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How to Develop an HRM System

In today’s dynamic business space, effective human resource management is essential for any organization’s success.

A well-designed Human Resource Management System (HRMS) can streamline HR processes, improve performance, and enhance employee satisfaction.

This article will guide you through everything you need to know about developing a powerful HRM system, including the key differences between off-the-shelf and custom-developed solutions and the essential features it should have.

What Is HRMS?

A Human Resource Management Software is an application that combines various HR functions and processes into a single, integrated platform.

What Is HRMS?

It automates such tasks as employee recruitment, onboarding, payroll processing, benefits administration, performance evaluation, and training management.

By centralizing these activities, HRMS enables HR professionals to optimize workflow, reduce administrative burdens, and make more informed decisions.

HRMS Benefits

Implementing an HRMS offers numerous benefits to organizations of all sizes. Some key advantages include:

  1. Streamlined HR Processes: HRMS automates repetitive tasks, including employee data management, leave requests, and performance reviews, allowing HR personnel to redirect their efforts towards activities that drive organizational growth.
  2. Improved Data Accuracy: With an HRMS, information is entered and stored electronically, reducing the risk of errors connected with manual data entry. This ensures accurate and up-to-date employee records.
  3. Enhanced Reporting and Analytics: HRMS provides comprehensive reporting capabilities, enabling HR professionals to generate insightful reports on various human resource metrics. These reports, in turn, help make data-driven decisions and identify improvement areas.
  4. Increased Employee Self-Service: HRMS often includes self-service portals, allowing employees to enter and update their personal details, submit leave requests, and independently participate in training programs.
  5. Regulatory Compliance: HRMS can automate such processes as payroll calculations, tax filings, and benefits administration, helping organizations comply with legal and regulatory requirements without the risk of associated penalties.

Off-the-Shelf or Custom Developed Solution?

When deciding between an off-the-shelf HRM solution and a custom-developed one, it’s important to weigh the pros and cons of each option. Here are the advantages and considerations for both off-the-shelf and custom-developed HRM systems.

Off-the-Shelf or Custom Developed Solution?

Off-the-Shelf Solution

Off-the-shelf HRMS solutions are pre-built software packages that offer a wide range of features and functionalities.


  1. Cost-Effective: Off-the-shelf solutions are generally more affordable than custom development since the development costs are distributed among multiple customers.
  2. Quick Implementation: These solutions are ready-to-apply, which means faster implementation and deployment.
  3. Established Functionality: Off-the-shelf HRM systems come with pre-built features and functionalities tested and refined by multiple users. Additionally, they often include best practices and industry standards.
  4. Vendor Support: Off-the-shelf solutions typically have vendor support, which can be valuable in terms of system maintenance and troubleshooting.


  1. Limited Customization: Normally, off-the-shelf solutions have limited customization options, and you may have to adapt your workflows to fit the system’s capabilities.
  2. Lack of Flexibility: Since off-the-shelf solutions are designed to cater to a wide range of organizations, they may lack the flexibility to meet specific requirements or unique business processes.
  3. Vendor Dependency: If the vendor discontinues the product or fails to meet your future needs, you may face challenges migrating to a different solution.

Custom-Developed Solution

A custom-developed HRMS is built from scratch, tailored to an organization’s unique requirements.


  1. Tailored to Specific Needs: Custom development allows you to build an HRM system precisely to your organization’s requirements, having full control over the features, workflows, and user interface.
  2. Scalability and Future-Proofing: Custom systems can be designed with scalability in mind, allowing for growth and adaptation as your organization evolves.
  3. Competitive Advantage: A custom-developed HRM system can provide a competitive edge by enabling unique functionalities or innovative approaches to HR management.


  1. Higher Costs: Custom development is usually more expensive than off-the-shelf systems. Costs include initial development, ongoing maintenance, and potential enhancements in the future.
  2. Development Time: Custom HRM systems require a longer development cycle, from requirements gathering to testing and deployment.
  3. Technical Expertise: Developing a custom HRM system requires skilled software developers and technical expertise. This way, you may need to hire external resources or engage a development partner.
  4. Maintenance and Support: A custom system usually requires internal resources or a dedicated support team to address any issues or implement future enhancements.

The Main Features of HR Software Solutions

Whether you opt for an off-the-shelf or custom-developed human resource information system, it is important to consider certain essential features. These include:

The Main Features of HR Software Solutions

Recruiting and hiring management

HR management software aimed at recruiting should allow automated posting of job opportunities across different platforms (corporate website, social networks, job boards), filtering candidates by chosen criteria, and even transferring the applicant’s data into employee files in case of hiring.

One more useful tool is an applicant tracking system (ATS) that should scan a resume and automatically decide whether it is somehow relevant to a particular position or not.

Payroll management

HR payroll software solutions offer automated payroll processing, tax calculations, and the ability to maintain accurate records of employees’ salaries and bonuses.

These solutions ensure that everyone is paid on time and in accordance with the established rates.

With payroll management functionality, a human resource management system streamlines the payroll process, reduces manual errors, and ensures compliance with tax and labor regulations.

Centralized database

A centralized database is a key feature of HR software solutions that consolidates and organizes all relevant employee data in a single location. This centralized storage of information ensures consistency and accuracy within the whole company.

By having a centralized database, HR managers can efficiently access and manage employee records, including personal details, employment history, performance evaluations, training records, and more.

Cloud and mobile access

A cloud-based HR management system provides the advantage of accessing the HR system from anywhere at any time.