS system should be an integral part of keeping your organization compliant. Find a system that allows you to manage your company’s adherence to key HR regulations. Look for a system that allows you to increase the efficiency of your compliance practices. Your platform’s compliance feature should manage employee handbooks, distribute notices, collect signatures, and maintain year-round documentation of compliance.
How can a compliance feature help me?:
Whether you like it or not, compliance is part of being a member of today’s workforce. Distribute this, report that—how do you keep up with everything that is required by law? A compliance feature will help you keep up by centralizing all notices management. Rather than running around looking for a loose leaf of paper, you will find yourself referencing a single portal for your notices. By keeping everything in one spot, you will also dedicate less time to administrative tasks.
What is Performance Management?:
Performance management is the process of frequent and ongoing communication between a manager and an employee in order to accomplish the strategic objectives of the organization as well as the growth and development goals of the employee. This process is often facilitated by 1:1 meetings.
What is a 1:1?:
A 1:1 is a regular, typically weekly meeting that managers hold with each of their direct reports to provide an outlet for open communication and dialogue on the full scope of an employee’s responsibilities. They provide the opportunity for growth-centric conversations, as well as high-quality and regular feedback, both of which are important in promoting employee development, team member engagement, improving performance, and encouraging retention.
How can performance management help me?:
Performance management helps maintain company-wide consistency and ensures compliance and accountability for managers and employees alike. Additionally, performance management software documents important conversations and events across an employee’s lifecycle, making sure all relevant parties can easily track performance and progress.
What are 1095-Cs?:
Starting in 2016, the IRS started requiring Applicable Large Employers (ALE) to file Forms 1094-C and 1095-C as part of the Affordable Care Act (ACA). These forms report on the health insurance coverage offered by an employer. A 1095-C must be generated and filed per employee while the 1094-C acts as a cover page for all of the 1095-Cs. A 1095-C reporting solution will take all of your benefits data and generate 1094-Cs and 1095-Cs for you. Some HRIS providers even offer additional ACA services such as mailing filing and e-filing.
How does 1095-C reporting benefit me?:
With strict noncompliance penalties in place, these forms cause employers much anxiety. This anxiety can be significantly reduced by automating your 1095-C reporting process. Through a 1094-C/1095-C reporting solution, you can eliminate duplicate data entry, reduce the risk of error and decrease the amount of time spent on ACA compliance.
How do I know if I need to file 1094-C/1095-C?:
In most cases, employers that meet the following criteria must file Forms 1094-C and 1095-C:
- 50+ Full-time employees
- 50+ Full-time employee equivalent: when the work time of 2+ employees adds up to a full-time employee workload
What is a full-time employee?:
- Full-time Employees: 30+ hours/week or 130+ hours/month
- Part-time Employees: under 30 hours/week
Roger and Amy are both part-time employees for a company with 49 full-time employees. Roger works 10 hours/week and Amy works 25 hours/week. Combined, Roger and Amy work 35 hours/week. Because the sum total of these employees is over 30 hours/week, the IRS counts them as 1 full-time employee. Now, the company has 50 “full-time” employees and qualifies as an ALE and therefore must file 1094-C and 1095-C forms.
Download the “Am I an ALE? Calculator” to help determine if you qualify as an ALE:
ACA reporting & 1095-Cs:
The form starts out with demographic information such as names and birthdays. Following this basic information, the form asks if the employer offered health insurance for each month of 2015 and what type of insurance. There are a variety of codes that the employer uses to answer the question for each month of 2015. The codes can be found here under Code Series 1.
Then, the cost of the cheapest monthly premium for each month during the year should be listed. Last, codes known as “4980H Safe Harbor Codes” are listed that indicate whether an employee was on a plan monthly and if they were not, whether the employer is subject to a penalty.
Self-insured employers have some extra requirements – Part III. This part requires dependent names, social security numbers, dates of birth and months of coverage.
What is a payroll system?
