HRMS: Helping HR Out of the Cost Center Rut

Updated: April 30, 2009

For too many years, upper management has viewed HR as little more than a vital but unprofitable department — a cost center.

But this view is rapidly changing, in no small measure due to the impact of HRMS (Human Resources Management System) technology. Sophisticated HRMS software — in the form of stand-alone products and ERP (Enterprise Resource Planning) systems — gives HR departments the ability to effectively and efficiently administer data in areas ranging from benefits to regulatory compliance. Also important, however, is HRMS's potential to transform HR from a cost center into, if not an outright profit center, a far less expensive department that can also function as a strategic advisor.

Here's a look at some of the ways that HRMS software can lift HR out of the cost-center rut.

Streamline Processes: By handling existing processes faster and with less human intervention, an HRMS can provide more accurate and timely information at a lower cost.

Reduce Errors: An HRMS can reduce or eliminate costly mistakes created by outmoded and faulty HR technologies and methodologies.

Collect More Data: An HRMS can acquire and track almost any type of data. Drawing on this vast information storehouse, sophisticated HRMS report generators allow managers companywide to create reports on an almost endless array of topics and to compile data in ways that provide a solid underpinning for strategic planning.

Improve Insight: Most HRMS products offer built-in data-analysis tools that allow managers both inside and outside of the HR department to track trends, spot weaknesses and take corrective actions before conditions spiral out of control.

Better Budgeting: HRMS tools make budgeting faster and more accurate. Management and staff will be able to use both current and historic information on wages, benefits and costs — drawn quickly and easily from the database — to forecast and create budgets.

Simplified Access: A graphical interface enables almost anyone with minimal training to tap into an HRMS to quickly search for and retrieve specific information.

Enhance Distribution: Network access allows staffers and managers to access critical data anytime, anywhere — not just when they're sitting at their office desks. Authorized individuals can securely access information while they are at meetings, visiting the factory floor, working at a satellite office, at home or traveling. Paper and mailing costs are also slashed when information is accessed online.

Reduce Duplication: Consolidating HR data into a unified database lessens the chances of data duplication and conflicts, allowing for easier and more accurate information sharing across departments.

Improve Security: The advanced data-security technology that is built into modern HRMS software helps keep confidential information away from unauthorized eyes. This protection lessens the risk that valuable corporate data will fall into the wrong hands and reduces the possibility of lawsuits that often follow such an event.

Less Downtime: Modern HRMS software tends to be much more reliable than older HR applications that have been repeatedly patched to keep pace with changes in business practices, security needs and evolving computer platforms.

Better Hires: An HRMS helps HR fulfill its mission of helping the company find the right person for the right job. Less time is wasted sifting through resumes and cover letters. As information arrives electronically, it is automatically added to the applicants database, categorized, scanned for key qualifications and purged after a specified period of time.

Easier Compliance: Meeting the requirements imposed by the The USA PATRIOT Act, HIPAA (Health Insurance Portability and Accountability Act), The Sarbanes-Oxley Act of 2002 and other compliance mandates becomes much easier when key information is stored inside and accessed via an HRMS.

Enhanced Morale: Easier-to-use, more flexible software makes every employee's job easier, resulting in increased productivity, reduced HR employee churn and increased time to focus on strategic issues rather than routine "grunt work."

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