Banking Article, Banking Finance 2022, Banking Finance November 2022

Human Resource Management System (HRMS): the digital approach

Human Resource Management System (HRMS) may be defined as a variant of Human Resource software which involves data entry, data tracking and data information needs of Human Resource, payroll management, and accounting functions etc within an organisation with the help of information technology.HRMS aims to improve the productivity and efficiency of the business through the automation of manual and repetitive tasks which in turn, also unbound the time and effort of HR team to be used to address more strategic, business-critical tasks.


The drift from manual to automated pay roll and workforce management processes began in 1970.Due to limited technology and restricted usage of mainframe computers, companies were still relying on manual entry while performing employee evaluation and reporting digitally.The advent of Enterprise Resource Planning (ERP) system led to the integration of various human resource functions.The system enabled the users with the capability of linking professional data in real time and administer the various processes from a single mainframe environment. In fact, many of the present popular HR systems still offer considerable ERP and payroll functionality.

The first thoroughly HR-centred client-server system for the enterprise market was developed by People Soft, Inc in 1987 which was later bought by Oracle in 2005.

While in the late 1990s, human resource vendors, such as Softscape, offered a different variant viz cloud-hosted human resource services which enhanced the accessibility of the technology amongst even small and remote teams. Instead of a client-server model, companies began using online accounts on web-based portals to access their employees’ performance.The emergence of application service provider and software as a service (SaaS) has enable additional features rendering greater administrative control. With the penetration of mobile technology amongst the various users, mobile applications based HRMS have also become more common.

Various challenges businesses encounter in modern HR operation:

With the scalability of operations and organizational growth, it seems impossible to manage hundreds of employees, vendors and finances manually. HRMS serves as a boon in managing and mitigating the diverse business challenges by reducing errors and presenting dashboard for effective analysis and decision making. Some of the major challenges faced by the organization in HR operations include:

  1. Finance Management:Managing payroll, payments, and salaries is a tedious and complex work. Starting from onboarding throughout the life cycle of the employee in organisation as well as at the time of separation (voluntarily or regular), payment of expense,salaries, increment, arrears, retirement benefits etc necessitates the need for having a robust HR management system.
  2. Mobility:The ability to access employee records and data on the go is a serious impediment. It becomes further difficult to sync real-time data for attendance, leaves, and other tasks.
  3. Performance Evaluation:The diverse operating field for employees results in employees having their own expectations regarding performance evaluation. Creating suitable and well justified Key Result Area (KRA) and Key Performance Indicator for the employees is a vital step for Human Resource Management System. At the time of appraisals, non-availability of matched performance management module can cause distress and demotivation among employees which would ultimately affect their efficiency and output besides inviting chaos and unrest in the organisation.
  4. Self-serve dashboard:Maintenance of updated employee records at a central location is important and sensitive. It needs to be easilycomprehendible and acquired for meaningful information sharing. Self Service portal provides employees access to all their own data. Exhaustive view onanalytic data related to employee’s payroll, leave and attendance etc builds employees trust in the organization and proves practically valuable to employees on several counts. If the dashboard does not function properly, then it might create serious issues.
  5. Data Management: HR data is one of the most sensitive, ever growing, and dynamic data available within an organization. The earlier adopted methodology of storing and managing this data was paper based and called for heavy investment in terms of required space and time. Further, the era of spreadsheets proved to be error-prone and alsotime consuming. Thus, the quicker and paperless data management eliminating the chances of being misplaced, incomplete/incorrect posed a great challenge for the organization.
  6. Recruitment:End-to-End recruitment cycle isconsidered to beone of the ordealsbymany recruitment experts. It includes salary dossiers, policy inferences, and many other hiring-related statements.Requirement of listing openings, candidate screening, and hiring adds intricacies to an already sensitive process.
  7. Statutory Compliance: Obedience with state and central laws plays a major role in the attainment of the purity aspect in the functioning of any organisation. Thorough regular updates about the legal changes with respect to human resource in a constantly burgeoning legal landscape such as prevalent in India poses greater challenges. Integrating taxation and compliance towards vendors / suppliers’ payments has added another level of complexity.

