A human resource management system may take the form of an information management system. An organization uses an HRMS to manage information about its work force. This information helps managers and HR professionals make decisions regarding employees. Without the right information available to decision makers, an HRMS has few applications beyond record-keeping and reporting.
When an organization collects personal data about its employees in an HRMS, certain security risks may arise. An organization spends funds to keep employee private information secure against internal and external threats. One disadvantage of an electronic HRMS is that an organization must collect information about who accesses employee private information. This data requires follow up with an audit process, which could result in disciplining or prosecuting an employee who accesses employee data without authorization or without an official purpose.
The need for data control is another potential disadvantage of an HRMS. This data control extends beyond unauthorized access of employee private information. An organization using an HRMS such as PeopleSoft must employ its own set of technical staff to program, troubleshoot, update and support the system. While an HRMS may help an organization reduce the cost of HR personnel, it could increase the requirements for technical staff with knowledge specific to the HRMS solution.
Data Entry Errors
An HRMS is also only as good as its human programmers and end users. People with high-level access, such as people who update an HR master file, may enter the wrong information deliberately or in error. If data is improperly updated, changed or lost, an organization can face government fines and other costs associated with damage to the HR master file. Pick a system with lots of internal controls so that one employee cannot make changes to your company's master file.