Benefits Software Made Simple: HRIS vs HCM vs Benefits Administration

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HRIS and HCM and Ben Admin—oh my! With so many HR acronyms flying around, it can be difficult to understand the nuances between different software solutions and to find the best fit for your individual company. But don’t worry, we’re here to help! 

In this jargon-free guide, we’ll cover the basics behind HR software terms and give you the link for a complete, unbiased HR software buyer’s guide to help you make an informed decision.

Keep in mind that there are almost 20 categories of HR software, which can be overwhelming to say the least. There are solutions for the broad human capital management and niche offerings for recruiting, engagement, payroll, compensation, communication, and much more. In this guide, we’ll focus on HR management from a benefits perspective and highlight solutions specific to benefits administration. 

What is HRIS? 

‘HRIS’ is an acronym for ‘Human Resources Information System’. 

The most basic of the HR platforms we’ll explore here, an HRIS platform allows users to electronically track, manage and automate core human resources functions, including information related to your workforce, policies and procedures. 

As a ‘core’ HR software, HRIS handles the basic necessities of running a human resources department. 

Features included in an HRIS platform often include: 

  • Payroll – calculate employee wages and salaries, deduct the correct amount for benefits and taxes, and print checks or execute direct deposits
  • Attendance and Time Tracking – track employees’ working hours and monitor employee absences related to vacation days, sick days, etc. 
  • Recruiting – automate the posting of job opportunities, receive and communicate online applications, tracking candidate interviews and the hiring process
  • Onboarding – automate information submission and storage, provide employees easy access to training materials and team information
  • Personnel Tracking – manage a digital roster of company employees (job title, contact info, personal details, etc.) 
  • Benefits Administration – enroll employees in company benefits such as health insurance and 401(k) savings, and track and automate compliance

HRIS platforms vary in scope and may include only one or up to all five of these core features. 

While an HRIS platform might meet the needs of very small employers (100 or fewer employees), a more customizable and feature-rich solution is often the best approach to handle complex HR and benefits requirements. 

Synonyms: HRMS (human resources management system), HRM, HRMIS, Core HR 

Examples: BambooHR, Zenefits, Namely

HR meeting

What is HCM? 

‘HCM’ stands for ‘human capital management’, and this technology adds the ‘human capital’ element into what a typical HRIS platform will offer. Meaning, the system has the capability to manage the entire employee lifecycle from recruiting and hiring to management, engagement and development. 

In addition to the feature set of an HRIS, HCM systems typically include features for:

  • Talent Management – recruiting, onboarding, performance management, compensation planning, learning and development and more
  • Labor and Workforce Management – Time off and attendance tracking, absence management, task management, forecasting, scheduling and more
  • Company Data – hosting company policy and procedure data, document management, organizational knowledge base and more
  • Administrative Functions – managing employee and organizational data, benefits and payroll administration, and more
  • Advanced Reporting and Analytics – in-depth reports, dashboards and graphics to help HR teams make data-driven decisions

 

Essentially, you can think of HCM platforms as a ‘jack of all trades’. They typically offer one really strong core competency, like payroll or time and attendance, with several other not as strong features—like benefits enrollment. This is why many HCM providers integrate and/or partner with other third-parties to provide a better, more feature-rich experience in specific areas, like benefits administration. 

Synonyms: People management, talent management, workforce optimization, strategic HR 

 

Examples: Ultimate, Kronos, Oracle, ADP

Specific features and functionality will vary from vendor to vendor—but in general, here’s what you can expect from an HRIS versus an HCM provider.

HRIS vs HCM table

But Wait—What About Ben Admin? 

On the other end of the spectrum, many HR niches have providers that offer a more robust experience in one single area, like benefits administration. “Ben Admin’—short for ‘benefits administration’—provides a rich benefits enrollment experience for employees and an advanced management experience for HR teams. 

Many benefits administration platforms offer the following advanced features: 

  • Eligibility Management
  • Open Enrollment and Life Events
  • Employee Communications
  • Cost Calculations
  • Flexible Reporting
  • Data Exchange with Carriers
  • Benefits Shopping and Enrollment
  • Educational Videos and Content
  • Decision Support
  • Tailor-Made Recommendations
  • ACA and COBRA Administration

Benefits administration software is designed to truly automate and optimize the entire benefits experience, from benefits shopping and enrollment to ongoing administration—and everything in-between. Additionally, a good platform will be flexible enough to handle complex benefits situations, whether a group offers a myriad of different health care plans and voluntary benefits if a group happens to be in a highly regulated industry. 

group of employees working in an open office

It’s important to note that many HRIS and HCM providers tout providing ‘benefits administration’ as a core offering. However, these platforms simply do not provide the flexibility and sophisticated configurability required to manage complex benefits rules and cost calculations. Additionally, many of these core systems present benefits as a simple ‘enrollment’ experience versus a full-service shopping and support experience. This is why a dedicated benefits administration platform is typically recommended for most midsize to large employer groups, or for groups in a more complex or regulated industry. 

While a feature-rich benefits experience might be the best route for managing employee benefits, you’ll want to partner with a benefits administration solution that seamlessly integrates with your HRIS or HCM solution to maximize HR efficiencies. 

By pairing your existing HRIS or HCM solution with a dedicated benefits administration solution, you will unlock the following additional features and functionality: 

  • Deep integrations with major insurance carriers to expedite enrollment and increase data accuracy
  • Robust shopping experience with built-in educational content and decision support
  • Modern, intuitive benefits experience for both employees and administrators

What’s Right For Me? 

Here are a few things to consider that will help qualify whether an HRIS or an HCM system is best for your general HR functions: 

Best fit for HRIS or HCM enrollment: 

  • Small business/workforce (<250 employees)
  • Simple benefits with limited offerings
  • Organization operates in a non-regulated industry

Best fit for dedicated benefits administration platform: 

  • Complex employee benefits
  • A true benefits shopping and enrollment experience
  • Built-in decision support tools
  • Desire for deep integrations with insurance carriers and other HR providers
  • Need for robust reporting and analytics

benefits administration software tenants

From there, these questions will help determine whether you should look for a dedicated benefits administration solution: 

  • How much time per week do I realistically have to dedicate to benefits administration? 
  • What features or functionality would make managing benefits easier? 
  • Would better integrations with insurance carriers make benefits enrollment, management and reporting easier and more efficient?

family putting money in piggy bank benefits account

So, how does all of this tie together in the real world? Consider this—Many HCM platforms simply offer a few basic enrollment screens to ask the employee what they want to elect for benefits. All the calculations (deduction codes, costs, etc.) happen in the payroll system. So, the enrollment experience is very limited in supporting rules like life insurance EOI and maximum coverage amounts. Alternatively, a true benefits administration system is designed to enforce the benefit eligibility and cost rules first, then also determines deduction codes to send to payroll as well as to carrier via data integrations.

In short, you can buy something bolted on to your payroll system that simply gathers what is needed to facilitate the payroll calculations, or you can use a tool that allows you to administers all your benefit needs in one place. 

Better Technology for Better Benefits

If you’re in need of a better benefits experience, visit our benefits administration product page to peruse our platform or contact us directly to schedule a no-strings-attached walk-through with a consultant.

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