HRIS Selection Advice, Research & Best Practices

Proven Steps to Select the Best Human Resource Information System

Over the years, Human Resources' role has expanded far beyond mere hiring and firing. A well-equipped HR department now trims costs, enhances efficiencies, delivers high value employee services and guides your business through a dizzying array of regulations.

A big part of being well-equipped means implementing an HR Information Systems (HRIS) solution that automates business processes and streamlines interdepartmental procedures, allowing you to accurately reconcile bills and eliminate over-payments, reduce the need for additional employees, and improve recruiting and employee-retention among other key tasks. Keeping current employees alone delivers huge cost-savings: Hiring a replacement employee for a $60,000-a-year position could cost $49,000 in direct costs - and a whopping $150,000 in direct and indirect costs, according to JDA Professional Services.

Not surprisingly then, selecting an HR solution is a multi-step process that extends far beyond the department's walls and impacts the company's bottom-line for many years to come. To aid your HRIS selection process, consider these critical success factors.

Team Work

Since HR's reach extends throughout your business it is critical to collect input from other departments. In addition to HR professionals and managers, it's wise to enlist a senior finance and payroll executive and a high-level IT executive. Also include a C-level corporate executive to drive corporate buy-in and needed funding.

The team then must scrutinize HR's existing methodologies and tools. Consider: Which practices or procedures work? What is frustrating, overly-complex or redundant? What do HR employees wish the current system could do or do better? What HR system features go unused? What processes are manually performed outside the HR system? What could be automated? How could HR better-integrate with other departments such as payroll?

HRIS manages all employee information; reports and analyzes this data; includes company information such as employee handbooks, codes of conduct and safety rules; offers information on benefits such as training, health insurance, life insurance, enrollment and status changes, manages applicants and resumes, and integrates with finance and payroll.

The results of your internal review will generate a check-list of requirements and wishes. Categorize and prioritize these findings, and determine the hard and soft return on investment. After all, if the new solution frees-up HR professionals from time-consuming but necessary tasks they can use that time on critical issues like cutting the costs of benefits, improving employee training and achieving compliance. At this point in the HR software selection process it's not necessary to have exact ROI figures, but at least have estimates that can be stack ranked so you know what efforts to prioritize in order to get the biggest returns early.

Feature lists and budget in-hand, it's time to review some of your many options.

Cloud HR Solutions

While some HR solutions cost a small fortune, value and price often don't correlate well when it comes to purchasing HR software. Many software systems address HR basics such as attendance and compensation, as well as more sophisticated tasks such as COBRA, compliance, payroll integration and benefits. Your HR solution also should easily import information from Excel, databases and old-fashioned paper as well as integrate to legacy systems such as accounting software or the ERP system.

HR software deployment options — and namely cloud HR solutions — have also changed the HR software procurement landscape in a big way.

Some businesses prefer to purchase application software outright, operating it on-premise. By doing so, they have complete control over all facets of the implementation, and also are responsible for maintenance, upgrades, the infrastructure and support.

Others, however, adopt a hosted or cloud HR software model, whereby a third-party provider actually installs, runs, maintains, upgrades and supports the application software. This lets a business focus on its core competencies without expending additional investments on IT resources and infrastructure. Cloud HR systems have become the single biggest growth sector in the HR software industry, and are becoming extremely popular for small and midsize businesses (SMB) that want to rid themselves of IT management.

Choosing an HRIS

You now have eliminated some contenders, and narrowed down to a more manageable list of prospective partners. You may be well advised to further cut the list by culling new, unproven companies, those facing financial challenges or those that otherwise bring increased risk to a long-term HR software investment.

Next compare candidates' capabilities to your list of prioritized features, and consider any additional capabilities your HR software finalists may offer. Be prepared for vendors to show you software capabilities that you didn't know existed. Then be prepared to understand whether these features are truly useful in your organization, or simply flash that looks great in a demo but would never get implemented. Your goal is to generate an HR vendor short list of no more than three or four finalists.

The stage is then set for in-house HR software demonstrations. Include multiple team members in the demos so that you have representation from all stakeholder groups. An HR software best practice is to use demo scripts that allow you to see how your most important and most difficult business processes are accommodated within the HRIS. This advances the demo beyond the low value dog and pony show presentation and also allows you to compare HR vendors in an apples to apples and objective scoring fashion. Another HR software best practice is to ask the demonstrator to show - not tell - how the HRIS addresses exception conditions and particularly difficult requirements. Finally, ask to see the HRIS business intelligence suite, which should include dashboards, standard reports, a custom report writer and possibly a data warehouse. The HRIS best practice here is to view these tools with either your actual data or at least relevant industry data as this will really illustrate how these tools may work in your environment.

Also ensure the features you want are included in the software or determine the price for added capabilities. Calculate the costs of implementation, integration, customization, training and 24x7 support. Discuss how long it will take to put the solution into place and the amount of IT and end-user training required. Talk about how the HR solution integrates with your payroll and ERP solution, how it will grow with your company, and how it will evolve with future upgrades and new versions. Then compile a cost-benefit analysis addressing the dollars and hours behind the anticipated ROI, and make sure your executive sponsor supports the final decision.

Check references by speaking with HRIS vendors' existing customers, asking questions of those that most closely match your organization. Discuss the solution's pros and cons, implementation or usage surprises, interaction with post-sales and technical support, and the solution's hard and soft benefits. On-premise or hosted, make certain you are working with a company that lives up to its marketing, one that delivers a quality product and stands behind it with customization, integration, technical and end-user support.

Human Resources, the company's first interaction with prospective employees and its guide into the world of benefits and regulations, deserves a strong tool to support its efforts. With the right HRIS solution in-place, human resources extends its value, better satisfies its customers and becomes a cost-savings center within your business.