Current Trends in HR Operation

The world has witnessed a deluge of transpositions in the last decade pertaining to the   approach and treatment in dealing Human Resources. Ascent of digital technology such as Machine Leaning and Artificial Intelligence and its inclusion in HR industry, magnification of gig economy, the accelerated thrust towards workforce diversity and most recently the global pandemic has transformed the outlook and forced the organisations to reconsider the HR polices and guidelines. Some of the major HR trends which are expected to continue and must be catered by Human Resource Management System are

  • Continuance of the Concept of Virtual Work

The pandemic has resulted in the transposition of traditional work model with that of flexible and work centric model characterized by recognition of work-from-home culture and the growth of gig economy. Various companies are moving into the space of full-time work from home model wherever possible drastically changing the ways of getting the job done. For instance, Twitter has decided for employees who maintain servers may permanently work from home if they propose to do so. Similarly, Microsoft have announced that certain portion of the job schedule would be permanently performed under work from home and enabling the employees with docility to acclimatize with the work style best fit with their lifestyle. Surveys and research conducted by various organization have revealed that majority of the respondents have opined for work from home in some capacity even after the pandemic is over. Thus, it becomes pertinent for the organization to incorporate the functionalities in the Human Resource Management system which would lay more emphasis on the job scheduling to accommodate the remote and digital work environment in the future.

  • More emphasis of digital first work

With the gradual shift of the workplace towards virtual arena, organizations have tointrospect the influence of such digital move on its culture and values. The 2021 Deloitte Global Human Capital Trends report, mentions about the prime factors involved in formulating a viable remote work environment and includes:

  • Inception of digital collaborative platforms
  • Acknowledging individual preferences in determining of ways of task accomplishment
  • Constituting new scheduling and meeting norms.

Experts have opined that the digital HR exceeds in collaborating changes which would lead tothe transformation-based initiatives. The process involves harnessing the advantages of the social, mobile, analytics and cloud-based technologies in optimization and improving the efficiency of HR functions, and also caters towards cultural calibrations, talent convenance, structures and processes leading to equivalence between efficiency and originative opportunities resulting in a transparent, sustainable and quantitative impact on the organization in its perpetual metamorphosis.

  • Teams play an indispensable role

Abstraction and formulation of virtual team is playing a decisive role presently in the   virtual workspace and is expected to be one of the success determinants in the future. As per Deloitte, ‘superteam’ comprising of people and technology shall outperform on a greater scale on fulfillment of the following criteria w.r.t HR functions:

  • Workculture that promotes growth, adaptability and resilience
  • Upskill, reskill and mobility being the capable workforce enablers
  • Enforcement of new HR systems and technologies

It is equally important to realise that the success of such superteams depends also on the impartment of relevant trainings, development of appropriate communication system and creation of bond amongst the members and selection of the appropriate performance evaluation metrices.

  • Reformulation of Employee Experience

It has been a well-established fact that the employee’s good experience with the   organisation leads to improvement of satisfactions level, enhances employee’s loyalty, enhancement of individual productivity, greater association in organisation’s vision and ultimately improves the productivity of the organisation.The prevailing orientation have established a bond amongst the rise of automation and the employee experience to illustrate personalized solutions and information for the workforce in a cost-effective and sustainable way. Critical HR practices now demand for more focus so that it can be improved and become more relevant for the workforce of today as well as tomorrow.It has also been proved that organisations may improve the employee experience if viable opportunities are provided to employees in the uncertain times to be heard / provide feedback which may be acted upon.

  • Mental Health gets due recognition

Pandemic has left a conspicuous percussion on the mental health. Surveys have revealed that employees either feel depressed, work burnout or emotionally drained. Besides providing adequate financial help, organisation have also adopted various means such as deployment of licensed counsellors, organizing recognition programs, broadcast positivity messages etc to uplift the mental health of the employees. Incorporation of such measures to tackle the mental health of the employees besides providing the analytics for dashboard, scoreboard etc would also be one of the areas in Human Resource Management system.

  • Diversity, Equality, and Inclusion demands more attention

With the gradual increase of Millennials and Gen Z in the workforce, organisation have encountered growing apprehension on the matters of diversity, equality and inclusion amongst the workforces. The onset of pandemic has further necessitated the organisation to address such expectation in a more methodological and strategic manner through the proper and appropriate usage of Human Resource Management System

  • Skills to overcome uncertainty

Pandemic has redefined the talent search for the organisations who will now prefer in capacitating the existing workforce with the various tools required to gain the skills in overcoming the occurrence of turbulence and uncertainty in future rather than attract the external talents. Artificial Intelligence and robotics are certainly going to play a decisive role in skill upgradation of the workforce.

Required attributes of an HRMS

  The motive of HRMS lies in addressing the above challenges and converting data into relevant information for different management level for effective decision making and effective conduct of job function while presenting the current information in a readily utilizable and easily comprehendible format. To meet these motives, the requisite attributes are:

  • to address the primary need of human resource management functions
  • to address the underlying problems and not just the symptoms in a more scientific and logical manner
  • to present maximum information with minimum data.
  • System output to be reliable and timely
  • System output should contain sufficient and relevant information to minimize uncertainty.
  • To offer data security and personal privacy. Data security can be dealt with in several ways including passwords and elaborate codes. In the present era of information, personal privacy is both an ethical and moral issue.