Of course, you can’t forget about payroll. Your employees are counting on their paychecks and you need a system that can help you get accurate paychecks out in time for payday. A payroll system should be able to automate payroll taking into account factors such as total hours worked and benefit deductions while also providing a record for tax compliance.
Why is payroll so important to an HRIS system?:
Payroll is a key factor in a successful HRIS purchase because payroll accounts for a significant amount of an organization’s expenses. If managed incorrectly or inaccurately, payroll can have a definite impact on both your employees’ lives and your bottom line.
Your employees count on payroll in order to make ends meet. According to Kronos, 87 million Americans and their families live paycheck-to-paycheck. So not only does incorrect payroll hurt your bottom line, it also places significant stress on your employees. In fact, many of these Americans were unable to make important payments because of a payroll error. An effective payroll system will reduce payroll errors so that your employees can better manage their personal expenses.
While many employees are underpaid due to payroll errors, others are actually being overpaid at their employer’s expense. Kronos also indicates that millions of American workers report being overpaid at one time or another—and just because they are being overpaid, doesn’t mean that these employees are reporting it. On average, American workers say they “must likely be overpaid a staggering $463 before alerting their employer to the mistake.” If payroll errors are frequently made, the overall impact on your bottom line may be significant.
Which payroll system should I use?:
So how do you know which payroll system will serve your interests best? Most employers already have a payroll system in place, so switching to a whole other platform would be cumbersome. Rather, look for an HRIS provider who offers integrations with a variety of payroll providers. This way, you won’t have to make any drastic changes to your existing payroll structure.
What is COBRA?:
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a set of laws put into place by the Department of Labor (DOL) in order to protect employees from the possibility of losing health insurance coverage. Under COBRA, group health plan administrators must offer a continuation of group health insurance coverage to qualified beneficiaries for a limited period of time
COBRA administration and compliance adds yet another layer of difficulty to successful administration. This complexity often leads to strict penalties for noncompliance. Ease your COBRA stress by selecting an HRIS that offers COBRA administrative services.
What is a reporting system?:
A quality HRIS will host quite a bit of information. Of course, you don’t need all your information at once. More likely, you’ll need information in bits and pieces—and that’s where a reporting system comes into play. Your HRIS system should allow you to export specific pieces of data as needed. These reporting options should be robust, yet easy to understand.
What are the most useful reports for new users?:
Benefits Deductions: Some HRIS systems like BerniePortal offer payroll integration options, but that’s not always the case with other systems. With so many people relying on you to run payroll promptly and accurately, it is essential to have a benefits deduction reporting tool readily available. Using this tool, you can export all data necessary to take care of payroll, getting your employees the money they need to pay the bills and put food on the table.
Notices: A compliant business is responsible for distributing an array of notices to its employees. These notices often require employee acknowledgment of the notice via signature. Of course, you can’t prove you collected employee signatures unless you have documentation. Your system should include a reporting option that allows administrators to export all signed notices so that when audits come around, your business is 100% compliant. Not only will this reporting option keep you compliant, but it will also save the time and stress associated with compiling information on your own.
Turnover: It’s no secret that the recruiting market is in the hands of candidates. More and more frequently, employees leave their current positions in order to seek alternative opportunities. Naturally, when a position is vacated, it must be filled—which can be costly. A quality turnover reporting tool will allow you to monitor and assess turnover trends within your organization. By understanding these trends you will have greater insight into your business and, as a result, have the opportunity to manage turnover costs.
What is Carrier Billing?:
Ever receive an incorrect carrier bill? Believe it or not, incorrect carrier bills happen all the time. A billing solution within your platform will allow carriers to issue bills directly through your benefits platform. Because the benefits data in your system should be up to date, so too should your carrier bills.
Why do I need to have a billing solution to get accurate carrier bills?:
Inaccurate billing occurs when carrier databases don’t have access to up-to-date benefits enrollment and eligibility records. When carrier databases don’t have this access, they cannot account for changes such as adds and terms when they distribute bills. It is often difficult for carriers to collect this real-time data because an integration needs to take place.
Benefits of HR Software
Now that the need for an HRIS has been established, let’s look at the key factors in making an HRIS purchase decision.
