What is Human Capital Management (HCM)?
Human Capital Management (HCM) fuses HR strategy and HR technology for better people management. HCM emphasizes treating people as assets rather than resources. HCM integrates optimal management practices to attract, engage, develop, and retain talent.
What are the elements of HCM?
Combining HR strategy and HR tech tools, HCM offers an agile and engaging platform for everyone, from the junior level to C-suite. HCM includes these primary functions:
- Core HR: The HR software used to store people’s data, including personal and financial information
- Talent management: The process of recruiting, hiring, and retaining professionals
- Workforce management: The organization of labor, work scheduling, budgeting, time and attendance, and succession planning
What are the benefits of HCM?
HCM is custom designed for our fast-paced, tech-driven work world. In medium and large companies, an HCM system is essential for attracting new hires, building and maintaining a productive, engaged workforce, and lowering company costs. An effective HCM system can facilitate:
- Career development opportunities
- Professional creativity and innovation
- Virtual collaboration
- Stronger social connections among co-workers
- A shorter recruitment period
- Cutting-edge compensation packages
- Better employee self-service through automation and AI
- Improved data analysis on workforce trends
What is HCM Software?
HCM software includes a host of interconnected applications. For example, HCM software may consist of payroll, time and attendance, and other HR tools. While each application has a unique function, having them all in one software program is convenient and helps HR better manage the workforce.
Today, HCM systems typically are SaaS to provide easily accessible cloud-based services for companies.
What’s the difference between HCM and HRMS?
HCM and HRMS offer similar solutions, and people often use the terms interchangeably. But there are subtle differences.
HCM is all-encompassing. It includes HR practices and HR tech to help manage all HR functions. HCM prioritizes the employee experience and strategic workforce optimization for better productivity and engagement.
In contrast, HRMS primarily refers to software applications. An HRMS focuses on managing people with an emphasis on tracking and organizing people data for better decision-making.
Because the differences between HCM and HRMS are slight, it’s important to evaluate each product’s features when shopping for HCM software.
How do you choose the right HCM software?
It’s hard to know which HCM software will be able to solve your company’s problems best. Here are four steps to help break down the selection process into digestible tasks:
- Consider the system you’re currently using. You may be unsure which product is right for your organization. To narrow in on the relevant software solutions, ensure that you only consider the systems that can integrate with what you already have.
- Assess your company’s needs. Each organization has its own obstacles and industry-specific problems. For example, a fast-growing high-tech company may need a platform compatible with different time zones. A manufacturing company may need a time and attendance app that allows people to clock in and out.
- Address your company’s recurring problems. Does your company have unexpectedly high levels of turnover? Are HR professionals feeling frustrated with an overly heavy administrative workload? Determine your company’s specific challenges and prioritize them in order of urgency.
- Plan ahead. You may want to focus on what your company needs now. That’s completely understandable. But being prepared for future workforce trends and internal changes can make all the difference between rocky and smooth transitions. Companies must address their current and future needs by asking questions such as: Which HR processes are time-consuming and need adjustment? How can we change our HR processes to boost engagement and retention? What are our company’s growth and workforce planning goals?
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What can HR leaders do to integrate an HCM system into their strategy?
HR leaders are responsible for researching, choosing, strategizing, adjusting, monitoring, and evaluating the HCM system. Here are some fundamental tips for staying on track during the implementation process:
- Identify objectives. Defining company goals enables HR leaders to navigate their HR ship in the right direction. HR leaders should address crucial questions regarding which practices and components of the HR processes should remain the same and which need adjustment.
- Pinpoint weak areas for improvement. HR leaders can enlist the aid of individual team members and managers to create a comprehensive list of issues they’ve experienced first-hand. Perhaps the onboarding process is ineffective, or performance reviews don’t encourage enough employee feedback. Determining weak points helps HR leaders decide on a strategy and a solution-oriented HCM technology.
- Establish a team. HR leaders can create a team of executives, division leaders, and tech talent to assist with the integration of the HCM system.
- Build a game plan. Drafting a strategic plan by assessing each problem and deliberate planning can help HR leaders actualize their vision.
How can a well-implemented HCM system improve company culture?
With the rise of remote work, companies have come to rely on HCM systems to ensure employee satisfaction and a pleasant employee experience. HCM helps people contextualize their roles within their company, form strong interpersonal relationships, and build community at work. When people feel connected to their co-workers, their jobs, and their company, they’re happier and can naturally contribute to building a positive company culture.