There exists many HR management software in the market. For eg: CORT – HRMS, HRSOFT, ORACLE- HRMS, Sapling, Eddy, Sage HRMS, VAIRKKO, People Book HR etc. In such a scenario it is imperative to design the evaluation criteria required in selecting the HRMS model best suited for the organisation.

Evaluation Criteria:

For reaping the maximum benefit from the selected HRMS, organisation may ponder upon some of the following evaluation metrices:

  • Value for money: The selected system must justify its price w.r.t to features, capabilities and utilities being provided.
  • User Interface (UI):The system should provide the relevant information in a clear, well organised, and easily searchable manner to its users
  • Usability:The system should be easy to learn and master. It is very important for the organisation to make available the associated technical support, user support, training etc to garner maximum benefit.
  • Features & Functionality: With a proper vision for growth, scalability and flexibility of the chosen system is vital for the organisation
  • Engagement Tools: In addition to performing the typical elements of HR process such payroll, leave management etc, the system should perform above and beyond, in order to provide ways and means for employee engagement, satisfaction gauge, and culture development and may involve a built-in learning management system.
  • Reporting and Analytics: Thesystem should provide real-time and actionable insights using the available data. The generated reportsshould be customizable and easily exportable.
  • Integrations:The system should be integrable with the other existing systems and provide ease of transition in the future.

Future traits of Human Resource Management System:

 The HR functions are gradually shifting towards organizational efficiency and predictive analytics. The   approach involves a paradigm shift from tactical to strategic. Presently Human Resource is being associated with strategic planners in the organization The emerging trends in HRMS visualises the transposition of transactional HR to chatbots and further automation in the various functionality.

  • Emanation of Relationship Analytics through Organisational Network Analysis

Social networks prevalent within an organisation helps inculcate employee’s acquaintance within the organisation and provides a better picture of the internal reciprocity between employees. As it deals with human network, proper analysis may result in more coordination leading to effective response and output.

  • Continuous Performance Management System

Until recent past 360-degree feedback was a common terminology in performance evaluation. Organisations are gradually inclined towards the continuous feedback loop wherein the development inputs do cater to the current trends of virtual workforce and distributed teams.

  • Evaluation of new skill sets

The emergence of new skillset assessment of the employees incorporates digital skills such data analytics and digital literacy; critical thinking skills such as strategic thinking and conflict management and soft skills like emotional intelligence and creativity. The Human Resource Management System may thus have an inbuilt module capable for assessing these skills of the employees right from the stage of onboarding throughout the different career development stages. Further, it may generate insights and reports for the organisation regarding suitably upskilling the required skillset deficient amongst the employees.

  • Congruence of Artificial Intelligence and Machine Learning

It is expected that AI based algorithms conjugated with cloud computing is going to serve as a decisive factor in streamlining the various HR functions related workflow. Congruence shall span over a wide range encompassing onboarding, integration, employee training, performance evaluation, reporting, payroll and data administration. Further, the Integrated Robot Process Automations shall deliver automated skills like chatbot, Natural Language Processing and Machine Learning in data mining

  • Equipping the workforce with Virtual Reality and Augmented Reality

The onset of digital era along withmore recent pandemic have opened avenues for organisations in possessing the best of novel technologies such as Virtual Reality and Augmented Reality for rendering employee growth and experience. The practical learning through the imparted trainings is expected to bring out behavioural changes and equip employees adequately to face uncertainties in the future.

  • Address to Diversity, Equality and Inclusion Issues

The workforce issues related to diversity, equality and inclusion affects the productivity of the employees and the overall success rate of the organization. It is expected that in future HRMS solutions shall be integrated with features that would facilitate organisation with the capability to minimize and solve these issues by adopting a comprehensive and appropriate approach.

Human Resource is considered to be the most invaluable asset for any organisation. In order to register long term success every organisation is committed in aligning the HR management strategies with the latest trend and have a complete vision for future. HR Management system have witnessed a series of transformation with the advancement of   technology. The recent global pandemic has compelled the organisation to promptly respond to the critical business priorities and managing sudden unprecedented variation in workforce utilizing the latest technology. Millennials and Gen Z have the largest cohort representation in work force of various organisation. The orientation towards artificial Intelligence, workforce diversity management, gig economy, cloud-based HR technology and empowerment of the workforce with skills to face uncertainty and improve productivity, shall propel the HR Management system to systematize and materialize corporate strategies and enhance employee engagement to sustain the growth journey. The world of work has already been through huge transformations of different pace and complexity.The future transformations are expected to touch every aspect of our live and is simultaneously stimulating and intimidating.

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