Factors to Consider When Developing a Human Resource Information System

Numerous considerations come into play when you decide your company needs a human resources information system (HRIS).

Weighing your options, and the pros and cons, enables you to make an informed choice that’s right for your company’s size, current workforce needs and anticipated needs as the company grows. Factors upon which to base your decision are industry, company size and projected growth, cost, training and outsourcing possibilities.

Industry

Fast-paced industries like food and beverage, hospitality and gaming process employment actions at high rates due to turnover. An employee base that changes rapidly leads to paperwork and more paperwork, which can more easily accomplished with an HRIS.

According to Wharton Business School management professor Benjamin Campbell: “HR strategy complements technology strategy, yet often people developing these strategies don’t work together…. I think this is especially true in younger firms. But if you want to be in a fast-paced industry, you need to invest in an HR system that gives you the skills you need.”

Health care is another industry where an HRIS is beneficial. Automating employment actions frees human resources staff time to focus on strategy, hands-on recruiting and retention.

These components of health care human resources often deserve personal attention because of other issues in this field, such as nurse-patient ratio, recruiting nurses from a smaller pool of qualified applicants and managing the potential labor union issues.

Company Size and Projected Growth

An advantage of purchasing your HRIS while your company is young is the benefit of having the HRIS infrastructure in place; however, as your workforce grows, updating that infrastructure may be costly.

You may be tempted to purchase a system that your company can grow into, but weigh the pros and cons of substantial cash outlay. Consider outsourcing one or several of your human resources tasks to a firm that provides HRIS services for smaller companies. As your company experiences significant growth, revisit your plan to integrate an HRIS.

Cost

Consultants charge fees to provide advice on the type of HRIS that best serves the interests of your company and its human resources department. Aside from the initial costs of contemplating purchase of an HRIS, other expenses are training and application costs.

Human resources outsourcing (HRO) costs and the return on investment should also factor into your decision. “HRO Today” writer Paul Davies encourages employers to weigh the costs of technology versus outsourcing: “HRO is a great way to pay for technology, but be careful IT costs are not shifted to HR without corresponding savings in the IT budget.”

When you weigh the benefits of human resources outsourcing, take into account the impact on HR department salaries or expertise eliminated through outsourcing some HR functions.