Why You Need an HRIS
As HR software platforms grow more common in U.S. workplaces, the HR department is becoming less about managing administrative tasks and more about adding strategic value to organizations. This finding was highlighted in Paycor’s recent HR Trendcast, which reported that 48% of HR leaders believe many core HR functions will be fully automated by 2022. This is good news—technology is giving HR the room to focus more on people and skills. In addition:
By reducing the administrative burden of chasing the paperwork, the HR department can focus on higher-skill tasks that contribute to business growth and employee experience.
Easily send required notices and other employee communication, and track employees’ receipt and signing to ensure compliance.
Using an online system makes it easy to ensure accuracy and resolve errors or inconsistencies.
Cut the paperwork:
From onboarding to benefits enrollment and more, many HR departments are drowning in paperwork. An HRIS eliminates the need for paper records by storing HR information and data online.
Boost recruitment and retention:
From the initial onboarding experience and throughout the employee life-cycle, make it easy for employees to manage their benefits and information online.
What to Look for in an HRIS
Employee self-service (ESS):
ESS systems are online workplace tools that provide employees with unique logins that allow employees to view and edit personal information. Traditionally, only HR could make these transactional changes because records were kept on paperwork. With online EES options available, HR staff can now provide employees with permission to enter and edit personal information as needed.
The idea here is that if employees have the proper tools, they can solve small, day-to-day problems without any administrative assistance. Because the employees are solving problems themselves, administrators now have time to complete more specialized tasks.
Single point of data entry:
When filing paperwork, how many times do you enter an individual employee’s name? Including benefits administration, onboarding, reporting, attendance, applicant tracking, payroll, and PTO, probably quite a few. HRIS systems remember specific pieces of data and automatically populate all fields using that same piece of data.
Jane the administrator just hired Sally using BerniePortal HRIS. When Sally applied, she entered her name into BerniePortal’s applicant tracking system. Because the name ‘Sally’ was already entered once, it will never have to be entered again by Jane or Sally for any of the HRIS functions.
No, you shouldn’t need a filing cabinet. Quality HR software will organize employee data for you. Using HRIS as an organizational tool empowers you to collect more data without spending extra time sifting through information. Keep everything in one accessible location without that mountain of paperwork.
Reporting: Human Resources professionals must continually manage important pieces of information for large amounts of people. This requires keen attention to detail, significant time investment and the execution of redundant tasks. That’s why reporting options are essential for your organization. Reporting eliminates many transactional administrative tasks which allow HR professionals to focus on specialized responsibilities.
Dashboard: Because HR covers so much professional territory, looking at an organization from a holistic perspective can be quite daunting. Your HR software platform should provide a dashboard tool that allows you to visualize organizational trends and without losing the human element that is so important in human resources. Here’s what you should look for in an HR dashboard.
User Experience (UX):
UX is a technical term that stands for “user experience,” which describes a user’s interaction with a given software. User experience is determined by different factors such as design, structure, and simplicity that should serve to address the unique needs of a software’s users.
User experience is integral in evaluating different HR software options because it determines the usability of the software. A quality HR system should be able to simplify the appearance of essential software functions so that the user feels comfortable with a powerful system.
It’s hard to tell in advance what will come in handy later on, so when it comes to documentation, more is better. Use your HRIS in order to clearly and concisely document important HR information and employee data.
When deciding between an HRIS, it is imperative to understand each vendor’s support model and how it factors into the pricing of the platform. Some vendors offer competitive prices but require upgrades for service after the purchase. Others include service in the overall pricing, but establish a maximum amount of service. The best support option provides full support and build-outs for no additional cost. Look for a software provider the provides full-service implementation to get the most bang for your buck.
You should also investigate the nature of the support offered. Some companies offer call center support, which can be a difficult and time-consuming method of service. You should find a vendor who provides you with a dedicated representative with a partnership approach. Your support system should be structured so that the success of the service team member is dependent upon the success of the client.
