| 23 October, 2023 | 9 Min Read

HR System - Everything You Need To Know To Choose The Best One

Overwhelmed by the myriad of HR systems available in the market? Feeling lost in the sea of options? Let our guide be your compass to discover the ideal solution for your business.

In the complex landscape of modern business, HR professionals grapple with an overwhelming volume of data and tasks daily. 

Recognizing this challenge, HR systems have emerged as a solution, simplifying intricate HR processes. From recruitment to employee engagement and performance management, these tools can automate tasks, saving time and enhancing the efficiency of HR professionals. 

But the key is to choose the right tool that fits your company's needs. Or else, you may be limiting your potential before you even begin.

So, in this article, we provide an in-depth guide to HR systems, unraveling their functionality and benefits and guiding you in selecting the optimal solution for your company's success.

Let's go!

What is an HR System?


An HR system is a comprehensive software solution designed to streamline and enhance various HR functions within an organization.

HR software can help to improve the efficiency, accuracy, compliance, and decision-making of HR functions.

There are 7 main benefits of HR systems:

  • Automate HR tasks: It automates routine and time-consuming tasks, such as onboarding procedures, payroll processing, and leave management. 
  • Minimize errors: Automation significantly reduces the likelihood of human errors in data entry and other administrative tasks and contributes to increased data accuracy, leading to more reliable decision-making processes.
  • Improve employee care: An HR system can improve the quality of care and support for employees. For example, it can provide self-service options for employees to access and update their personal information, request time off, enroll in benefits, and more.
  • Eliminate paperwork: HR software enables organizations to transition from manual, paper-based processes to digital workflows. 
  • Data compliance: HR tools provide a secure environment for storing and managing sensitive employee information, ensuring adherence to data protection laws and regulations.
  • Data-driven decisions: Usually, an HR tool can measure employee engagement, satisfaction, retention, and performance to provide valuable HR insights.
  • Improve employee engagement: HR systems often include features designed to enhance communication, recognition, and collaboration and foster a positive work culture.

3 Types of HR System

There are 3 main types of human resource system: HRIS, HCM, and HRMS.

Human Resource Information Systems (HRIS)

This is a basic system that stores and organizes employee information, such as personal details, job history, attendance, leave, and payroll. 

The goal of HRIS is to centralize HR-related data and automate processes for increased efficiency.

Most-read: Best HRIS in the Philippines for 2023: Top 6 Picks

HCM (Human Capital Management)

This is a holistic system that covers the entire employee lifecycle, from hiring to retirement. 

An HCM system includes all the features of an HRIS plus additional functions such as employee management, succession planning, workforce planning, diversity, and inclusion. 

An HCM system can help to align the human capital strategy with the business strategy and optimize the performance and productivity of the workforce.

Human Resource Management System (HRMS)

This is a more comprehensive system that includes all the features of an HRIS, plus additional functions such as payroll calculation, benefits administration, recruitment management, performance management, and employee engagement.

An HRMS system can help to streamline and automate various HR processes and improve the efficiency and accuracy of HR operations.

10 Must-Have HR System Features

HR information database

A comprehensive HR information database serves as the backbone of an HR system

It consolidates and organizes employee data, including personal details, employment history, skills, and certifications.

This centralized repository ensures quick access to accurate information, facilitating informed decision-making.

Applicant tracking

Streamlining the recruitment process, an applicant tracking system (ATS) helps in posting job vacancies, managing applications, and tracking candidates throughout the hiring pipeline. 

This feature improves efficiency, reduces manual efforts, and enhances collaboration among hiring teams.

Payroll calculation 

An integrated payroll calculation automates the complex task of salary processing. 

It calculates wages, taxes, and deductions accurately, ensuring compliance with regulations. 

This feature not only saves time but also minimizes errors in payroll, contributing to overall employee satisfaction.

Employee self-service capabilities

Empowering employees, self-service capabilities allow them to access and manage their personal information, update contact details, and submit leave requests.

This feature not only reduces administrative burdens on HR but also enhances employee engagement and satisfaction.

Performance appraisal management

Performance appraisal tools facilitate goal-setting, performance reviews, and 360 feedback processes

This feature promotes continuous improvement, aligns individual performance with organizational objectives, and contributes to a culture of accountability.

Benefits administration

Managing employee benefits efficiently is critical for both employees and HR. 

Benefits administration features help handle health insurance, retirement plans, and other employee perks. 

This ensures accurate benefit calculations and compliance with regulations.

Onboarding options

Effective onboarding is essential for integrating new hires seamlessly into the organization. 

Onboarding features include the creation of onboarding checklists, electronic document submission, and orientation materials, fostering a positive first impression for new employees.

HR reporting

Robust reporting capabilities provide insights into workforce trends, employee performance, and other key HR metrics. 

For example, HR systems can provide employee information reports that include all information on employees' data factors, such as employee headcount, employee turnover rates, employee satisfaction percentage, employee engagement percentage, etc.

It can also provide performance review reports to keep track of employees' goals, skill sets, and feedback.

Customizable reports help HR professionals and organizational leaders make data-driven decisions and assess the effectiveness of HR strategies.

Time and Attendance

Time and attendance management features automate the tracking of employee work hours. It includes clocking in and out, managing overtime, and monitoring attendance patterns.

This not only improves accuracy but also contributes to efficient payroll processing.

Absence management

Absence management features enable HR to track and manage employee leave, whether it's vacation, sick leave, or other forms of time off. 

Automation in absence management helps maintain staffing levels and ensures compliance with leave policies.

How to Choose an HR System



Cost is a crucial factor to consider when selecting an HR system. 

You must define a clear budget and understand how the costs of implementing and maintaining the system will impact your financial resources.

Evaluate hidden costs, such as deployment expenses, training fees, and customization charges.

For SMBs, we suggest you check out this list of free HR solutions for a small team. For example, Grove HR offers a free plan for up to 50 employees.


Identify the specific features essential for your organization. 

Consider core HR functionalities, such as employee information management, payroll, and benefits administration. 

Additionally, assess advanced features like performance management, onboarding, and reporting. 

Choose a system with features that align with your organization's unique needs.


Anticipate future growth and select an HR system that can scale alongside your organization. 

Scalability is crucial for accommodating an increasing number of users and expanding functionalities as your business evolves. 

Ensure that the chosen system provides flexibility to adapt to changing requirements and workforce dynamics.


In a dynamic work environment today, accessibility is paramount. Choose an HR system that offers convenient access from various devices and locations. 

Remote and mobile access is especially important to accommodate flexible work arrangements. 

Accessibility contributes to user adoption and ensures that employees can engage with the system seamlessly.


Selecting the right HR solution is a pivotal decision that shapes the efficiency and success of your human resource management.

This article provided you with a thorough understanding of human resource system to help you make an informed choice. 

By considering these critical elements, organizations can implement a suitable tool that streamlines HR processes and enhances employee experiences

Investing time and resources in choosing the best HR system is an investment in the long-term success of the organization.

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Reduce manual effort with automated HR processes

  • Reduce manual effort with automated HR processes
  • Automate attendance and time off.
  • Conduct 360-degree performance management easily.