Native software is software that is created, managed, and sold by the same company. Essentially, all activities associated with native software occur “in-house.” Because native software is developed internally, the vendor of that native software can respond more quickly to client concerns and requests. Furthermore, a native software vendor will have a greater understanding of their platform.
Alternatively, some software vendors earn rights to license software built by another company. While this strategy provides consumers with a wider selection of products, it also limits the vendor’s ability to address software bugs and glitches. This is because vendors that sell non-native software do not have the same level of understanding of the system as those who developed it. Similarly, these vendors also do not have access to the developer side of the business and therefore cannot prioritize specific client needs. If you have a client pressuring you to fix a system error, your hands are basically tied.
A common misconception is that HR software takes value away from the administrator. However, the result is quite the opposite. HR software streamlines transactional challenges which, in turn, allows administrators to focus on more specialized tasks that require strategic HR expertise. Essentially, these systems add value to the administrator rather than taking it away.
How to Adopt HR Technology
Understanding the Market
Small and mid-sized employers have a few different options for bringing their HR needs online with software. Understanding the market will allow business leaders to find the right solution provider for them.
Generally, a key differentiator among these systems is their go-to-market approach. Some systems market directly to employers, while others provide their software to employers through value-added resellers, such as a benefits broker.
While many platforms used to take extreme positions on either side of that spectrum, the various players are now recognizing that when it comes to serving the needs of small and mid-sized employers and their brokers, it is unwise to separate the two parties completely.
Because benefits touch so many parts of the HR ecosystem—from onboarding to payroll to time tracking and more—it is better to serve the needs of both sides through a system that fully integrates benefits and benefits brokers into HR administration. Further, because the compliance stakes are so high for small and mid-sized employers, administering HR with the support of an advisor typically produces the best long-term outcomes.
Advantages of a Broker-Supported HRIS
A seamless experience:
By integrating HR and benefits, employees have a streamlined, consistent experience beginning with their first touch with the company. An all-in-one system allows a recruit to move through applicant tracking, to onboarding, to benefits enrollment, and time tracking in one system.
There aren’t multiple accounts or customer service numbers to remember, only one single, comprehensive point of contact for all benefits and HR needs. Both the vendor and your broker will play a role in making sure the system is working as effectively and efficiently as possible. Employers are able to access both an on-the-ground broker in their local market as well as industry-leading technology, paired to produce the best results.
Built around benefits:
Benefits is typically the most expensive line item in the company budget next to payroll. Because of the investment in this part of the HR ecosystem, consider whether the system you utilize is robust enough in its benefits administration capabilities. Typically, you will want the system to handle a full array of benefits, including life, critical illness, dental coverage, and more, as opposed to just the major medical plan.
Using a system provided and vetted by a benefits broker ensures it will be able to administer the particular needs of your organization.
Brokers may cover a portion of the cost:
Typically, a system offered through a value-added reseller represents a lower-cost investment than systems marketed directly to employers. Why? As brokers compete to better serve the needs of small and mid-sized employers, they are increasingly recognizing that to solve a client’s benefits challenges, they need to provide a solution for the rest of the businesses’ HR needs.
As a result, more brokers are bringing their agencies online with benefits administration software, which also optimizes the benefits administration process on the agency side. Often, these brokers cover all or most of the basic costs for their clients.
Steps to Adopting HR Technology
1. Identify options:
Ask your benefits broker if they provide any kind of benefits and HR solution. If they already provide an online enrollment system, ask whether it has additional HR functionality. You may also want to get recommendations from other businesses or business advisors you know.
2. Request and attend demos:
Contact the recommended vendors to schedule demonstrations of their products.
3. Adopt the system:
To adopt a system offered through a value-added reseller, you will need to connect with a broker that licenses the product or recommend an existing broker adopt it. The broker will oversee and support your organization’s adoption and rollout of the system.
More employers are taking advantage of software solutions to streamline HR, improve efficiencies and reduce errors. But how do you know which type of HR solution is right for your organization? Download the e-book below for information on how to adopt HR technology, solutions to compare, and where/how to find the best HR software solution.